I just read a post by a mortgage lender who was advocating using your home's equity to pay off credit card debt, i.e., refinancing.

It is my opinion that this is one of the most grave financial mistakes that anyone can make.  I've sat in front of hundreds of people (I used to be in the mortgage business) who refinanced their homes to pay off credit card debt, and one year later they were back in credit card debt, and all of their equity was gone.

As real estate agents, we are now seeing the financial repercussions from people who refinanced their homes to pay off consumer debt and then trying to sell their homes at a high price just to break even.

Dave Ramsey www.daveramsey.com gives some of the best advice regarding paying off credit card debt.  Most of the time he will recommend you selling your home and paying off your debt.

 

6 Comments on Using your home's equity to pay off credit cards.

JUL
05
2007
276,752 Points 11 Featured Posts Outside Blog Attended Rain Camp

True... A lot of people will run the cards right back up to the limit. They use their home as an atm machine.

I cannot give much credence to dave ramsey.... who charges people a monthly fee to access his site about managing debt. LOL
8:19am • #1

Tom- I just wrote a blog about the same thing. I too read that blog and felt that it wasn't a great idea.

Search: Credit- The Truth

 
8:27am • #2
3 Featured Posts

Tom, I have to admit that I'm not a Dave Ramsey fan, I just like what he says about credit card debt.

That son of a gun is getting rich...filthy rich.  I wonder if his site takes credit cards? LOL
10:13am • #3

It does stink that Dave Ramsey does charge a monthly fee . . . but 

Dave Ramsey doesnt take credit cards.

 You can "get" Ramsey's books for "free" at your local library.  Sometimes audio CDs and DVDs are available.

 Finally, I think that Ramsey only says to sell your house if the payments are greater than 50% of your take home pay.  Basically, if your home is preventing you from being debt free.
Eel
10:20pm • #4
JUL
06
2007
190,810 Points 7 Featured Posts Outside Blog

Todd,

Thanks for the post. The real mistake is when an uniformed individual takes the "professionals" advice and makes an unwise decision. By the way thanks for stopping by my blog post on homes.com. The general consensus is that they are not worth the investment of money or time currently.

 
5:48pm • #5
3 Featured Posts

William,

I certainly don't need to put out any additional money on something that's not worthwhile, so thank you for helping us to take a look at Homes.com.
10:46pm • #6


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Todd Murphy

Tuscaloosa, AL

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