Turning Equity into Cash and Savings

The equity in your home is similar to a savings account you can access through a home equity loan or a cash-out refinance. This normally happens when you want to finance an important home improvement, pay off high-interest credit card debt or even pay for college. Whatever reason, this could be a good opportunity for you.

Consolidate Your High-Interest Credit Card Debt

Financially speaking, the difference between credit card debt and a mortgage could mean thousands of dollars. Why?  Unlike your mortgage, the interest you pay on a credit card is not tax-deductible so you end up paying a higher rate than you would on your mortgage. As a result, credit card debt is often referred to as “bad debt” while your mortgage is considered “good debt.” Using your home equity to pay off your high-interest credit card debt will save you money in the long run. Using your home equity, rather than your credit cards, to finance expensive purchases is also a smart move. Again, make sure to consult your tax advisor before making any quick decisions.

The decision when to refinance your mortgage will depend on the circumstances of your situation. How long you’ll be in the home, what your financial goals are, whether interest rates are dropping, etc. The decision is up to you!