Paying Off Debt Consolidation Home Equity Loans Quicker
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Is there any way to pay of debt consolidation home equity loans faster?
When people use their home equity for debt consolidation purposes, that debt often sticks around until the house is sold. Sure, it was great to consolidate back then, but when you get the check from the sale of the house, it will be much lower because you never bothered to pay down that consolidation loan. If you want to avoid this situation, here are a few tips to paying off debt consolidation home equity loans faster.
- Pay Extra – Most debt consolidation home equity loans are ‘interest only' payments. This means that your minimum payment each month will go exclusively towards your interest. This will never get you out of debt. If you want to pay towards your principle, you will want to make extra payments, or just pay extra beyond your regular minimum. Every penny above your minimum payment will go towards your principle, so they can really add up.
- Emergencies Only – The problem with debt consolidation home equity loans is that people tend to go a little crazy once they have access to that kind of money. I have known people who have bought boats and cars with it. Its great to consolidate, but then you just build up more debt with the leftover funds. If you borrowed more than you needed for your debt consolidation, do yourself a favor and tear up the checks that they sent you for the loan. Use these funds ONLY for debt consolidation and then forget you even have the line.
- Mind Your Rate – If you have a variable rate debt consolidation home equity loan, be sure you do not pay more and more towards rising interest rates. Nothing is harder than paying off a loan that forever grows in interest. If you see that your rates are spinning out of control, look to refinance your debt consolidation home equity loans into a fixed rate loan instead.