How the switch works
You take a home equity loan, a second loan secured by your home, and use the lump sum to pay off one or more personal loans. Several payments become one fixed monthly payment, and your first mortgage stays the same.
Debts can often be paid off directly at closing, so the money goes where it's meant to go. Your loan consultant can confirm how that works for your loan.
Know what you're paying now
Personal loans are usually fixed-rate installment loans with a set end date. That makes them easier to compare than credit cards, but you need the right numbers. Ask each lender for a payoff quote, not just the balance on your statement.
- Your current rate and APR
- How many payments are left
- The payoff amount and its good-through date
- Any prepayment penalty in your loan agreement
Fees you've already paid
Many personal loans charge an origination fee up front, often taken out of the money you received. That fee is gone whether you pay the loan off early or not, so don't let it hold you back from a better deal. It also means a personal loan's real cost is higher than its rate alone suggests.
On the home equity side, CapCenter home equity loans come with ZERO Closing Costs (restrictions apply), which keeps the cost of switching down.
When it can help
- Your personal loans carry higher rates than a home equity loan would.
- You're juggling several payments and want one fixed payment.
- Your monthly budget is tight and a longer term would give you breathing room.
- Your combined balances are large enough to make a home equity loan worthwhile.
When to leave them alone
- Your personal loans have low rates or only a few payments left.
- The total is small. CapCenter home equity loans start at $50,000.
- Your income is uneven, and you'd rather not put your home behind the debt.
- You expect to take out new personal loans once the old ones are gone.
Look at total cost, not just the payment
Stretching a loan with three years left into a 15- or 30-year home equity loan can shrink the payment a lot. But paying interest for many more years can add up to more in total, even at a lower rate. Ask for the total interest on both paths. If you choose a longer term, you can often pay extra each month to finish sooner, but check your terms first.
CapCenter home equity loans
CapCenter offers fixed-rate home equity loans from $50,000 to $250,000, with 15, 20 or 30-year terms, on single-family primary residences and second homes. The maximum depends on the loan type and purpose, and a loan consultant can tell you yours. You need a credit score of at least 620 for a CapCenter loan.