I Have $30,000 in Credit Card Debt and $69,000 Left on My Mortgage. Is a Home Equity Loan a Mistake?

I Have $30,000 in Credit Card Debt and $69,000 Left on My Mortgage. Is a Home Equity Loan a Mistake?

AJ Fabino

Wed, January 21, 2026 at 4:31 PM EST

5 min read

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Quick Summary

Using home equity to pay off credit cards can feel like progress, especially when someone has $30,000 in high-interest debt, a 715 credit score, and more than $100,000 in estimated equity.
For homeowners, a product like a Rocket Mortgage Home Equity Loan can fit. According to company data, Rocket clients who consolidate debt using home equity save an average of $535 per month. It offers a fixed interest rate and a separate payment that does not disturb an existing mortgage, with lump-sum payouts starting at $45,000.
To determine whether consolidating debt actually improves long-term outcomes, some homeowners run side-by-side scenarios with a financial advisor. Platforms like SmartAsset can match you with an advisor who models different paths, and you can get matched with an advisor for free.

The numbers initially look manageable. A homeowner with about $69,000 remaining on their mortgage, a property worth at least $175,000, and a 715 credit score is considering a home equity loan to deal with roughly $30,000 in credit card debt.

Their idea was to replace high-interest credit cards with lower-cost debt, free up monthly cash flow, and make some home improvements before selling the house later this year.

On paper, it sounds like progress. However, the question isn't whether a home equity loan can work. It's whether using home equity to solve unsecured debt actually improves the situation, or makes it riskier.

Turning short-term debt into long-term risk

Credit card debt is expensive, but it's also contained. Miss a payment and your credit score suffers, but your home isn't directly on the line.

Home equity loans change that equation.

In this case, the homeowner estimates they could borrow $50,000, enough to wipe out the credit cards and fund renovations. With a property value around $175,000 and a mortgage balance of $69,000, there appears to be enough equity to qualify, assuming typical loan-to-value limits.

The appeal is obvious as credit cards charging north of 20% interest can feel impossible to outrun. Even aggressive payments often go mostly toward interest, not principal. Replacing that with a fixed-rate loan tied to the house can lower monthly payments and create breathing room.

That's the upside. The downside is that this move converts unsecured, flexible debt into secured, inflexible debt. If something goes wrong (job loss, medical issue, delayed home sale) the consequences are more severe.

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That's why this decision depends less on the interest rate and more on what happens next.

When a home equity loan can make sense

There are scenarios where using home equity to consolidate debt is rational.

If spending habits are already under control, income is stable, and the plan is clearly defined, a home equity loan can reduce interest costs without reopening the door to new debt. In this case, the homeowner says they've frozen their cards, stopped adding balances, and are focused on getting ahead rather than treading water.

That matters. Another factor is structure. Unlike a cash-out refinance, a home equity loan allows borrowers to keep their existing mortgage and interest rate intact. That's especially important for homeowners who locked in low rates in prior years and don't want to reset their entire loan.

This is where a product like a Rocket Mortgage Home Equity Loan can fit. According to company data, Rocket Mortgage clients who consolidate debt using home equity save an average of $535 per month. It offers a fixed interest rate and a separate payment that does not disturb an existing mortgage, with lump-sum payouts starting at $45,000.

Importantly, this type of structure avoids refinancing the entire home just to deal with revolving debt.

The risk most people underestimate

The biggest mistake with home equity borrowing isn't the loan itself. It's what happens after.

Using equity to pay off credit cards only works if the cards stay paid off. Otherwise, homeowners end up with both the home equity loan and new card balances, effectively doubling the debt.

Timing also matters. This homeowner hopes to sell sometime this year, which means any home equity loan taken today must either be paid down aggressively or comfortably absorbed at sale without eroding proceeds. Renovations funded by the loan need to meaningfully improve resale value, not just comfort.

If the loan stretches out spending without increasing equity, the math deteriorates quickly.

That's why this move should be modeled, not guessed. Many homeowners focus on whether they qualify for a home equity loan, not whether it improves their long-term position.

This is where working with a fiduciary advisor can make the difference. Platforms like SmartAsset match users with financial advisors who can model multiple paths without pushing a specific product. That kind of side-by-side analysis helps separate temporary relief from real progress, and you can be matched with an advisor for free.

A home equity loan isn't inherently a mistake. But it's not a shortcut, either.

In cases like this, it can be a tool (one that lowers interest costs and stabilizes cash flow) if it's paired with disciplined spending, realistic renovation expectations, and a clear exit plan before selling.

For homeowners considering this path, the right move is not rushing into a loan, nor dismissing the idea outright. It's running the numbers carefully, understanding what's being risked, and choosing the structure that solves the problem without creating a bigger one later.

Image: Shutterstock

This article I Have $30,000 in Credit Card Debt and $69,000 Left on My Mortgage. Is a Home Equity Loan a Mistake? originally appeared on Benzinga.com

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