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While interest rates today are higher than they were in 2020 and 2021, compared to other types of debt, the long-term nature of a mortgage can be an asset to your financial health.
Overall debt in the U.S. rose 4.4% between 2022 and 2023, according to Experian, with average credit card debt alone rising 10%. Even among seniors ages 59 and older, credit card debt is up 6.4%.
That debt limit includes your mortgage, the HELOC, and any other home-related debt you have. For instance, let’s say you have a $500,000 mortgage and get a $150,000 HELOC to remodel your home.
Unlike with other debt, you can deduct from your taxable income home mortgage interest you paid on up to $750,000 of your mortgage debt (or $375,000 if married and filing separately).
More debt: While you can pay off a mortgage with a HELOC, you’d also be replacing that debt with another form of debt, and you might end up paying more interest than you would have with your ...
A key question is what to pay for the assets. For example, a bank may believe an asset, such as a mortgage-backed security with a claim on cash from the underlying mortgages, is worth 50 cents on the dollar, while it may only be able to find a buyer on the open market for 30 cents. The bank has no incentive to sell the assets at the 30 cent price.