Nope: Use equity to pay off credit cards
Paying off car loans, credit cards or other personal debt is another popular use of a home equity loan, HELOC or cash-out refinance.
But the ease with which new debts can be incurred suggests this tactic might not always be wise.
"It may make sense when you run the numbers," Moore says. "But that doesn't cure the problem of credit card debt. We want to make sure we're taking care of what got you into debt in the first place."
Moore points out that credit card debt is unsecured while a home loan is secured by your home, which explains why the interest rate is so much lower than a typical credit card rate.
"Freeing up unsecured debt for secured debt is typically a bad idea until it's absolutely necessary," Moore says.
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