Should homeowners tap equity to pay off costly debt? Weigh these pros and cons

Using home equity to pay off high-rate debt can be a sound financial strategy, but only under the right conditions. Sakchai Vongsasiripat/Getty Images Credit card debt has become increasingly difficult to manage over the last few years, and it's causing major issues for borrowers in today's economic landscape. Not only are credit card interest rates still elevated, but inflation is climbing again . In turn, millions of borrowers — including those who were previously staying on top of their balances — are starting to feel the strain that those larger monthly payments are putting on their tighter budgets. That financial pressure can escalate quickly, particularly for borrowers who are juggling multiple forms of high-rate debt. At the same time, many homeowners are sitting on record amounts of home equity after years of strong home price growth. While the housing market has cooled compared to its pandemic-era peak, property values in many markets are still well above where they were just a few years ago. That has left the average homeowner with plenty of equity to pay off their high-rate revolving debt via a lower-cost home equity loan or home equity line of credit (HELOC). The strategy can offer meaningful benefits in the right situations, especially for borrowers dealing with costly credit card debt . But because your home becomes part of the equation, there are also important risks to consider before doing so. …