Home Equity Line of Credit Calculator

Do you currently carry high interest revolving credit on credit cards, cars & other personal loans? You may be able to leverage a home equity line of credit (HELOC) to lower your monthly debt payments.

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Closing Costs : ($)
Federal Income Tax Rate : (%)
  Amount ($) Payment ($) Interest (%)
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Should I Use a HELOC to Lower My Debt Payments?

A Home Equity Line of Credit, or HELOC, is a loan made on the amount you have acquired in home equity. Though you are still paying off your home, you can borrow on the value of your home that you have already paid off. If you have been living in your home for only a few years, you may have very little equity or even no equity. However, if you have been living in your house for a decade or more, you could have tens of thousands of dollars available to borrow.

A HELOC can come in handy if you want to add on to your home, remodel, or pay off other debts, such as credit cards, car loans or medical bills. However, you should carefully consider your options before making this choice to take out an additional line of credit. Understanding the advantages and disadvantages can help you to make the choice.

Benefits of a HELOC for Consolidating Debts

There are many benefits to taking out a home-equity loan. Primarily, a HELOC can help you to lower your debt payments by lowering your interest rate. For example, on November 26, 2013, the national average interest rate for a 30-year fixed loan was 4.34 percent, while the average credit card rate was 15.36 percent. Though lines of credit may have a variable interest rate or may have a shorter term (anywhere from 5 to 15 years), the rate is still likely to be significantly lower than that of your credit cards. Depending on the amount of your debt, you could save several thousand dollars in interest charges in the first year alone.

By lowering your interest rate, you may be able to pay off your debt more quickly. Making the minimum payment on your credit cards can take you years to pay off your debts. By consolidating your debt with a HELOC, you can make one monthly payment with a lower interest rate, allowing you to both pay less each month and to pay off your debt more quickly.

In the past interest paid on home equity loans and HELOCs was tax deductible, but the 2018 tax bill no longer allows the deductiblility of equity debt unless it was taken on to build or substantially improve the homeowner's dwelling. Interest due on first mortgage debt still remains tax deductible.



There are a few disadvantages of taking out a HELOC, mostly dependent on your own spending habits. For example, when you pay off your credit cards, you clear up a significant line of credit. No longer are your cards maxed out, and no longer do you have to be careful about using them. This may tempt you to spend more freely, which could lead to the accumulation of more credit card debt. Before you know it, you could max out your cards again, and then you would have the same credit cad debt you did before in addition to your monthly HELOC payment.

When you consolidate your debt, you also move them from unsecured to secured status. If you defaulted on your credit card payments, the only recourse your creditors had was to report it to the credit bureaus. If you default on your HELOC, your creditor can foreclose on your home.

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By default 15-yr fixed-rate refinance loans are displayed in the table below. Filters enable you to change the loan amount, duration, or loan type.


Making the Decision

Ultimately, whether a HELOC is the best idea for you depends entirely on your current financial situation and how much debt you have. The above calculator can help you make the decision by comparing the expenses you will pay with a HELOC with those you will pay on your other debts. For example, the calculator takes into account interest rate and loan term, as well as the closing costs and your estimated tax savings. It then compares that to all of the debts you plan to consolidate, including the amount you owe on your auto loan, credit cards and other accounts, your monthly payment and your interest rates. The calculator provides an easy monthly payment comparison to help you determine how much money you can save.