By consolidating, you'll have just one payment instead of many. Then you can chip away at what you owe even faster with a lower interest rate. You can do this with two options: a home equity loan or a home equity line of credit. They both use your home as collateral.
A home equity loan has a fixed interest rate. It makes budgeting easy with a fixed interest rate, loan term and predictable monthly payments.
A home equity line of credit gives you flexibility—it's there when you need it. As you make payments, that amount of the credit line becomes available again. You'll have a variable interest rate, but it's likely to be lower than the interest rate on a credit card.
Home equity pros
- Make one monthly payment instead of many
- Save money with lower interest rates
Home equity cons
- Your home ownership may be at risk if you're unable to repay the debt
- You may have to pay closing costs if you pay off your home equity line of credit within 36 months
The bottom line
Compare your options and make the best choice based on fees, closing costs and interest. Finally, be clear that you are borrowing against your home in order to simplify your debt payments.
Ready to take the next step?
Does Debt Consolidation Make Sense for You?
Debt consolidation can improve your finances in two big ways.
Getting Out of Debt
The road to a debt-free future begins with a solid plan.
What Do I Need to Apply for a Home Equity Line of Credit?
Applying for a home equity line of credit (HELOC) is a bit like applying for a mortgage, minus a couple of steps.
The information provided is not intended to be legal, tax, or financial advice. BB&T hopes you find this information useful but we cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided to assist you in estimating the approximate costs associated with any bank activity. Your actual costs may vary. You should consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.
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