equity loan
Using your equity is a good idea
I was working with a good income, but in 1996 I was injured and eventually went on permanent disability. When I got my final settlement and permanent disability income started coming in, I made settlements with my creditors. I now have one credit card that I have paid down to a $6,000 balance, two checking accounts and a guaranteed income totaling approximately $4,200. I need to put siding on my home. I asked the bank that has my home equity loan to increase it by $13,000 so I can pay for the siding. The bank put the interest rate on my credit card at 26 percent because they didn't like my cash to debt ratio even though I've never been late on a payment to them.
They're offering to increase my home equity to $91,000 so I can both pay off my credit card and pay for the siding. They want to charge me 8.8 percent on the loan for 30 years.
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Use Your Home Equity Wisely
Web sites like www.LowerMyBills.com make it easy to find and compare various loan options. Here are some tips on how to use your home equity wisely.
* Pay off outstanding debt - "Credit card interest rates can be 10 or more percentage points higher than home equity loans or line of credit, so if you are dealing with mounting debt, it can make sense to pay off those credit cards using a lower-interest home equity loan," says Coffin. Just make sure to cut up the credit cards first.