Consolidating debt on your mortgage
With mortgage rates still near historic lows, consolidating credit card debt in a refinance can substantially lower monthly expenses. With their savings dwindling and credit card debt mounting, they looked to their most valuable assets: their center-city Philadelphia home and a second house they were renting out. Three years after Ray left an executive position, he found himself earning a fraction of his former income, while his self-employed wife, Jo Ann, struggled to make up the difference in a faltering economy.If you have a load of unsecured debt, such as high credit card balances, your top priority should be to reduce it as much as possible, as soon as you can.The longer you have the debt, the more unnecessary interest you pay.Refinancing your house to consolidate your debt by paying off your credit card and other bills might sound appealing, but beware of the risks.You might trade several payments at high interest rates for one payment at lower interest, but that might not be your best choice.
Consolidating credit card debts in a new purchase mortgage may lower total payments, but in most cases it will make the purchaser poorer. "I have ,000 in cash for a down payment on the 0,000 house I am purchasing."We were property-rich and income-poor," says Jo Ann.The couple had refinanced six years before, but when mortgage rates dropped to historic lows in May, they saw an opportunity to eliminate their credit card debt by refinancing their home and rolling ,000 of credit card debt into the loan.If you’re a homeowner, one way you may be able to reduce your balances — or at least the rates you’re paying on them — is to utilize the equity in your home.
You can do this by refinancing your existing mortgage, cash-out refinancing or taking out a home equity loan.
I also have ,000 of credit card debt at 12% that I would love to get rid of.