Debt Consolidation Mortgage Loan
Debt consolidation mortgage loan is available but you have to choose the loans that fits you best first. Some companies will make it easy for you to do this despite the type of credit situation you are in. You will have to be ready with the amount of the current loan and the goal you want to achieve.
With a mortgage refinance loan, you may be able to secure a lower interest rate that could reduce the monthly payment. You may also be able to obtain cash out of your home equity but be careful with this as this will of course make your loan higher with a longer time frame to pay for it. Remember that it is good to build your equity faster instead of applying for a higher loan.
A very common way that people reduce some of their high interest cards is to do a credit transfer. If you do a transfer it enables you to get a reduced interest rate on your cards for a certain period. You might be able to get a significant reduction in your interest rate for up to a year. This can help you save money on your interest payments every month.
When you refinance your home loan at a point in time where interest rates are lower than they were at the time you took out your original mortgage, then you immediately shave off a few thousands dollars off your total mortgage debt. You’re essentially switching from your high interest mortgage to a new low interest mortgage. This causes the immediate decrease in your debt.
Different Types of Debt Consolidation Mortgage Loans
If choosing to consolidate debts, homeowners usually obtain a lump sum of money. The funds can be used to payoff credit card balances, personal loans, auto loans, etc. Once credit account balances are zero, homeowners simply submit one monthly payment to repay the debt consolidation loan.
Because debt consolidation mortgage loans have very low interest rates, most homeowners are able to repay the loan within a few years. Typical repayment periods consist of five to fifteen years. Moreover, the monthly payments are very affordable. You can expect to save hundreds each month.
So you see the homeowner can obtain a debt consolidation mortgage loan. In this case, remember that the home is used as a security so commitment to the repayment plan is a must as there is the risk of losing the house if there is a default. The house remains the lien that the lender holds until the full amount is paid.
Make sure that what is saved is put away for emergency. And emergency means just that. It will cover situations that could spell life or death. So take a look at the credit cards and put them away. Do not cancel them as doing that, some say, may impact the credit rating.
Refinancing Mortgage Loan Debt Consolidation
Many people have heard of refinancing their mortgage loan and also getting debt consolidation in the process. By refinancing your home when interest rates are low, you are essentially taking out a new home mortgage loan to pay off your old loan. The whole idea here is that your new loan will have a lower interest rate so that you instantly shave off thousands and thousands of dollars from your mortgage debt. It may sound too good to be true, but the good news is… it’s actually true! Interest rates won’t keep dropping lower and lower forever, so choose your refinance moment wisely.
Debt consolidation loans pose a risk to your home
A credit card company can’t take your home away from you for missed payments, but when you put your home up for collateral to receive a debt consolidation loan, falling off your payment schedule could mean the loss of your home.
There are many good reasons to apply for a debt consolidation mortgage loan. By consolidating your debt into one loan, you only have to deal with one statement and payment a month, and most likely you will lower the amount of money you are paying out each month. Chances are a debt consolidation loan will help you financially, but it is wise to consider all of the risks before you begin the consolidation process.