One option to control long-term debt is withdrawing money from your home equity, known as HELOC: Home Equity Line Of Credit. Similar to a credit card debt, HELOC is a revolving debt, which means that you can continuously borrow against it while paying it off. Unlike a credit card, however, HELOC is a secured loan, which means that the interest rates are significantly lower due to the collateral involved.
Carrying long-term credit card debt can be costly
A HELOC has greatly lower interest rate than a credit card because you use your home equity as collateral. If need be, it’s better to borrow against your home equity instead of a credit card in times of crisis. It’s a smart move as long as long as you can repay the loan correctly.
A powerful tool for paying off surprise debts.
Usually, banks will loan up to 80% of your house’s assessed value, leaving it the perfect situation for consolidating all of your high rate fees into a single low-interest loan. If your situation calls for it, you can even sell your house, paying off your mortgage and your loan, while possibly earning money in the process.