I own my home outright. Would it be wise to get a home equity loan and pay off my debt?
Due to a bankruptcy 7 years ago, we have 4 loans of high interest (15%). Bankruptcy is off our credit report now and interest rates are getting better. Question is I own my home outright, would it be wise to get a home equity loan and pay these off with the money? All 4 notes will be paid off in around 4 years. It totals to about 30,000 in debts. My Payments run about $1,200.00 per month for the 4 notes (these are vechicles). Thanks so very much.
Home equity is the value between what your home is worth (in a sale, or an estimate of this determined by an appraisal) and the amount you owe on a mortgage(s). If your home is "paid off" or you do not have any mortgage balance remaining, you can certainly 'tap' that value by either refinancing your home, and creating a first mortgage, or by taking out a Home Equity Line of Credit (HELOC).
If you are looking to borrow money to pay off other debts (you mentioned 15% APR), a home loan is almost always your best route, since you get a low rate and the interest is tax deductible. With your old bankruptcy removed from your credit report, you may qualify for a low rate loan, which will keep more of your money in your pocket, and lower your monthly debt payments.
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