Consolidating mortgage home equity loan

If so, it will likely be unrealistic to expect that you’ll be better off when you increase your debt by 25%, plus interest and fees.This could become a slippery slope to bankruptcy and foreclosure.You make regular, fixed payments covering both principal and interest.As with any mortgage, if the loan is not paid off, the home could be sold to satisfy the remaining debt.Before you take a home equity loan, be sure to compare terms and interest rates.When looking, “don’t focus solely on large banks, but instead consider a loan with your local credit union,” recommends real estate and relocation expert Clair Jones.The loan amount is based on the difference between the home's current market value and the homeowner's mortgage balance due. Your equity in the home serves as collateral for the lender.

The draw period (5 to 10 years) is followed by a repayment period when draws are no longer allowed (10 to 20 years).

If you are contemplating a loan that is worth more than your home, it might be time for a reality check.

Were you unable to live within your means when you owed only 100% of the equity in your home?

HELOCs typically have a variable interest rate, but some lenders may convert to a fixed rate for the repayment period.

Home equity loans provide an easy source of cash and can be valuable tools for responsible borrowers.

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