Should I Refinance My Mortgage to Use My Home Equity To Pay Off Credit Card Debt?

As a financial advisor, some of the best advice I can give my clients is to pay off high interest loans first in an effort to avoid paying unnecessarily high amounts of interests. This means that you will ultimately be paying less money in interest and more toward your outstanding balance, and paying off your balance means eliminating your debt. Thus, in my professional opinion, one of the best options for individuals to eliminate unwanted debt is to use their home equity to pay off high-interest credit card debt.The logic behind my advice is that I would prefer my clients pay 6-10% in interest as opposed to 18-30%. The difference in interest paid corresponds to money that can be paid toward the outstanding balance. (Additionally, a number of individuals take advantage of the available funds to negotiate their accounts with credit card companies, which could result in paying 40-60% of the outstanding balance.)Mathematically, my advice works out very well, but unfortunately, in the real world things do not function so smoothly. The problem that most individuals find after refinancing their home is that they have zero balances on their credit cards, and instead of maintaining those balances, they proceed to run up their credit card bills once again. Only this time, they have no more equity in their house to bail them out of financial trouble, and if things continue in that direction, they are at more of a risk of losing their home. Therefore, the refinance represents a temporary pause on the road to bankruptcy. The moral of this story is that refinancing your home will help you pay off high-interest credit card balances, but it will not help you acquire good spending habits. Discipline and moderation are the only way to achieve that.In conclusion, if you are considering refinancing to help relieve financial burden, I would definitely recommend it if it will help you save money. Just make sure that it is a step to financial freedom, not a path to more debt.