My friend is looking into getting an home equity loan and paying off the majority of her debt. The mortgage company stated they will send the checks directly to her creditors. Now will this look bad to her creditors?? Or will they just see this as a normal check to pay off her balances?? Will they require her to close these accounts?? I have gone through all her bills and helped her cut up her cards and after most are paid, she is going to close some and just keep a few, but we are wondering if a "consolidation loan" will raise flags with her creditors??? Thanks
I don't know if a consolidation loan will send any flags up or not. But, I would be careful of changing unsecured debt to secured debt. With the credit cards paid off, your friend will have to watch her spending habits very closely. The open cards can easily be ran up again. Then you have a secured loan and credit card debt! You can layout spreadsheet style the costing differences of the loan (fees, interest rate, terms, minimum monthly payment) and credit cards (fees, interest rates, minimum monthly payments) and see which one is truly better for your friends monthly cash flow. I would still keep in mind that you are trading non-secured debt for secured debt and if spending habits do not change you have the possibility of losing your house. I personally have a HELOC that is in place for emergencies. It is for $20,000 on a house with cash equity of $100,000. Good Luck, Michelle
I wouldn't do this Especially before getting the HE loan. This could tank her scores and cause the HE loan to come with a jacked rate or be denied.
Re: Re: equity consolidation loan I ment that is how much equity including CASH that we have in our house as of a year ago. Michelle
Re: Re: Re: equity consolidation loan There is no cash equity in a home. *Can you or anyone else tell me how equity in a home and cash value in a whole life insurance policy are alike???
