Can I use my paid-for home as collateral for a consolidation loan to pay off outstanding bills?

Asked by: Ebony Laws

How do I use my home equity to pay off debt?

Make lower monthly payments

Using a home equity loan for debt consolidation will generally lower your monthly payments since you’ll likely have a lower interest rate and a longer loan term. If you have a tight monthly budget, the money you save each month could be exactly what you need to get out of debt.

Do you have to put up collateral for a debt consolidation loan?

Personal loans for debt consolidation are typically unsecured, meaning they don’t require collateral. If you’re having a hard time getting approved for an affordable unsecured debt consolidation loan, a secured loan might be worth considering.

Can I combine my mortgage and home equity loan?

The easiest way to consolidate your mortgage and home equity debt is to do a cash-out refinance of your primary mortgage, and use the extra funds to pay off the balance you’re carrying on your HELOC or loan. Check out Bankrate’s mortgage refinance calculator to see how much you might be able to save.

What is used as collateral with a home equity loan?

Like home equity loans, you use your home as collateral for a HELOC. This can put your home at risk if you can’t make your payments or they’re late. And, if you sell your home, most HELOCs make you pay off your credit line at the same time.

Can you take equity out of your home without refinancing?

Instead, you can consider a home equity line of credit (HELOC) or a home equity loan. These ‘second mortgages’ let you cash-out your home’s value without refinancing your existing loan.