Even if you still have equity or your HELOC credit line has not been reduced or closed you probably shouldn't do this right now. You could be putting your home in serious risk.
One good thing with using your HELOC to pay off your credit card debt is the interest
now becomes tax deductible. But I still don't like the equity in your home being used for liabilities rather than creating assets. Like buying a rental property or starting a business. But with the economy just starting to turn around I wouldn't mess with using my home as collateral at the moment.
There is a chance you may lose your job the way the economy has been struggling. So what if you can't keep up with your HELOC payments along with all your debts? Your unemployment checks probably are not going to cut it. If you fall behind on your HELOC payments you could lose your house.
I love that you want to pay off your credit card debt but, I want you to understand that credit card debt is unsecured debt. Your HELOC is secured debt. The credit card company has no collateral to force you to hand over to settle your credit card debt. It is not a good idea to transfer your unsecured credit card debt to secured debt. Using your HELOC to pay off credit card debt only puts your home at risk if you can't make the payments.
1 comment:
They call credit card debt unsecured debt but--they CAN sue you for the equity in your home to pay some or all of the cc debt you owe them. So it isn't really unsecured debt after all.
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