Consolidating home and auto loans

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You can get a home equity loan or home equity line of credit (HELOC) to consolidate your debts and pay off the credit cards.The interest rate is tax deductible and will be so much lower than credit cards, you’ll probably be able to buy a new Spanish tile roof.Instead of a one-time loan, you have a certain amount of money available to borrow, and you dip into it as you see fit.That gives you more flexibility than a lump-sum loan and offers an immediate source of revenue if an emergency hits.Don’t confuse a home equity loan for a home equity line of credit. With a home equity loan, you receive a lump sum and then repay it on a monthly basis.Using the example above, you might borrow ,000 and make monthly payments that include a fixed-interest rate, for an agreed amount of time.

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Now, he gets to make a slightly higher interest rate on the second mortgage and he still has the same house as collateral.If you get a home equity loan, you pretty much know how much you’ll be paying each month and for how long.A HELOC’s flexibility means those things fluctuate.They also aren’t likely to rent it to anyone who’d turn it into a meth house or indoor chicken hatchery.Such collateral gives lenders flexibility when evaluating borrowers, but they still rely heavily on credit scores when setting the loan’s interest rate.

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