Learn How to Consolidate Your Debt and Save

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Have you ever wondered, “How can I consolidate debt and save?” You can reduce your interest rate charges by using your home equity loan to consolidate all or part of your outstanding debts. Your home equity loan can be used to consolidate debt and pay off the following accounts:

• Credit card balances
• Department store balances
• Gas card balances
• Installment loans
• Auto loans
• Any account balance that is outstanding

Home equity loans generally have a much lower interest rate than most credit cards and other unsecured loans.

You can also set the repayment terms at a fixed rate so that you can plan exactly how much to budget each month. Also, save time and hassle by writing just one monthly check.

Tailor a debt consolidation plan to fit your budget

With most home equity loans, you can set up a repayment plan that fits your budget.

If your debt consolidation balance is high, you can set a repayment plan that is longer. It will reduce your monthly payment so that you can budget for other important living expenses. If your debt consolidation balance is low, you may want a shorter repayment period.

Most home equity loans have the following repayment terms:

• Up to 5 years
• Up to 10 years
• Up to 15 years
• Up to 20 years

Compare your monthly payments among several different repayment plans and select the plan that fits your current budget.

For example*, the table below illustrates the different minimum monthly payments for the consolidated amount of $35,000 at the fixed equity loan rate of 7.50 percent:

*Please note: This is only an example, and interest rate and minimum payment may be different at the time you close your home equity application.

Consolidate Balance: $35,000

FIXED Interest Rate: 7.50%*

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Monthly Repayment Plan

5-year Repayment Plan $701.33
10-year Repayment Plan $415.46
15-year Repayment Plan $324.45
20-year Repayment Plan $281.96

You may select a longer term to start with. And, when circumstances allow, pay more than the minimum monthly payment to reduce your loan faster.

But when finances get tight, it’s nice to have a lower monthly payment to manage through tough times. That is the flexibility you need.

Consolidate those high-interest credit cards

The holiday or vacation season is ending, and guess what’s coming in the mail? Your credit card bills. Carrying a balance on your credit cards can add up to hefty interest rate charges of 12 percent or more. A debt consolidation plan can consolidate all of your outstanding credit card balances using your home equity loan. Your home equity loan carries a much lower interest rate than most credit cards and other loans. And any interest you pay may be tax deductible.

Debt consolidation lets you plan ahead with maximum flexibility.

You can have the flexibility of a credit line that lets you consolidate your account balances now and remodel your kitchen in a couple of months. You never know when you may need extra cash, and that’s why an equity line of credit is great for consolidating your debts.

With your debt consolidation Equity Line of Credit, you can consolidate your accounts now and then later, if you need to:

Add an addition to your house
• Finance a new car or truck
• Send your kids to college
• Start a new home business
• Whatever else you may need

Debt consolidation helps you save on taxes

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Debt consolidation helps you save on taxes

Formulating a debt consolidation plan using your home equity can save you money, since your home equity loan is secured by a mortgage lien on your home.

The interest you pay is considered mortgage interest and is tax-deductible for some taxpayers. See your tax advisor for more information.

How much can you save?

That depends on your income bracket and annual percentage rate, but by the time you deduct qualifying interest payments from your taxes, your effective APR will be significantly lowered. Compare this lower rate to the current interest rate you pay for credit cards, car loans, and other installment loans that do not qualify for tax deductibility, and you can see why a debt consolidation home equity loan is a smart way to consolidate loan balances, send your child to college, finance trips or home improvements, or whatever else you may need to finance.

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