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Before contemplating filing for bankruptcy or reaching into your 401(k), getting a Home Equity Line of Credit (HELOC) or a Home Equity Loan may be a better option for you. This is an especially good option if you have significant equity in your home.
A HELOC is similar to a credit card. Your bank approves you for a predetermined amount, of which you can take the entire amount up front or make withdrawals periodically. Just like a credit card, the more you pay down, the more credit you have available to you. There interest in on a HELOC is typically lower than that of a Home Equity Loan, and may be tax deductible. However these rates can be variable, meaning they may change over time and could possibly increase.
A Home Equity Loan is similar to a HELOC, except for the fact that you get the lump sum upfront, and the interest rate is fixed. So the monthly payments stay the same for the life of the loan. Most individuals use home equity loans when they are trying to consolidate other high interest debts such as credit cards. If you have decent credit, and enough equity in your home, then either of the aforementioned products could work for you. Many banks offer these products so do the research to make sure you select the bank and loans that fits your needs.