Tapping into the equity in your home can be one of the ways to consolidate your debt. In case of taking the second mortgage or home equity credit, interest rate together with monthly payment may be much lower than they are on your current debts. In some cases, the interest will be tax-deductible, so you can free up more money to pay off your debt.

But you should remember that when you take out a home equity credit or second mortgage you to expose your home to risk.

Before you start to think that home equity credit is one of the best debt solutions for you, ask yourself simple questions listed below and answer them honestly.

  • Do I control my spending? Am I living within my income now? Do I spend less than my pay packet each month?
  • Am I good at money management? How can I guarantee that I will continue to save and spend money wisely when my financial situation will be different?

You should start exploring the possibility of tapping into your home equity to consolidate your debt only if your answer to all these questions is "yes". If you have answered "no" to one of these questions, it seems that once you have paid off your current debt, you will return to the same bad habits that have led you into present trouble. At last, the load of your rising debt will conflict with your ability to pay each month your home mortgage expenses. And of course you take into consideration that your mortgage expenses they will be higher than before because of the added second mortgage or home equity payment.

Remember that if you will neglect your responsibilities to handle a second mortgage or home equity loan, you will lose your home.

If you have made a decision to tap into your home equity, assure that you are working with reliable creditor, as at present in the marketplace operate plenty of unprincipled “home equity and second mortgage specialists”. If you plan to live in your own home for the rest of your life and already have a low interest rate locked in for 30 years, you should beware of such debt solutions as lower payments and adjustable rate mortgage promises. This may mean lower short-term payments but in a few years if interest rates will go up, it may result in considerably higher payments.

Also don’t agree to take up a loan that have prepayment penalties or balloon payments, until you understand them feel comfortable following these terms. And call Better Business Bureau to enter a good agreement that will not cost you your home.


The cultural transformations that have made people accept life in debt have had a direct impact on the approach youngsters take to money matters, which could lead to negative consequences in the long run as many of the next generation would resort to IVAs to cope with serious financial issues.

When we put efforts into our work and get paid for this, we get an amazing feeling of satisfaction. Our hard hard work seems to have been remunerated financially. We go shopping and buy the items we need and the items we simply want.