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This method basically works the same as a standard debt consolidation loan; the only difference is you’re securing the loan with the value of your home.
Because of this, Home Equity Loans are also known as “second mortgages.” Unlike other mortgages, they cannot be used to purchase a home; they can only be taken out on a home that a person already owns. Home equity loans are secured loans, meaning that the borrower has put up a valuable piece of property to serve as collateral.
This method is best for people who have a plan and the means to pay down their debt quickly.Some loans come with introductory “teaser rates” that only apply for a certain period of time, after which they go up.You should also be sure you understand all the fees that accompany the loan.There are several different ways that debt can be consolidated, but there are a few things that all these methods have in common.All methods for consolidating debt involve combining many smaller debts into one large debt; this simplifies the number of payments a person owes.
It is expressed as a percentage of the total amount owed.