Is it better to consolidate debt through a home equity loan or a refinance with cash out?
If you are consolidating credit card debt, it is important to be aware that shifting unsecured debt (credit cards are unsecured) to secured debt (your mortgage is secured by your home) can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure.
Now, consider the following four factors when deciding between the two types of loans that you mention:
In your case, if the consolidation is indeed for credit cards, then I would check with multiple lenders to see what is the lowest rate that you will get approved for and then go in for a shorter term home equity loan. But, if you are able to find a refinance deal with minimal closing costs and a substantially lower interest rate, then it would make sense to opt for a cash out refinance. Either way, Bills.com makes it easy for you to compare quotes from different lenders. Just fill in your information on our refinance application page and qualified lenders will get in touch with you to discuss your options.
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