There are many reasons to get a home equity loan. It is usually a good idea to get a home equity loan for improvement projects or to pay down large debts and improve cash flow. These strategies help a lot of our customers get in better shape credit wise.
However, you should think hard before using a home equity loan to pay of unsecured credit, like a credit card. When you do this, you've wagered your home against that debt, and that could be a scary situation in the case of default. While paying off debts with a high interest rate first is a good idea, it may not always be the smartest one.
Instead, try using a home equity loan to pay down off one major large debt, like a car, and several other small debts. Then, use your improved FICO score (as these actions will inevitably add points to your credit score) to bargain for lower rates with the credit card companies. With the large debt now gone, as well as some small debts, you can make higher payments to the high interest credit cards and work your way out of debt forever.
This is the kind of help we offer at Downs Financial, Inc. We know that shopping for strategies to repair credit and add cash flow are numerous and full of pitfalls. Let us help you design a loan program that works well with your finances and future goals to help you build a solid financial future.
