The money you borrow on your home will,usually have a lower interest rate than credit cards. This may reduce your monthly repayments, because you are borrowing over a longer period of time. Plus you are not adding to that debt every time you run to the store.
You can use your spread sheet to test different possibilities and pick the result that works best for you. The effect of moving your debit around will be very clear and help you make an informed decision. The budget spreadsheet is a great financial planning tool.
Unless you have huge amounts of untapped equity, market conditions may make it hard to get an equity loan right now. Borrowing guidelines are much more stringent and look to stay that way for some time. If you are deeply in debt you may not be able to use this technique.
Don’t risk losing your home if you are already struggling with your mortgage. It’s not worth losing your home. In the current market to get a federally backed mortgage after foreclosure is about five years. That’s a long time to rent. If it’s cheaper overall, lowers your total payments and makes sense to you then go for it.
If it looks like you would continue to struggle even after the switch too your equity line then you should not do it. Its time to look at other options that can help you reduce your debt. Even if you can’t make big changes a lot of little changes will have the same effect over time.
Use that budget to see where you could make some cuts and save some money. You’d be surprised over a period of time how these could add up. Then take that extra savings and start applying it to pay off the balances of your most expensive cards. Your new financial attitude will make this easier.
The home is a valuable asset, and so is your mental well being. Using any tool, including your home’s equity, to ensure your home’s security and your life free from financial stress, is worth considering. The final decision is yours.
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