How to Pay Down Principal on a Home Equity Loan

Pay down home equity loans to decrease the amount of interest you pay monthly and to reduce and eliminate debt. Home equity lines of credit are loans that allow you to borrow against the equity you have in your house. Many of these loans do not require a principal payment. Pay off home equity loans to relieve financial burdens and use the money for savings, college or paying off debts.

Difficulty: Moderate

Instructions

1. Pay off a credit card, car loan or other debt. Apply the excess money that you now have to your home equity loan.

2. Dissolve smaller debts first. Use the money from those debts, and apply it to your home equity loan. Continue to knock out debts and apply the extra money to the loan.

3. Review your budgets. Prioritize wants and needs. Eliminate items that you can live without like cable TV, XM radio or another fun extra. Apply the money from the items you eliminate to your home equity loan.

4. Refinance your home mortgage when interests rates are low. Combine your home equity loan into your mortgage payment.

5. Design a budget. Withdraw cash to use for as many expenses as possible. Immediately pay a principal payment to your home equity loan each month so that you are not tempted to withdraw more cash.

6. Meet with your financial institution or a credit counselor. Set out your financial concerns and goals. Discuss ways to rearrange your budget so that you have money to pay off the loan.