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If you have “bad debt” such as unpaid credit card balances, car loans, or other types of consumer debt, you may be looking for a way to pay them off as quickly as possible. If you own a home, you may be able to eliminate this debt sooner than you think by utilizing a home loan in various ways.

Let’s dive in to see how you can take advantage of your personal property with different home loan strategies.

Refinance Your Home Loan

Depending on when you acquired your mortgage, it might be beneficial to refinance. Interest rates are low, so refinancing may get you a lower monthly payment. A lower payment will allow you to have some cash flow to pay off other debt, and will save you big money in the long run!

Take Out a New Loan

It might sound counter-intuitive, but it can be helpful to take out a larger home loan. Called a cash-out refinance, you can use that second loan to pay off your existing mortgage. You can then strategically target your other debt with the amount of money that you have leftover. You will need a decent amount of equity in the property for a cash-out refinance to work well. 

Utilize a Home Equity Loan

A home equity loan is another option but also requires that you have equity in your property. If you can utilize a home equity loan, they are a great way to pay off debt. Home equity loans are secured and offer lower interest rates than many other types of debt. 

There you have it, three ways that home loans can help you eliminate your debt. Take advantage of these ideas and you’ll be out of debt in no time!

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