Line of Credit or Second Mortgage - Using Your North Carolina Home for Debt Consolidation
Contributed by Julia Emerson
Shopping for Debt Consolidation in North Carolina
You probably already know that the equity that you've built up on your North Carolina home is a cash cow waiting to be milked for debt consolidation. And if you've been doing some research, chances are you've heard the terms "Line of Credit" and "Second Mortgage" by now. But which to choose?
Using Your North Carolina Home as a Debt Consolidation Credit Card
A Home Equity Line of Credit is a terrific way to consolidate your debt. A line of credit works a lot like a credit card account, where the credit limit is the amount of equity you have in your home. You can pay down the balance and then withdraw against it again if times get tight, exactly like a credit card. And the best part: the interest you pay is tax deductible.
Beware of the most common pitfall when using a credit line for debt consolidation: Actually using the line of credit like a credit card. Keep in mind that you opened your line of credit to eliminate debt. Because the credit line is so easy to access, it's very tempting to borrow against your line of credit for non-emergency purchases. Unless you're an unemployed fisherman, a new boat is probably not an emergency. But if you trust yourself to leave the line of credit for emergencies only, then it's a good way to take advantage of the tax breaks while doing debt consolidation.
Mortgaging Your North Carolina Home for Debt Consolidation.
A second mortgage is another good way to put your North Carolina home to work as a debt consolidator. Current rates for a 15-year fixed mortgage range from 5.2% to 5.5% -- much better than most credit cards.
