Comments on: Pay Off Credit Cards with Home Equity?

By: John Rodriguez

John Rodriguez — Thu, 27 Mar 2008 05:08:32 +0000

First of all, I am planning to roll my Car Loan, Credit Card and any other loan out there that I have into my Home Equity Line of Credit (HELOC) as it grows enough to take it in. Why you might ask? Because most people do not know how to do their finances. First of all, did you know that by taking out a HELOC or even a Personal Line of Credit it is possible to reduce your mortgage from 30yrs to 10 years or less? You don’t have to refinance, your mortgage payments remain the same, and there is little to no house budget change. Most people use checking accounts and savings accounts which get taxed at the end of the year so there goes your interest earned. A HELOC can be used just like a checking account. Difference between HELOC and mortgage is that one is compounded monthly and the other (HELOC) daily. So if you paid all your monthly bills from your HELOC and then deposited your paycheck at the same time. Your interest paid at the end of the month is 0%. Since it calculates daily there is no time for it to build interest. Now, if you take out lump sumps of money and paid it to your Mortgage it will take off years and save interest on the mortgage. Well, what about the debt I created on the HELOC? Well, you know all that money you were sending to your savings account (even if it isnt that much)? That pays down the extra balance so you dont have to worry about trying to bring it down. So, now I add on my car loan and guess what? Rather than paying my mortgage+car off in 10yrs, it will now be even less. How’s that you ask? Lets use imaginary made up numbers so you get the idea. If my car payments were lets say $500/month for 60 months, it has now been spread over to 120 months and lets say $250/month. Can we agree that now my payments are now smaller because the car loan has been stretched out twice as long? Well, can we agree that the money that is no longer being used for the car loan payments ($250) is now discretionary and is now being applied together with your left over money a month towards bringing down your HELOC? And so your HELOC drops faster allowing you to take out more lump sums to pay off your mortgage. Yes, I am an independent agent for United First Financial (u1stfinancial.com). The cool thing is that I pretty much just told you what they tell you themselves on their site on how to pay off your mortgage. Yes, I do sell a software that makes it all possible to be as effective as possible and keep you out of financial troubles if you decide to do your finances like this. If you would like to get a free analysis, and no I do not need any real information for now because I use John Doe as a profile for anyone who is interested in getting some numbers, email me. I do this and give this free information out to people because I do not depend on this for my money. I actually have a real job (not realestate or banking) and do not dedicate myself to selling this program like someone who only makes there living off this. So don’t be afraid to email me if you want more information or would like to get on the program. jmrdrgz@hotmail.com

By: Alice McDaniel

Alice McDaniel — Sat, 20 Oct 2007 16:01:35 +0000

I have about $20,000 of credit card debt between two major credit cards and I do not want to turn unsecure debt into secured debt so I don’t dare use my equity to pay off these two cards. I would like to do a debt settlement but I don’t know what organization I can trust. Do you have any suggestions?

avmcdaniel@verizon.net

By: Steve "The Debt Reduction Man" B

Steve "The Debt Reduction Man" B — Sat, 16 Jun 2007 17:18:25 +0000

Great post I completely agree about not using a home equity loan to pay off credit cards. After being in the debt reduction business for as long as I have. I have spoken with many people who have done that, and then guess what. They go and turn right around run up their cards again and bam not their right back where they were with the credit cards but now they have a bigger mortgage to pay and must file bankruptcy. I feel the best way to reduce debt is through debt settlement. YOu save money and time, the only negative thing is the temporary reduction in your credit score, but that will go back up as soon as your debts start being paid off. Ofcourse you do need to make sure you hire the right organization to do so.

By: jim

jim — Thu, 10 May 2007 13:53:00 +0000

The payoff in terms of credit score improvement isn’t big enough to warrant continuing to pay interest on the debt, so no, pay off the debt ASAP. There are plenty of opportunities in the future to pay off a debt that doesn’t cost you 20%+ (like a car or a mortgage) if you want.

By: sissy

sissy — Thu, 10 May 2007 13:34:32 +0000

is it good to pay off all the credit card dept if you could or is it better to leave some kind of balance on them,,,to keep the credit report in good shape ???

By: InsultComicDog

InsultComicDog — Thu, 01 Feb 2007 09:44:05 +0000

I did it the other way around.

Paid off the HELOC with the 0% 0-fee BT.

Now the house is paid for but I have credit card debt.

Just to cover my butt I left the HELOC open with 0 balance in case I have to transfer back to it before the teaser expires and there isn’t another 0% out there for me.

By: Lazy Man and Money

Lazy Man and Money — Wed, 31 Jan 2007 23:41:01 +0000

Yes a 0% rate is ideal, but if that’s not possible I think it really is worth looking into using a home equity line of credit. If you ever get to the point of not being able to pay back your home equity line of credit you could always get a cash advance on that credit card you paid off. That’s the worst case scenario after a worst case scenario. If you’ve really gotten to the point of the cash advance on your credit card, you’ve already failed handing your credit card the first time as well as this reform attempt. After all that you are probably still better off having paid the cash advance fee and saving the difference between 20%+ interest and 8%+ interest.

By: Debt Hater

Debt Hater — Wed, 31 Jan 2007 13:51:28 +0000

I’d think that short term 0% rate would motivate you to pay off the debt as fast as you can. And I’ve read enough to never considered using a home equity loan to pay off credit cards (not that I’ll ever have credit card debt once I buy my home!)