Consolidating debt home equity line

"By simply doing that, you will be able to reduce expenses and pay off your debt." Her advice: "Create a spending plan to determine the total amount you owe and your total monthly income to see where you can reduce expenses," Freeman suggests.

And a home equity loan can be relatively fast compared to a full-blown mortgage loan. Many costs, especially origination fees, often aren't disclosed until well into the application process.

"If you make a late payment, your interest rate may increase.

This is only a temporary solution because you could easily get into debt again." She insists that home equity loans should only be used for covering costs of large purchases such as roof repairs or an unexpected emergency.

Freeman says taking out a home equity loan should be a last resort.

"Don't get one if you already have bad credit, if you can't afford to make your current mortgage payment or if you are not sure that you can make the home equity loan payments," Freeman says.

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