If you are a homeowner in DC, then a Washington DC debt consolidation may be easier to obtain than you might think. Using the equity value of your home to secure either a home equity loan or home equity line of credit is a simple way to bring all of your debt together in the most comfortable and familiar place of all - your home.
If you have equity in your home it simply means that your home has more value than what is currently owed on the mortgage. Say for example you purchased your DC home just outside the beltway 15 years ago for $200,000 and have been faithfully paying on it all this time. Now your home is worth $350,000, but you only owe $125,000 on the home. In this case you are said to have $225,000 worth of equity in your home. A home equity loan or home equity line of credit allows you to use your home's equity in order to secure a new loan or line of credit which can then be used to pay off many other debts if you wish.
Often people don't fully understand what the difference is between a home equity loan and a home equity line of credit. The primary difference between them is the method by which the equity payments are disbursed. If you take out a home equity loan, you will receive a flat amount that you decide, up to a maximum amount offered to you by your bank or credit union. This loan is your to spend how you see fit and usually has a fixed interest rate for repayment. A home equity line of credit, on the other hand, is not a flat loan, but it acts much like a credit card - a revolving loan that you can take money out of, repay, and then take out again. Home equity lines of credit often have adjustable rates for repayment and may have other conditions or restrictions governing their use such as a minimum amount that must be charged at any one time or a maximum period where you are not allowed to make any charges (such as one year). If you go too long without charging anything to a home equity line of credit, it will probably be closed to you. Home equity lines of credit are also often offered for a specific term of time, such as 10 years, after which, the bank will have the option of renewing the line if they wish, modifying the term, or simply closing the credit line down.
If you are interested in a Washington DC debt consolidation in order to pay off your debt, a home equity loan is probably the best way to go for most situations, though your debt consultant may recommend a different path. If you have found yourself struggling with debt in the past, the one-time use of a home equity loan, taken out as just enough to pay off your other debts, may be the safest route to avoid getting into further trouble. In addition, the fixed rate repayment terms of a home equity loan are more favorable for managing debt.