Debt Consolidation Calculator

You borrow against the equity in your home and use the funds to pay off other balances in full — credit cards, personal loans, an existing HELOC, medical debt, and similar obligations. Instead of several separate high-interest payments, you're left with one loan payment — typically at a much lower interest rate, since the new loan is secured by your home. The trade-off is that debt is now tied to your house instead of just your credit.

Home equity loan: A lump sum with a fixed rate and a fixed monthly payment for the full term — predictable, and behaves like a second mortgage.

HELOC (Home Equity Line of Credit): A revolving credit line, usually with a variable rate. During the "draw period" you often only owe interest on what you've borrowed; once the draw period ends, you enter a "repayment period" where the balance is amortized and your payment typically jumps significantly. Good for flexibility, but the payment shock at the end of the draw period catches many borrowers off guard.

Most lenders will let you borrow up to a combined 80%–90% of your home's value (your existing mortgage plus the new loan). For example, on a $450,000 home with an 85% max and a $280,000 mortgage balance, you'd have roughly $102,500 in available equity ($450,000 × 85% − $280,000). If your total debt exceeds your available equity, you may only be able to consolidate part of it.

The biggest risk is that you're converting unsecured debt into debt secured by your home. A credit card company or personal loan lender can't take your house if you stop paying — a HELOC or home equity lender can foreclose. It's also common for people to pay off revolving balances like credit cards and then run them back up again, ending up with both the new loan payment and new card debt. Consolidation only works if it's paired with a real change in spending habits.

Generally, no. Under current federal tax law, HELOC and home equity loan interest is only deductible when the funds are used to buy, build, or substantially improve the home securing the loan. Using the funds to pay off credit cards, personal loans, or other debt does not qualify for the deduction. Consult a tax professional about your specific situation.

It can go either way. Paying off revolving card balances typically lowers your credit utilization, which often helps your score. Opening a new loan involves a hard credit inquiry and a new account, which can cause a small, temporary dip. Most people see their score recover and often improve within a few months, as long as the paid-off cards aren't run back up.

A HELOC or home equity loan sits behind your existing mortgage as a second lien and leaves your current mortgage rate untouched — often the better choice if you already have a low first-mortgage rate. A cash-out refinance replaces your entire first mortgage with a new, larger one and rolls the debt payoff into that single loan — it can make sense if your current mortgage rate is high or you want to simplify to one payment. Robert can help you compare both side by side.