Debt consolidating home mortgages

Refinancing your non-housing debt with a mortgage does not mean your debts have been "wiped out." You’ve restructured the debt and made it more manageable, but it still exists. Credit counselors estimate that over 80 percent of those who use home equity to clear credit card debt run their cards up again and end up in worse shape.

So don't use home equity unless you are very, very disciplined and did not acquire debt through financial mismanagement.

Consider cash-out refinancing only if you can significantly improve on the terms of your current mortgage.

That's because lenders charge extra for cash out, and that fee applies to the entire home loan, not just the cash out.

The home equity line of credit is secured by your house, but functions kind of like a huge credit card. For smaller amounts, the HELOC offers the advantage of the lowest setup cost -- even zero in many cases. However, HELOCs come with significant disadvantages. First, if the reason you're in over your head with debt is credit card abuse, getting a mortgage that's like a giant credit card is a bad idea.

Consider their current balances, minimum payments and interest rates.

Then compare a mortgage refinance against other options for debt consolidation, such as a personal loan.

Verify your new rate (Apr 8th, 2018) The Federal Reserve reports that at the end of the second quarter, homeowners accumulated real estate equity worth .9 trillion.

That’s a lot more than it used to be, in part because home values in most areas have been rising.

Leave a Reply