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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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