How to Merge an Equity Line With a Secured Credit Line

Merging home equity and secured credit lines can streamline monthly payments.

A home equity line of credit is secured by the equity in a home. For example, if you owe $150,000 on a home and the property value is $200,000 ,you have $50,000 of equity. A secured credit line is secured by a personal asset, such as a vehicle or other item of value. Consolidating a balance on a secured line of credit with your home equity balance will streamline monthly payments. But before getting started, make sure your home has enough equity to consolidate debts.

Instructions

1. Tally up the total debt amount. For example, if your secured line of credit balance is $5,000 and your home equity line balance is $5,000,the total is $10,000.

2. Review your home equity line of credit limit. This is usually available on the first page of your home equity line of credit statement. You can also contact the lender directly to get the information. If the total debt exceeds the limit, you will need to request a higher line of credit.

3. Request a line of credit increase. Tell your lender about your plan to consolidate secured debt and that you need the increase to accommodate the consolidation. The lender might require a home appraisal to ensure you have enough equity in the home to secure the balance increase. There is a fee for appraisals.

4. Sign loan documents. After approving your request, the lender will set up a date to sign loan documents. Review the home equity interest rate and terms before signing documents. Funds are usually available within three days, depending on the lender.

5. Pay off the secured credit line. Ask the lender to issue you home equity line of credit checks so you can use one to pay off the secured credit line. If you prefer, some lenders will issue a check on their end if you provide the appropriate payee account number and mailing address.

Tips & Warnings

• Leave your secured credit line open with a zero balance. This will boost your credit score, according to MSN Money.

• Continue making payments on the secured credit line until confirming the lender has received its payment. This will preserve your credit.

References

• Federal Reserve: Home Equity Lines of Credit
• MSN Money: Anatomy of a Credit Score