Consolidating home equity line credit
The problem can be much worse if the line of credit only requires minimum payments.
With interest only payments it takes someone much longer to pay off the line of credit or home equity loan, and in some instances, they end up going down the “never-never” road and never pay off their debt.
Serious debt problems and financial trouble can result from living a credit-dependent lifestyle.
How much you spend, and what you spend it on, is entirely up to you.
As such, having a home equity credit line can be a terrific financial tool if you’re disciplined and diligently stick to a payment plan. The mortgage uses the property as collateral for the loan, meaning that if the borrower doesn’t repay the loan, the lender has the legal right to seize the property.
Before signing up for a home equity loan or line of credit, estimate whether you can absorb the full balance of your line of credit at double today’s interest rates.
Today’s interest rates are uncharacteristically low, so it’s important to keep in mind that your payments will likely go up before you’ve paid off what you owe.