Sometimes it makes good financial sense to use the equity in your home to consolidate debt. Depending on your financial goals, it may be just the thing to do if you want to:

• Lower your total monthly payment amount
• Make your debt tax deductible*
• Pay off your credit cards
• Consolidate many small payments into one
• Reduce the interest rate on your high-interest debt

There are a several ways to access the equity in your home to consolidate debt:

• A cash-out refinance
• A home equity Loan
• A home equity line of credit

When you refinance to get cash out, you're essentially refinancing to a loan amount more than you currently owe and taking the difference in cash. Depending on your current interest rate, you may actually be able to lower your payment and pay off other debt with the cash. It's possible to lower your overall monthly payments with a cash-out refinance.

A home equity loan is a second loan to tap into your equity. Commonly referred to as a "second mortgage," a home equity loan allows you to get cash for your equity without refinancing your first mortgage and usually in less time.

A home equity line of credit is very similar to a credit card except that it uses your equity as the revolving line of credit. You pay only if and when you use the money. You can get a home equity line of credit in as little as ten days.

When you use the equity in your home to consolidate debt, you do not reduce the amount or your debt. Instead, you lower the interest rate you pay. It's important to not run up your credit card debt again. It may be a good idea to close your credit card accounts and keep one for emergencies only. If you increase your monthly cash flow by consolidating, think about saving, investing or paying down your debt faster.