1st Eagle provides great service and by far the best rates. I have used Herb and his team for mortgages on my home and on investment properties, and they always work hard to get the deals done. I especially value that they have smart and experienced people working there, and they are very straightforward with keeping me involved in the loan process.
Some individuals think about using a home equity loan to pay off their credit card debt. You can borrow money using the equity in your home with a home equity loan, which typically has better conditions for repayment than credit cards and lower interest rates. However, there are advantages and disadvantages to using a home equity loan to pay off credit card debt, so it’s important to carefully weigh them before making a choice.
Pros of using a home equity loan to pay off credit card debt
Lower interest rates than credit cards
The fact that home equity loans frequently have lower interest rates than credit cards is one of the biggest benefits of using one to pay off credit card debt. Home equity loan interest rates are usually much lower, often between 7% and 9%, while credit card interest rates can range from 15% to over 25%. Over the course of the debt, you could save a lot of money on interest fees by doing.
Potentially lower monthly payments
Home equity loans can result in lower monthly expenses than credit cards, in addition to having lower interest rates. This is due to the fact that home equity loans frequently have longer repayment terms (5 to 30 years), whereas credit card repayment terms are generally 3 to 5 years. Longer repayment periods can reduce your monthly payments while increasing your total interest costs over time.
Possibility of tax benefits
Your home equity loan interest may occasionally be tax-exempt. This, however, only holds true if you use the loan to renovate or enhance your house. The interest on the loan might not be tax-exempt if you use it to pay off credit card debt. A tax expert should be consulted in order to fully comprehend your tax position and any available deductions.
Cons of using a home equity loan to pay off credit card debt
Risk of losing your home if you can’t repay the loan
Possibility of losing your house if you can’t make the loan payments Your home is at danger if you use a home equity loan to pay off credit card debt, which is possibly the biggest risk. The lender has the right to foreclose on your house and seize it if you are unable to pay back the loan. Before taking out a home equity loan, it is essential to make sure you can handle the loan payments.
Potential fees and closing costs
Possible charges and closure expenses Home equity loans, like all loans, may have fees and closing charges like application, appraisal, and origination fees. The money you’ll save by using a home equity loan to pay off credit card debt can be rapidly deducted by these expenses. Make sure to ask your lender about all fees and costs associated with the loan before you sign any papers.
Can prolong debt repayment and increase the overall interest paid
Higher overall interest rates could be the outcome of settlement delays. Longer repayment terms can lengthen the time it takes to pay off your debt and lower the total amount of interest you will have to pay, even though they might result in lower monthly installments. If you took out a 20-year home equity loan to pay off credit card debt, for instance, you would pay off the debt for a lot longer than you would have if you had kept making credit card payments. You will also end up spending more in interest over the course of the loan because interest accumulates over time.
Other factors to take into account before choosing to use a home equity loan to pay off credit card debt include:
Your credit score
Your credit score may be impacted if you use a home equity loan to pay off credit card debt. When you apply for a home equity loan, the lender will likely perform a hard credit inquiry, which can temporarily lower your credit score. A home equity loan can also have an impact on your credit utilization rate, which is a factor that affects your credit score if you use a large portion of your available credit on it.
Alternatives to home equity loans
There are other options to take into account besides using a home equity loan to pay off credit card debt. Consider debt transfer credit cards, for instance, which provide introductory interest rates of 0% for a set period of time. This may enable you to eliminate your credit card debt without paying interest while you try to reduce it. Loans for debt consolidation are an additional choice that will let you combine several debts into one with a reduced interest rate.
Your financial goals
If you’re deciding whether to use a home equity loan to pay off credit card debt, it’s crucial to take into account your financial objectives. If you want to quickly pay off your debt and raise your credit score, there may be better alternatives than a home equity loan. A home equity credit, however, might be a good option if your objective is to reduce your monthly payments and pay off your debt more slowly.
Conclusion
For some individuals, consolidating credit card debt with a home equity loan can be a wise financial decision, but there are risks involved. It’s critical to weigh the benefits and drawbacks, your financial objectives, and possible alternatives to home equity loans before choosing whether to use one. In the end, choosing to pay off credit card debt with a home equity loan should be founded on careful deliberation and a thorough understanding of the potential risks and benefits.
ilm_is_inbound_links_added: 1
ilm_sync_report3: 1
ilm_links_inbound_internal_count: 2
ilm_links_inbound_internal_count_data: a:2:{i:0;O:14:"Ilm_Model_Link":9:{s:7:"link_id";i:0;s:3:"url";s:98:"https://1steaglemortgage.com/pros-and-cons-of-using-home-equity-loans-to-pay-off-credit-card-debt/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";s:3:"907";s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:38:"pay off high-interest credit card debt";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:1;O:14:"Ilm_Model_Link":9:{s:7:"link_id";i:0;s:3:"url";s:98:"https://1steaglemortgage.com/pros-and-cons-of-using-home-equity-loans-to-pay-off-credit-card-debt/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";s:4:"1010";s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:16:"credit card debt";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}}
ilm_links_outbound_internal_count: 8
ilm_links_outbound_internal_count_data: a:8:{i:0;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"246";s:3:"url";s:71:"https://1steaglemortgage.com/five-key-steps-for-first-time-home-buyers/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:1042;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:14:"interest rates";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:1;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"247";s:3:"url";s:71:"https://1steaglemortgage.com/why-credit-cards-shouldnt-retire-with-you/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:155;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:12:"credit cards";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:2;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"248";s:3:"url";s:84:"https://1steaglemortgage.com/8-things-about-credit-card-debt-you-may-not-have-known/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:1010;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:11:"credit card";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:3;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"249";s:3:"url";s:67:"https://1steaglemortgage.com/3-ways-to-pay-back-a-reverse-mortgage/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:841;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:8:"pay back";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:4;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"250";s:3:"url";s:66:"https://1steaglemortgage.com/preparing-your-home-for-an-appraisal/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:64;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:9:"appraisal";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:5;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"251";s:3:"url";s:91:"https://1steaglemortgage.com/10-secrets-about-home-equity-lines-of-credit-you-need-to-know/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:1020;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:29:"equity loan to pay off credit";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:6;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"252";s:3:"url";s:68:"https://1steaglemortgage.com/no-cost-mortgage-loans-fact-or-fiction/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:167;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:30:"costs associated with the loan";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}i:7;O:14:"Ilm_Model_Link":9:{s:7:"link_id";s:3:"253";s:3:"url";s:68:"https://1steaglemortgage.com/5-ways-to-consolidate-credit-card-debt/";s:4:"host";s:20:"1steaglemortgage.com";s:8:"internal";b:1;s:4:"post";O:14:"Ilm_Model_Post":11:{s:2:"id";i:907;s:5:"title";N;s:4:"type";s:4:"post";s:6:"status";N;s:7:"content";N;s:5:"links";N;s:4:"slug";N;s:6:"clicks";N;s:8:"position";N;s:15:"page_importance";s:0:"";s:9:"itemOrder";i:0;}s:6:"anchor";s:26:"debt transfer credit cards";s:15:"added_by_plugin";b:0;s:8:"location";s:7:"content";s:9:"link_mark";s:0:"";}}
