Value And Credit – Two Things To Consider When Using Home Equity To Refinance

One great thing about owning a home is the fact that once you get some equity built up, you can use that home to eliminate other debt that you have accumulated. Making your monthly mortgage payments and paying down what you owe on the house will give you a little breathing room when it comes to credit cards, medical debt and other expenses that you wouldn't otherwise have the money to pay for. If you are considering using a home equity loan to refinance your debts, there are a couple of things you should know.

Home Value

If it has been several years since your home was last appraised, your lender may require a new appraisal. In some cases, this service will come with an additional fee on your closing costs. Sometimes, you can get lucky and find that lenders offer the appraisal at no cost as well as void the closing fees commonly associated with mortgages and equity loans.

If you are doing research to find out what all goes into an appraisal, you may read that your home needs to be in tip-top shape and that the appraiser will take a peek in all of the cabinets, under the stairs, in the attic and other places that may not have been cleaned in quite a while. The truth is, they will walk through your home with a camera and a clipboard, take pictures and take notes just to give them an idea of what has been done to your home that could increase or decrease the value. There honestly is no reason to go all out and clean like a crazy person during the days leading up to the appraisal. Just straighten up and be prepared for a quick walk through and an exterior measuring of the home.


Some credit professionals may tell you that it is unwise to refinance your credit cards and other unsecured debt with the equity in your home. Think about it this way – if you were to continue paying your credit cards and other debts monthly, how long will it take you to pay off those high-interest debts. You can get a great rate on an equity loan that will cut your monthly debts drastically and make it possible to get out from under those high-interest debts permanently.

Paying off multiple credit cards and debs and refinancing them into a single debt will have a positive impact on your credit score. It may take a few months for your credit score to increase because it will take a bit of a hit from the large sum of new debt, but then, you won't have as many lines of credit open and things will begin to improve.

Talk with your lending professionals (such as those from Liberty Escrow Inc) to learn more about refinancing using your home equity as a source to pay off those other debts hanging over your head.