Even with the added difficulty of getting qualified for a second home mortgage, there are still those peddling home equity for debt consolidation. And while debt consolidation can be a good move for many people (and even using home equity has its advantages), it is not for everyone.
Putting your home on the line for credit card debt
When you use a home equity loan to get out of debt, you are exchanging your unsecured debt for secured debt. This means that your home is now collateral for your credit cards.
In the current climate, where home values are still falling in many markets, this could easily tip you into an upside down mortgage within a few months. And if you run into recession-related troubles, then you might start having trouble with your payments. And if that happens, you could lose your house.
Before choosing debt consolidation -- especially home equity debt consolidation -- consider your other options as well.
image credit: sxc.hu
» Financial Advisor: Anytime Could Be a Good Time to Use Home Equity from LendingLeaves
William Jordan points out that even now, with home values falling, it might be a good time to use your home equity. [Read More]
Tracked on: May 22, 2008 11:04 PM | Permalink to Trackback