I hope someone has some insight. Since my friends know I am credit obssessed LOL, they have asked my advice about HELOC. I really don't know too much about them so I hope someone here has some thoughts Thye have been in there home for about a year and a half and have accumulated some credit card debt, they can make the payments easily, but just got a few offers for them to borrow up to 100% of their home value, with rates as low as prime or prime + .05. They wanted to get about 25K and pay off their debts and CUT up the cards ( my idea) and save some money on interest, plus I "think" that is tax deductible. But I am not sure how it all works, and putting up your house for collateral scares that heck out of them. I would appreicate a run down on them. Thanks
I'm getting the impression they don't have a mortgage, if so yes they can get a debt consolidation loan easily and yes it's tax deductible.
Tell them to do this ONLY if they intend to pay off the second mortgage before getting into any more credit card debt. Otherwise, they will have a second mortgage and high credit card balances, with nowhere to turn. Also, by rolling credit cards into a second mortgage, they are essentially paying for that $60 romantic dinner or 1 week vacation for 15 or 30 years. Only do this in an emergency.
Thanks, yes that is why I thought I would ask, getting a second mortgage was always a no no when I grew up, my parents said whatever you do don't do that............
