|
by
Hien T. Do
Owning your own home is "The American Dream." For many, owning
your own credit cards is also part of that American Dream.
And
if you are like many people, you might use those cards without
discretion. Before you know it you count every dollar to keep
up with your credit payments; your creditors can (and often do)
report you to a credit bureau. The credit bureau keeps you in
their computer for up to seven years. When you need credit again,
you can't get it. Instead, you have to figure out how to get out
of the debt you owe.
Your
"Piece of the American Dream" may be the answer.
A
home equity loan can be as low as 6.75% or as high as 18% (these
change frequently), depending on the amount you borrow, the length
of time (usually 5, 10, or 15 years) you take to pay it off, and
the type of equity loan. The longer you take to pay it off, the
higher the interest rate.
Also,
equity "Line-of-Credit" has a higher interest rate.
The advantages of taking an equity loan include paying off credit
accounts that usually have a percentage rate above 18% and a much
lower monthly payment. Some home equity loans may also qualify
for interest deduction on your income tax return.
Some
disadvantages are: you must pay some closing costs such as fees
for appraisal on your home, title insurance, and filing; your
equity loan may not qualify or may be limited for deduction on
your taxes.
The
best thing to do is talk to your credit union or bank and get
all the facts and current interest rates.
You
may be able to live your American Dream without the burden of
credit card debt.
|
