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ghrigsby

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Advise on a home equity line of credit to pay off a car loan & credit card.
The total would be approx. 14,000 and would reduce my monthly payments by $300 which is much needed.

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This can potentially be a wise move, since Heloc rates are generally much lower than auto or credit card rates. I actually specialize in Helocs with the bank I work for, and see this type of utilization all the time. The other advantage of a Heloc is that as you start to pay it down, you will open up available credit to use for something else if needed (just like with a credit card).

The things to keep in mind are, most banks will loan up to a maximum of 80% loan-to-value (LTV), though some will go higher or lower. This means that if your home is worth $100,000 and you currently owe $60,000 on the mortgage, they will only give you a Heloc up to a max of $20,000 (because 100,000 value x 0.80 = 80,000 max - 60,000 mortgage = 20,000 Heloc). Also, many will only loan you up to a maximum of 40% or 45% debt-to-income (DTI). This means that if you make $10,000 per month, and you owe $3,000 in monthly debt 9like mortgage, credit cards, auto loans, etc), they will only give you a loan that, if maxed out, has a monthly payment of $1,000 (assuming a max DTI of 40%).

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Your home will outlast your car although your car is a "secured" loan which means the loan holder could recoup some of the loan by selling the car, if it came to that. 

The credit card is an "unsecured" credit line.  It is not wise to potentially risk your home to pay off a credit card, and this has happened more than most people know.

Please read the Articles (see left side of this page) for information on these topics so you can learn what are wise credit moves and what are not.  That is what this site was designed for...helping people to learn how to build their credit score through wise use of credit.

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