Fixed housing costs are putting the squeeze on South Florida homeowners. Property taxes for some Palm Beach County homeowners have tripled. Insurance rates can be double the premium you paid just a few years ago. Costs that used to be $1,600 a year are now sometimes $3,000 to $10,000.
This pressure is causing some homeowners to resort to using credit cards to pay their insurance premiums and tax bills. If you get hit with a $6,000 bill and don't have the cash in savings to pay for it, what else could you do? If you didn't plan on having those higher expenses, it could cause some serious cutbacks on personal spending. Even if you escrow the tax and insurance, which spreads out the payments over a year, it will still take a chunk out of your household income. You'll have to cut back on something. If not, you may find your credit card balance creeping up on you. And as so often it happens, it may creep unnoticed until it becomes a serious problem.
Fortunately there may be a better way. Look into refinancing your home before you increase credit card debt. The interest rates on many cards are much higher than home loan products. You can use the equity you have built up over the last few years to your advantage. Because you can write off home loan interest, their may be tax advantages to refinancing as well.
A Home Equity Line of Credit, or Home Equity Loan, may even help you get out of debt altogether, by consolidating higher interest debts like school loans, cars and credit cards.