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Debt Consolidation: Your Home Equity is Your Resource
by Gabriel Traverso
CMR Columnist
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When does it make sense to take out a second mortgage in order to get your debt under control? For some homeowners, a home equity loan is the best answer for debt consolidation.
When Should You Access Your Home Equity?
I recently spoke with a friend of mine who has been going through some tough times. A couple of years ago his company closing the plant where he worked and he lost his job. A year ago, it happened again. As a result, my friend has been having trouble keeping up with his debt and we've talked several times about his options. However, I learned that while my friend is growing further and further behind with his debt and his troubles have continued to get worse, he has been sitting on the solution--his home equity--the entire time. Point of fact, he doesn't owe anything on his home!
Take Out a Second Mortgage
Does it make sense to sit on equity while you struggle to pay bills every month? My friend had thought that owning the home outright was the end goal, that his equity shouldn't be touched. Some financial analysts refer to this kind of thinking as a throwback to the Great Depression, but these days it makes much more sense to take out a home equity loan for the purposes of debt consolidation than it does to sit on equity.
If you have equity in your home but have been reluctant to touch it, like my friend, consider the alternative. Does it make sense to watch your life spiral out of control when you have the power to reverse your situation? The equity you have in your home is a resource you can use for debt consolidation--let it work for you.
About the Author
Gabriel Traverso is a freelance writer, professional musician, and artist. He resides with his family in Reno, NV.
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