Is this wise, or not?
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Is this wise, or not?
| Tue, 01-18-2005 - 9:24pm |
Is it wise to use home equity (HELOC) to pay off credit card debt?
Just curious.
Thanks,
Nancy
| Tue, 01-18-2005 - 9:24pm |
Is it wise to use home equity (HELOC) to pay off credit card debt?
Just curious.
Thanks,
Nancy
Hi Nancy,
I don't know if it's the wisest thing but I did it. The reasons I did were because it gave me a much better interest rate and a lower monthly payment overall which helped make some "breathing room" in my budget.
Don't know if that helps you much but I thought I'd let you know you wouldn't be the 1st to go that route.
Tamara
Hi Nancy.
All my best,
Danni
Hi Nancy,
I agree with Danni on this...however, on the other hand, we did refinance and rolled our credit cards into it.
I would think very, very, very, very, very hard before doing this as "on paper" it looks great but you are putting your house on the line, if something should happen, do you want to take the chance of them foreclosing on your house?
Becky
CL of 4th, 5th & 6th grade Scoliosis
I wouldn't, for the reasons already outlined. Also, when you pay off a debt quickly with minimal immediate consequences, it is too easy to fall back into bad habits. Getting out of debt and staying out of debt is a lifestyle formed of good habits, and good habits take practice, time, and consequences to form. That's why so many people get these loans and six months later find their credit cards racked up again.
Also, I plan never, ever to borrow against my house more than we had to in order to move in to it in the first place. I will do nothing to jeopardize the house because of what it has meant to my family--a yard to play in, a swingset to use, a barbeque to cook out, space to stretch out, a playroom for the kids and a bedroom too, a guestroom to share with friends and family, a garden for me and to feed my family, and on and on. I cannot put a price tag on that. I wouldn't borrow against the house even if the alternative were loan shark-high interest rates.
On the other hand, our current mortgage was necessary in order to get into the house to begin with, so I don't see that as a bad thing. But as soon as our credit cards are paid off, we'll begin paying off the mortgage, never to borrow against it again. Eventually, our dream is to build our own house on acreage in the country, and that we plan to do without borrowing anything at all. But that is a ways out.
So, anyway, the short answer is, people do it, and it looks good from one angle, but really for most people it ends up not being such a terribly good idea.
Good luck on whatever you decide, and keep coming here for support and advice,
Heather
I would also consider how long it will take to pay off the cc's versus how long the HELOC is for. Are you just stretching your debt repayment for another 5-10 years? If so, you will pay a lot more in interest over time with the additional years tacked on than you would even if the cc was at a higher rate.
I have my cc debt down to $6,000 and just put it on a zero interest card. I don't know how long it will continue, but it seems to be pretty easy to find a zero interest period for a year or longer and no transfer fee. If I don't have my cc paid by the end of 2005, I'm planning to roll it to another zero interest card. Even if the HELOC rate is low, you can't beat zero percent.