Slash your monthly payments by using your home equity.
This calculator determines if you can save money by consolidating high-interest debt (like credit cards) into a lower-rate Home Equity Loan or HELOC. Enter your home value, mortgage balance, and current debts to see your potential savings.
Consolidation Analysis
Compare your current debt payments vs. a new home equity loan.
| Comparison | Current Debts | New Loan |
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How Debt Consolidation Works
Debt consolidation involves taking out a new loan to pay off multiple existing debts. By using your home equity (which is secured debt), you can often get a much lower interest rate than you pay on credit cards (unsecured debt).
Key Terms
Frequently Asked Questions
Is it smart to pay off credit cards with home equity?
It can be very smart financially because mortgage rates are typically much lower than credit card rates (often 7% vs 25%). However, you are turning unsecured debt into secured debt, meaning your home is collateral.
What is the difference between HELOC and Home Equity Loan?
A Home Equity Loan provides a lump sum with a fixed interest rate and fixed term. A HELOC is a revolving line of credit with a variable interest rate, similar to a credit card but secured by your home.
Are there closing costs?
Yes, home equity loans often have closing costs ranging from 2% to 5% of the loan amount, though some lenders offer "no closing cost" options in exchange for a slightly higher rate.
