Consolidating car loan into home loan

Deciding what to do about an auto loan can involve numerous calculations and some close judgment calls, but that’s rarely the case when it comes to using cash-out refinances to consolidate other types of consumer debt, especially credit card debt.

The average credit card today carries an interest rate ranging from 10-20%, plus cash-advance fees and “penalty rates” for late-payers or people with lower credit.

But cash-out refinancing also has one major downfall: By binding your unsecured debts to your home, you’ve compromised your home’s equity and have a higher risk of going “underwater” — having a house that is worth less than you owe the bank.

Similarly, if you fall behind on your new mortgage, you can face foreclosure.

The money you save can be used to pay off other debt, such as credit cards, or set aside for an emergency.

The difference is that a HELOC is a line of revolving credit with an adjustable interest rate, instead of a fixed-rate, lump-sum loan.You can do this by refinancing your existing mortgage, cash-out refinancing or taking out a home equity loan.With mortgage interest rates at an all-time low, one option to help free up cash is to refinance your existing mortgage at a lower rate, reducing your monthly obligations.An additional strategy used to help reduce debt is to apply for a home equity loan, also known as a second mortgage.If you have equity in your property, you can use it as collateral to secure another fixed-rate loan and pay off other debts.

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