What are the pros and cons of HELOCs (Home Equity Lines of Credit) with regards to debt consolidation?
Answer HELOCs make sense if the rate at which you can borrow is equal to or better than the debts you are paying off. I say “equal to” because if you are paying off credit cards, you will be turning your interest expense into something you may be able to itemize on your tax return to help offset the interest expense, therefore reducing the overall expense of the debt by having it in a HELOC. Keep in mind that in Texas you cannot borrow more than 80% of the value of your home after the initial purchase. You can, however, borrow up to 100% on second homes and investment properties.
