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A home equity loan uses your house as collateral to obtain a loan that can be used to pay off your high interest debts. By using your house to guarantee the loan a person can obtain a lower interest rate then what they would normally pay on unsecured debt like credit cards. The difference in the interest rates can add up to hundreds of dollars a month. The downside to using a home as collateral is that if a default occurs; the loan holder can foreclose on the house. Home equity loans make carrying debt more affordable but it is important to remember that they do not actually reduce the total amount of money a person.
Try our our calculators to see how much money someone can save by
using a home equity loan to pay off credit cards.
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