Nowadays, home equity loan rates and refinance loan rates are hovering between 6.5% and 7.8%. Even though they have climbed slightly over the last two years, these home equity rates are still substantially lower than the interest rates on other types of consumer credit. Many homeowners have enjoyed significant increases in home equity through appreciation over the last few years, making a home equity debt consolidation loan a viable way to reduce monthly overhead on debt payments.

A debt consolidation loan that is drawn again home equity is considered by many financial experts to be a shrewd and wise financial move on the part of homeowners. It allows the homeowner to transfer their high interest credit card debts, automobile loans, and other consumer loans to a much lower interest rate because the new loan will carry a much lower interest rate.

There are three main ways that a homeowner can choose to leverage the equity in their home in order to create a debt consolidation loan. They can either do a complete refinance, a home equity loan, or open a home equity line of credit. Each of these home equity financing options have different benefits to be considered.

Some homeowners think that the simplest approach to doing a such a loan is to simply do a full refinance mortgage. In this scenario, they would borrow enough to cover the pay-off of their existing mortgage plus all of their other consumer debts.

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This entry was posted on Friday, March 7th, 2008 at 3:27 am and is filed under Financial Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.