X

Think you know a bit about mortgages? Why not take our 10-question mortgage quiz and test your knowledge?

Think you know a bit about mortgages? Why not take our 10-question mortgage quiz and test your knowledge?

How best to consolidate credit card debt?

Keith Gumbinger

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 (HELOC). The most competitive offers are available at the Prime Rate, which would likely lower her monthly cash-flow requirement considerably.

While her income and debt load will determine how much equity she can borrow, you can reckon how much equity she has in her home using HSH's KnowEquitysm home equity calculator.

Depending upon her age, she might also consider a Home Equity Conversion Mortgage (HECM). These reverse mortgages can allow her to extract 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.

Ask the expert
Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
Please enter a question.
Please enter name.
Please enter email.
Captcha code invalid
Q: How best to consolidate credit card debt?
SEP 24, 2024
A:

A lower-cost alternative might be to obtain a home equity line of credit or even an HECM.

Read More
Q: The index which governs my ARM disappeared. What happens now?
SEP 09, 2024
A:

When an index disappears, it will be replaced with another indicator.

Read More
Q: How should I pay my mortgage closing costs?
SEP 04, 2024
A:

Generally, there are three ways to approach the issue. Each option has different effects on your mortgage cost over time.

Read More
Add to Homescreen?
X
X
Install this web app on your phone :tap and then Add to homescreen