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Can I use a home equity loan to pay off debt?

Curious about Paying off debt

Can I use a home equity loan to pay off debt?

Yes, it is possible to use a home equity loan to pay off debt. A home equity loan allows a homeowner to borrow against the equity in their home, which is the difference between the home's current value and the amount owed on the mortgage.

Home equity loans typically have lower interest rates than other forms of consumer debt, such as credit cards and personal loans, because they are secured by the home. Therefore, using a home equity loan to pay off highinterest debt can be a smart financial move for some individuals.

However, it's important to note that taking out a home equity loan to pay off debt means that the homeowner is putting their home at risk. If they are unable to make the loan payments, they could face foreclosure. Additionally, using a home equity loan to pay off debt does not address the underlying issues that led to the debt, such as overspending or lack of financial planning.

Before using a home equity loan to pay off debt, it's important to carefully consider the risks and benefits and to make sure that it's the right choice for your specific financial situation. It may also be helpful to speak with a financial advisor or a credit counselor to explore other debt repayment options and to develop a comprehensive debt management plan.

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