I have about 400k in home equity I still owe 126k on the house I want to withdraw 10 to 12k to pay off all my credit cards I still owe 15k on my car. What’s my best choice here?

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grokfinance t1_iyatdei wrote on November 30, 2022 at 12:45 AM

Generally not a good idea to use secured debt (home equity loan) to pay off unsecured debt like credit cards. If you can't pay your credit cards nothing can be taken from you. If something happens and your ability to repay the home equity loan is compromised then bye bye house. Don't put your house at risk for unsecured debt.

meepmeepboop1 t1_iyaxcbr wrote on November 30, 2022 at 1:15 AM

Your general sentiment is fine, but HELOCs are secondary liens so they can't take your house anyways if you have a mortgage. The mortgage is the primary lien holder and they don't care if you pay the HECLOC, all assuming you have a HELOC not through your mortgage company.

[deleted] t1_iyatld1 wrote on November 30, 2022 at 12:46 AM

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kveggie1 t1_iyav7ek wrote on November 30, 2022 at 12:59 AM

None of the above.

I would tighten the belt and pay off the debt. Moving debt around is not a good idea.

I would assume your income can pay this off in less than one year. I would not keep the debt around as a pet.

BastidChimp t1_iyaxwjo wrote on November 30, 2022 at 1:19 AM

Try using either the Avalanche or the Snowball method to bring down your debt. There are YouTube videos that have extensive information on these two methods. Don't take out a home equity loan.

222KFT t1_iyb7l66 wrote on November 30, 2022 at 2:33 AM

I would only leverage my house if I felt otherwise secure in my finances and did not have any month-to-month issues with paying off my revolving credit card debt. So, me being a carefully observant CC user, yes I would absolutely leverage my house to pay off CC debt of that size (my home equity ~300k+). But I never carry a CC balance. So I'd ask myself, why am I carrying a $12k balance this time? Was it a highly specific, one-time purchase that is a practical purchase? E.g., if I really needed backup generator and electrical upgrades to secure my family in our home over the winter, I might invest $15k for a system. Maybe that's the transient reason for my CC debt.

tekela_1800and1 t1_iyattis wrote on November 30, 2022 at 12:48 AM

If the assumption is you will pay all your bills, then compare interest rates.

If the assumption is you won’t be able to pay bills in future, then understand that debt you could have bankrupted on will now be taking your house.

Nothing is free!

Any more info would need income, %, etc

Plenty-Entertainer71 OP t1_iyavcv6 wrote on November 30, 2022 at 1:00 AM

I make about 48k a year my credit is in the low 800s I haven’t taken a look at any offers just a thought for now