We have about 1200 in cc debt, 10000 in personal debt, 10000 in car debt and we'd like to fix up our house needing about 10k. Should we wait on the house or should we consolidate the debt and improve the value of our home? We also want to have another baby which would add to our expenses...
2007-08-04 05:53:11 · 5 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Sounds like a HELOC could be a viable option.
The advantages?
Pay only on the amount you use
Payment flexibility (only billed interest so you can pay extra toward principal in months when you have extra cash)
Can be tax deductible (speak to tax specialist for more info)
Disadvantages?
Interest rate is variable and rates are going up
If you are not fiscally responsible, you can accumulate a large debt.
Need to weigh the options and decide what is best for you.
Other options? Refinance mortgage, negotiate with cc companies to lower rate (threaten to xfer to another card)
2007-08-04 09:12:46 · answer #1 · answered by Matt 7 · 0⤊ 0⤋
Everyone who owns a house and has the equity should have a HELOC unless they are planning on moving in the next couple of years. The bank pays the costs to set it up, and it's great for an emergency. There are also different options for fixing rates, and all that. It sounds like in your situation a HELOC may be a good idea. Not only is the interest tax deductible, it may lower your overall payments which would be a good idea if you are having a baby. This being said, I would highly emphasize the point that you should not use it like ATM to get yourself more into debt. Another option may be something like a cash-out refinance. That maybe something to look at.
2007-08-04 07:51:41 · answer #2 · answered by trkguru213 2 · 0⤊ 1⤋
You should wait on the house until you pay off the other debt. I personally don't recommend a HELOC for any reason, but won't tell you not to use one for home improvement. I WILL tell you not to put your house on the line for UNSECURED debt. Both credit cards and the 'personal debt' are unsecured.
2007-08-04 08:00:41 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
Many people lost their houses because they think their home equity is ATM. If the money you take out make more money you should, if not think another way :
like work 2 jobs, save as much as you can.
I know that will be hard but just for tempory. When you pay off your debt by earning and saving you will quit 1 job and have another baby. It's better than take out your home equity and lost it.
Good luck
2007-08-04 06:39:58 · answer #4 · answered by Huynh T 2 · 2⤊ 0⤋
It sounds like you need a long term fix...Weigh your options of refinancing the whole mortgage. Seconds and HELOCS can be very high with the interest rate.
HELOCS are good because you only pay interest on what you borrow.
But like I said before, it sounds like you need a lot of money. Can be very costly either way.
2007-08-04 05:59:13 · answer #5 · answered by C D 4 · 0⤊ 1⤋