You can use your home equity to do a consolidation loan. In this type of setup you will be using the value of your house as equity to borrow against. If your spending habits are out of control, this is a poor choice because you may end up losing your home. However if your spending habits are under control this can be an inexpensive way to pay off your credit card balance and get rid of your car payment.
Check with your bank about a home equity loan. Normally these loans are at a very low rate because they are guaranteed by the value of your house. Many times you can get a home equity loan at around 4%. If you have an auto loan at 9% the home equity loan will let you apply more of your monthly payment toward paying off the principle and spending less on interest. This type of mortgage is a very attractive option–especially if the value of your house has appreciated significantly.
If you are in serious financial debt and you have serious problems controlling your spending, you should probably not get a home equity mortgage right away. This type of mortgage can be a dangerous thing if you aren’t financially responsible and can’t control your spending. Consolidating to a mortgage can put your house at risk and is particularly dangerous if you continue making poor spending decisions because you can end up right back in debt again, but now you own even less equity in your house because of the consolidation mortgage.
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