Many Americans have accrued a lot of debt, from credit cards, student loans, or other means.
Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. Consolidating debt can help you pay off unfavorable loans, reduce the amount of interest you owe, or reduce many loans into a single monthly payment.
Home Equity Loans for Debt Consolidation
Equity is the difference between what your property is worth and what you owe on it. If your home is currently worth $200,000, for example, and your mortgage balance is $100,000, then you have $100,000 of equity.
You may be able to use this equity to pay off higher interest debt. The interest on home equity loans is typically lower than credit card rates, and can be tax deductible. This can be very efficient way to pay off debt, if managed properly.