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See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

How best to consolidate credit card debt?

Q: My mother-in-law needs around 25,000 to take care of credit card debt. She owns her nine year old home outright (worth about $170,000). She is on fixed income (around $2,200/month), with $1,000 to $3,000 a month from natural gas royalties. What is her best option to pay off the credit cards, using her home as collateral?

A: A lower-cost alternative might be to obtain a home equity line of credit. The most competitive offers are available at the Prime Rate (currently 3.25%), which would lower her monthly requirement considerably. Depending upon her age, she might also consider a Home Equity Conversion Mortgage (HECM), where she can obtain the money from her home and not need to make any payments on that debt (it is paid off when the home changes hands). She would need to be 62 years old or older, attend a few counseling sessions to make certain she understands the loan product. These do have some drawbacks, including fairly high fees, but don't represent any commitment against income.

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Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
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AUG 18, 2022
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Mortgage rates fluctuate from day to day, depending on a number of factors related to the economy and to choices made by investors. While some mortgage money comes from deposits held by banks and credit unions, most of the funds for borrowers come from investors in capital markets.

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Mortgage rates are influenced by a variety of factors, rather than moving in lockstep with any one economic indicator. The stock market rises and falls for a wide variety of reasons, including global, economic and political issues, but as a broad rule of thumb, a rising stock market indicates optimism among investors about the economy.

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For the most part, this is a discussion about time. You should compare the total costs of the difference in the two interest rates over your given time horizon.

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