Home Equity Loan Can Be a Powerful Tool for Debt Consolidation - SPONSORSHIP

Are you drowning in credit card debt, but have sufficient equity in your home to pay off that debt? You may want to consider a home equity loan as a tool to consolidate that debt, but be careful how you proceed.

Any debt you take against the equity (amount your home is worth above what you owe on your mortgage) in your home will be considered secured debt, which means the debt is secured by the collateral in your home. If you can't make the payments, the bank can foreclose on your home. Any debt on credit cards is most likely unsecured, which means the debt is not secured by an asset. The bank has nothing to take from you if you don't pay.

But, if you pay off unsecured credit card debt with debt secured by your home using an equity loan, you do put your house in jeopardy if you can't pay the loan. So, if you decide that debt consolidation using an equity loan is a good idea, be sure you'll be able to make the payments.