13 Sep

Using a Home Equity Line of Credit to Pay Off Debt

Attention: Please read this article until the end. 

Pay off debts with HELOC Rocky Mountain Law Enforcement Federal Credit UnionA Home Equity Line of Credit, or HELOC as we will refer to it, is an amount of credit that we extend to a homeowner based on their credit history and the value of their home. A HELOC differs from a mortgage in that you will only pay interest on the money you draw from your line of credit. For example, if you accept a HELOC of $10,000 and never draw from it, you will not have to pay any interest. If you choose to take $5,000 from your HELOC, that you will pay back $5,000 with interest.

Wait, wait, wait. I know what you you’re thinking. Whoever, is writing this article must be taking advantage of the recent legalization of a certain green substance in Colorado. How can you pay off debt, by taking on more debt? Great catch.

The advantages of getting a HELOC is that by using your home as collateral, you will receive a considerably lower interest rate than with the credit card where your debt is now. At the time of this writing we are offering a HELOC with amazingly low rates based on the prime rate plus 0 points (based on current Loan to Value (LTV) and your credit history.) At 3.25% (as of 9/12/14) that is insanely low! What is the interest rate on your credit card? 20%? 25%? 30%? More?! Even our Visa Platinum Select without rewards credit card is 6.75% which is still double the rate of a HELOC.

By using a HELOC to pay off debts with higher interest rates, you can save a lot of money in interest, and pay off your debts faster. To make things even more convenient, we offer the HELOC on a Visa card so you have access to it on the go. No waiting for a check and no waiting for approval.

IMPORTANT! DO NOT STOP READING.

The dangers of using a HELOC to pay off debts.

A Home Equity Line of Credit is an extremely powerful privilege. And like any powerful privilege such as yielding the Excalibur,captaining the Starship Enterprise, or having the power to read minds, a HELOC requires great self-control and responsibility. The danger of using a HELOC to pay off debt is that a HELOC, by definition, is a line of credit. This adds to your total amount of available credit, thus creating the opportunity to go further into debt. Unlike a credit card which is an unsecured loan (the reason credit card interest rates are so high are because they are unsecured) a HELOC is backed by the value of your home. This means that defaulting on payments on your HELOC may result in foreclosure! See more details regarding a RMLEFCU HELOC on our website.

The best way to learn whether a HELOC is right for you is to talk with one of our banking specialists. As a member of the Rocky Mountain Law Enforcement Federal Credit Union, you are entitled to honest advice and quality customer service. If a HELOC is not the best way for you to pay off debts, we may have something else to help you. For example, a credit card balance transfer. Click here to learn more.

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