Should homeowners tap equity to pay off costly debt? Weigh these pros and cons
Homeowners are considering using their home equity to pay off high-rate debt, particularly credit card debt. While this strategy can lead to lower interest rates and simplified repayment processes, it also carries significant risks, including the potential loss of one's home. It's essential for borrowers to weigh the pros and cons carefully before making such a financial decision.
- ▪Credit card debt has become increasingly difficult to manage due to high interest rates and inflation.
- ▪Homeowners have record amounts of home equity, which can be used to pay off high-rate debt through home equity loans or HELOCs.
- ▪Using home equity to consolidate debt can lower overall interest payments but puts the home at risk if payments are missed.
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Sponsored MoneyWatch: Managing Your Money Should homeowners tap equity to pay off costly debt? Weigh these pros and cons We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Angelica Leicht Angelica Leicht Senior Editor, Managing Your Money Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
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