When most think of a home equity loan, their minds go straight to using it for a big remodeling project or installing a pool. But there are other ways this money can be put to use—one of them being debt consolidation.
Homeowners can use equity accrued in their homes to help pay off debt they have accumulated over the years. These larger home equity sums can go towards paying off credit cards or any other kind of loans—and in most cases leaves you with a more manageable, fixed payment going forward.
And even though many people think of personal loans when they consider consolidating debt, home equity loans deliver a ton of benefits.
Take advantage of a lower interest rate
While a personal loan can help you reach your debt consolidation goals, the interest you accrue will likely be far higher than what you get with a home equity loan.
With a personal loan, even those with good credit can likely see an interest rate of of 14%-18%. Compare this to the average home equity loan interest rate, and you start to see why home equity can be a smarter avenue for debt consolidation.
Lower interest rates on your home equity loan leave you with more flexibility on what you can do with your money long term.
Enjoy the ease of a single monthly payment
Tired of keeping up on all the recurring debt payments you need to make on a monthly basis? A home equity loan allows you to consolidate your debt into a single payment each month.
Consolidating your debt into a single home equity loan can help simplify your monthly budget and make it easier to manage your debt repayment. Coupling this with the lower interest rate leaves you with more money in your pocket over the long term.
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Home Equity lets you access more cash
Many personal loan lenders have put a cap on how much you can borrow—often below $50,0000. Sometimes you get stuck with an even larger, seemingly inescapable amount of debt, which is where the flexibility of a home equity loan can help you.
While most home equity lenders will limit how much you can take out, it is typically around 80-85% of your home's value. These larger sums can be used to clear substantial amounts of debt while being paid back at a fixed interest rate. At Spring EQ, we offer homeowners access to up to 95% of their home's value.
Home Equity is a great way to consolidate debt. Learn more today.
When approached properly, a home equity loan is one of the most effective ways of consolidating debt out there. The lower interest rates, payment consolidation and access to large sums are why many choose this route to relieve themselves from debt accrued over the years. Release yourself from the restraints of debt and get back on your track toward more financial flexibility with a home equity loan today.
Take a moment to get your free, instant equity estimate and see how big you can dream.
If you have any questions about how to access cash from your home's equity, we can help find a solution that works best for you.