A home equity loan is also called as a second mortgage.HELOC stands for a home equity line of credit and works like a credit card. A home equity loan will have lower rates than a debt consolidation program.Many people use the money from a home equity loan to pay off credit card debt.A cash out refinance is similar in a way to a home equity loan.However, these loans will require good credit history, usually at least a 660 FICO score or higher is required.But this is one of the cheaper debt relief options because it’s a low-interest loan. A debt consolidation loan may be a great option for you.
You should know all of your options before doing anything.
However, instead of having two mortgage payments with two lenders. A lender will refinance your primary mortgage plus give you up to 80% of the value of your home in cash.
One of the great benefits of a cash out refinance is that the credit requirements are lower than home equity loans.
If you have low average to bad credit (below 660 credit score) you may still qualify for a debt consolidation loan but the interest rate will be high.
Rates can be as high as 30% in some cases defeating the purpose of a debt consolidation loan.
There are other ways to get out of debt besides through a debt consolidation loan.