Equity Home Loans

Home Equity Loan, Home Equity Line of Credit or a Personal Loan?

A baby boy recently entered our lives and prior to his birth, we had a bit of credit card debt that should have been taken care of but wasn't. My wife is now working part-time instead of full-time, which has been really rough. Our debt is not getting any better. We borrowed money from immediate family to purchase our home so the loan is a low APR and is not technically on our credit. We still need to consolidate our debt (credit cards, vehicle loans, etc...) but not sure what route to take. It sounds like a Home Equity Loan is the best choice since the APR is usually fixed and is like a typcial loan. Do you have any suggestions for us? We do not want to damage our credit so we need to make the best choice. Thanks!

Public Comments

1. Well, home equity loans vs lines of credit are typically fixed. The APR will definitely save you money on a home equity loan vs your credit cards. I would just make sure the costs to do your loan are minimum to none, otherwise, if it costs you a couple thousand or more, then your not really doing yourselves any favors in the short term. Companies like BofA and Countrywide are offering zero closing cost products and are highly competitive so you may want to start there. Also, you may want to consider paying your mortgage once every 2 weeks by splitting your regular mortgage in half and sending in each half amount on the 2 week mark. Once you refinance or if you refinance, you might want to get the new mortgage oo both mortgages set up in this way. One last thought on the subject - if you have a low and better interest rate on your primary mortgage (than what you can get in today's market), don't refinance for a higher rate. Take out a second mortgage instead. Good luck!
2. A home equity line of credit is a good option since it is flexibile and reusable. The payments are often reasonable. Personal loans tend to be very inflexible, and the interest rates are often high. Home equity loans are inflexible in that you get a fixed amount and once you pay the balance you don't get access to the funds again, while with the line of credit, if you use $50,000 and pay it off, you still have access to the $50,000 line.
3. I would say that a home equity loan is most likely the best route for you to take, remember that these rates are way less in most cases than a personal loan as well as the interest that you will pay on this type of loan is tax deductable, if you are looking for options for places to get a home equity loan please visit my profile and see my blog about credit lots of great places that offer these types of loans with little to no fees as well as great interest rates, Best of Luck and congrats on your child.