A home equity loan can provide practical debt relief by consolidating your high interest credit cards and other debts into one lower payment, which could save you hundreds of dollars each month. Compare the payment for the new loan to your existing debt payments to see if it makes sense. Also consider the break-even period by dividing the monthly savings into the total closing costs.

The interest portion of a home equity loan may be tax deductible up to $100,000 loan amount, or up to 100% of value. The tax savings can be substantial compared to non-deductible debts.

A home equity loan is a fully amortized, simple interest, fixed rate second mortgage, which does not change in the terms, or the payment of your existing first mortgage. You will end up paying less on a simple interest loan when compared to credit cards with daily compounded interest. It is estimated that over a long term, you could pay up to three times more on credit cards with compound interest, than you would on a fixed rate, simple interest home equity loan.

You have the option of using all or part of your new loan for debt consolidation, or you can also choose to use part of your loan to make home improvements, or receive cash for personal use.