Lenders won’t give you an equity loan or an equity line of credit unless you meet underwriting standards.
Even if you have enough equity in your house to cover what you want to borrow, lenders don’t want to have to foreclose to get their money back.
If you owe ,000 on your credit cards and your combined interest rate averages 20%, you would owe ,000 a year in interest on the balance, assuming it didn’t change.
Usually, you will also have to pay some principal each month.
Using a home equity loan for credit card debt works for some people but could lead to disaster, especially for those with trouble managing consumer debt.
A home equity loan, on the other hand, is usually a lump-sum loan and is often called a second mortgage.Lenders will not only want to know how much equity you have in the home and your ability to repay the loan, they want to know what you plan to do with the money.Home equity loans have traditionally been used to add to the value of the house, paying for such things as kitchen remodeling or a new roof.For that reason, they consider other factors, including your income, credit score, other debts, investments, loan-to-value ratio and debt-to-income ratio.A loan-to-value ratio is the amount you owe on your home compared to its value.