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DOYLE
if the rate on your HE is lower, then by all means do it
SCOTT
In one way it makes sense to roll over your credit card balances into the home equity line. Your interest rate will be lower and you could save money that way.
However, most people who do this end up racking up the credit card debt again in short order. If you do the same, you will have all the credit card debt plus less home equity.
Only $100,000 in home equity debt is tax-deductible, and from what I understand from your question you will be over that amount.
And, you are getting awfully close to having more than an 80% LTV ratio (amount of debt compared to house’s value). This is way too close for comfort, especially during a time of declining home values.
What if you had to sell your house in the near future? You might not be able to sell it for what you owe. Is it worth losing your home to pay off some credit cards?
My advice is for you to change your spending habits and start to pay down all that credit card debt. It could save your home!
STEVE
Home equity debt is better than credit card debt. But be careful. Your house is at stake. You don’t discuss your income, but your debt is high.
SCOTTIE
A home equity loan is a loan that uses the difference in the present value of your home and the unpaid mortgage on your house. There are also various mortgage companies that will lend slightly more than your equity in your home. They can take the risk since the value of many homes goes up over a period of time. If you have a high interest credit card debt, you can think about opting for a home equity loan for credit card debt consolidation.