Sometimes it makes good financial sense to use the equity in your home to consolidate debt, such as credit cards, student loans or medical bills.

Depending on your financial goals, you may want to:

• Lower your total monthly debt payments
• Pay off credit cards with high interest rates
• Simplify by consolidating many small debt payments into one
• Reduce the interest rate on your high-interest debt
• Turn the interest you pay into tax-deductible* interest

There are a three ways you can access the equity in your home to consolidate your debt:

1. A "cash-out" refinance
2. A home equity loan
3. A home equity line of credit

Cash-Out Refinance

When you refinance to get cash out, you're refinancing your mortgage to a loan amount more than you currently owe and taking the difference in cash. Depending on your current interest rate, you may also be able to lower your monthly payment and get cash to pay off other debt at the same time.

Home Equity Loan

A home equity loan is another personal loan on your home that taps into your equity. Commonly referred to as a "second mortgage," a home equity loan allows you to turn your equity into cash without refinancing your first mortgage, and it usually takes less time than it would to refinance your first mortgage.

Home Equity Line of Credit

A home equity line of credit is very similar to a credit card except that it uses your home's equity as the revolving line of credit. You pay only if and when you use the money. You can get a home equity line of credit in as little as 10 days.

When you use the equity in your home to consolidate debt, consider cutting up your credit cards and keeping one for emergencies only. And if you increase your monthly cash flow by consolidating debt, think about using the extra money you now have to save or invest for retirement or to pay down your other debt faster.

* Please consult your tax adviser.