Question : Should I use my home equity line of credit to pay off my car loan and part of my student loan?
By using the HELOC, it's going to free up several hundred dollars per month, and I can claim it as a tax deduction at the end of the year. On the other side, I'm eating up a sizable amount of home equity by doing so. I'm planning to pay them off either way--I can do it now with the HELOC, or after I sell my house, with the cashed in equity. Which route should I go? Does it make a difference?
- asked by djbod2006
All Answers:
Answer #1
Generally speaking, debt is debt, so whether it'sdebt on your HELOC or a student loan or cardoesn't matter. Using your HELOC is usally abetter deal because the rates are lower and as youmentioned, you can deduct the interest. The onlything I would caution is if the property values inyour area are going down, you may not want toextend your HELOC too much and end up with eitherno equity or oweing more than the house is worth.
- answered by Anemone
Answer #2
Do it only if the interest rate is lower by doingso. If not, why pay out more money than you haveto?Good luck and have a great day!
- answered by purple_amanecer
Answer #3
Don't you think it's really a bad time to sellyour house now. The house prices have come down somuch. I suggest you to go for Home equity loan. We have compiled very good home equity loan offersat,
http://www.SlashYourRate.comCompare multiplelenders and offers instantly. I hope my suggestionhelped you.
- answered by Tarun Reddy
Answer #4
If you do not have to use your equity better. Also, that is what equity is for. Also, when youpay off on the car loan will be less than becausethe interest rate will be decrease or negotiagewith them because you are paying off the loan onthe car. School loan because you are paying offearly it will not cost as much over a long termdepending on what type of loan.
- answered by dmvariety
Answer #5
If the interest on your home equity line of creditis less than that of your car loan and studentloan, I'd say GO FOR IT. You'll save money on theinterest.But if not, don't go for it, because thenyou won't save any money and it'll look veryobvious that you're simply shuffling debt around. Plus, it'll lower your credit score because thehome equity credit will be a new account. Part ofyour credit score is determined by "length ofcredit history," which includes the average(mean)age of each open account. A new loan has an ageof 0 mos., which will lower your average accountage, and likewise lower your credit score!Ifyou're concerned about rising student loan rates,you can always consolidate your student loans. This will lock your loans into the current rate(orslightly lower). It only takes minutes to do, andas long as you haven't had any student loandefaults, you will be automatically eligible forthis.
- answered by Beetle Becca
Answer #6
The drawback to doing this is that you loose thedeferment option that is enrolled into studentloans. For example, should you come upon hardtimes, you can defer payment of your student loansuntil a later date. If you roll that debt into ahome equity loan, I doubt that you'll retain thedeferment option, should you ever need it. Haveyou checked into student loan consolidation? Ifyou have multiple student loans to pay, this wouldhelp reduce the amount of checks you need towrite, resulting in a lower monthly payment andstill give you the deferment safety net.
- answered by Wee Bit Naughty
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