If you are trying to improve your financial situation and want to eliminate all the debts you have, turning to a home equity loan can be one of the best options available. To get a home equity loan, you will need to have equity in your house, and this is the first step to analyze before you apply. If you can qualify for a home equity loan and use the money to pay off the debts you owe, you may benefit in the following three ways.
Using a home equity loan to pay off debt is one way to consolidate your bills. If you currently have 5 or 10 different debts you are paying on each month, consolidating them allows you to have only one debt to pay. Writing one check per month instead of 5 or 10 is nice for so many reasons, and this is one of the reasons people look for ways to consolidate debt.
A second benefit a home equity loan may offer to you is a lower interest rate, and this is especially true if your debts are credit card bills with high interest rates. The interest rates on home equity loans are typically lower than the rates you would find on most credit cards. A lower interest rate not only results in a lower monthly payment, but it also helps you pay less in interest over the lifetime of the debts.
You Can Write Off The Interest
One of the main benefits this option would offer to you is the ability to write off the interest you pay on your taxes. Any interest or fees paid to credit card companies are not tax-deductible. You can never write these off on your taxes; however, you can usually write off the interest you pay for a home equity loan.
The benefit of this is that it will help lower your taxable income, and lower taxable income results in paying fewer taxes to the IRS. There are some restrictions with this though, and you may want to talk to a tax professional before you assume you will have the ability to write off all the interest you can pay.
Taking control over your finances may help you improve your financial situation, and you might be able to benefit from a home equity loan. To learn more, contact a lender that offers home equity loans today.