3 of 13

Write now Article Tools

If my boss knew I was writing this, I would be fired. But I'm going to give my humble opinion anyways: when it comes to the pros and cons of paying off credit card debt with a home equity loan there are no pros! First let me say that I've been in the industry for a little over two years. I make a living, and a pretty good one at that, as an underwriter for one of the consistent top lending institutions in the United States. All of this makes me anything but an expert, rather I'm looking at the issue from a variety of sides and saying that as an insider do what you have to do to avoid changing your credit cards into a lien on your property.

Credit card debt is unsecured, whereas a home equity loan is secured debt. This means that if you don't pay back what you owe the credit card companies they cannot come after your property and force you to sell. If something goes wrong and you default on your home equity loan, the Banks can and will come after your house and force you to foreclose. Perhaps people believe that such a drastic outcome won't happen to them, but today foreclosures have been occurring more and more, and faster as well as the Banks will not give you very many opportunities to catch up on a late mortgage. It's in the news everyday and foreclosure is a very real and very scary thing.

Furthermore, one extremely disturbing factor for homeowners that I see at my job every day is that the value of our homes, regardless of home improvements, is decreasing and even plummeting in many communities across the nation. Sure the market fluctuates and your property values may increase within time, maybe even a short time. However, when turning credit card debt into a home equity loan one must take into consideration depending on their credit card balances that you may end up with negative equity in your home, which you hadn't planned on. This is unnecessary if you keep the debt where it is- unsecured with the credit card companies.

There are other reasons people decide to open home equity loans. Perhaps all of a sudden they need a new roof on their house. Perhaps an expensive medical procedure is required and the insurance company is refusing to pay for it. Perhaps an elderly parent needs to move in rather than go to a nursing home and an addition needs to be built onto the property. I could keep the list going forever because unfortunately life loves to hand us down unplanned and even sometimes tragic events that we have to pick up the pieces and find some quick,

• 1
• 2
• next page >>

Add your voice

Know something about Pros and cons of paying off credit cards with a home equity loan?
We want to hear your view. Write now!