I know this sounds hypocritical coming from a debt-elimination specialist, and if you're not committed to your debt-elimination plan, it could be a bad decision.  However, if you are committed to your debt-elimination plan, under the right circumstances and with the right mortgage program and the right plan, you can actually be out of debt sooner than your current plan calls for.

Almost every mortgage lender out there boast that they offer debt-elimination, but the truth is they only offer debt-consolidation.  Debt-consolidation is only part of the process, it doesn't eliminate it.  I consider debt-consolidation to be a tool.  As with every job, you should always use the correct tool for the correct job.  Most lenders are only interested in closing the deal, not in your financial goals.  In fact most believe that debt-consolidation is the end result of your plan.  I believe the mortgage program that provides the consolidation is the tool that enables the accelerator for your debt-elimination plan.  There are 1000's of mortgage programs available and each program (tool) does a different job.  As a true debt-elimination specialist, my job is to find the correct tool (mortgage program) for the client's specific debt-elimination needs. Just keep in mind as we discuss this topic, that debt-consolidation isn't for everyone.  DFS can evaluate your situation to determine the best methods to assist in your debt-elimination plan.

How can your Home Equity assist you to eliminate your debt quicker than normal?

1. Using the equity in your home, you could consolidate your existing debt, which lowers your monthly payments in two ways; first by lowering the overall interest rate & secondly, by spreading the payments out over a 30 years period. (Keep in mind, I'm not suggesting you take 30 years to pay this debt or even your mortgage off, we are talking for the average person, having all of your debt paid off in 7 - 10 years.) Then, if you use the saved monthly payments as extra monthly payments towards your mortgage principal, you will pay your debt and mortgage off much sooner than if you kept it unconsolidated.

2. I often have clients that desire to accelerate their debt, but also want to put money away for emergencies simultaneously.  But this is not possible for most people, because of limited monthly disposable income.  So how do you accelerate your debt using extra money each month, but also have money to handle emergencies that may arise?  A home equity line of credit or HELOC, may be the answer. With a HELOC you only make payments on the amount that you use, so if you never use the money, you don't make any payments. So by having a HELOC available, one could feel comfortable about using their monthly available money as an accelerator, knowing that the HELOC is available if an emergency should arise. 

There are as many scenarios for using your equity to accelerate debt as there are personal financial situations, therefore don't trust just any lender to help you to determine the correct program to use or whether this is even the right plan for your situation.  Again, most lenders are only interested in closing the deal and so if you ask them to help you determine if this is the right thing to do... the answer with always be yes.

Debt Freedom Strategies™ is committed to assisting our clients in the best financial plan for their specific situation! For a FREE evaluation contact us at 1-888-893-6394 or email at service@debtstrategies.com.