With the new year well under way, many people make all sorts of resolutions, including setting personal finance goals. One of the most popular personal finance goals, especially after the holiday season, is getting out of debt. But many people turn to the home equity loan when it comes to debt consolidation. Is this really a good choice?

Securing your unsecured debt

One of the questions you have to ask yourself is this: Do I want to secure my unsecured debt? A home equity loan for debt consolidation takes your credit card debt (and other consumer debt), which is secured by nothing, and backs it up with your home.

This means that if you stop paying on your debt, you could lose your house. If you keep it separate, as long as you make your home mortgage payments, your consumer creditors can’t come after your house. It may seem like a good deal at first, with the tax advantages and the lower interest rate, but if you aren’t careful, it may home equity debt consolidation may come back to haunt you.