Debt
Consolidation
Pros and Cons of Paying of Debt
with a Mortgage
If you fall behind on your mortgage,
contact your lender immediately to avoid foreclosure. Most lenders are
willing to work with you if they believe you're acting in good faith
and the situation is temporary..
With the new, tougher bankruptcy laws
in effect, people are looking for alternate bill consolidation, loan
consolidation and credit card consolidation solutions.
Mortgage consolidation loans are
one of the most popular ways for homeowners to consolidate their debts
by means of mortgage refinancing (replacing an existing first
mortgage with a new one), taking out a home equity loan (second
mortgage) or taking out a home equity line of credit (HELOC).
But, be careful to consider these pros and cons before signing on the
dotted line.
If you and your lender cannot work out
a plan, contact a housing counseling agency. |
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MORTGAGE LOAN
CONSOLIDATION PROS
- Interest paid to a mortgage may be
used as a tax write-off, but, according to Bankrate.com, it could be
limited in some situations.
- You have one payment to make versus
many payments. This makes managing your finances easier because you'll
know just how much you need to pay each month, and there's only one
creditor to deal with versus many.
- The interest rates for home equity
loan (second mortgage) and refinanced first mortgages are lower than
most credit card interest rates.
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Reputable credit counseling
organizations can advise you on managing your money and debts, help
you develop a budget, and offer free educational materials and
workshops.
MORTGAGE LOAN
CONSOLIDATION CONS
- It generally takes longer to pay off
a Mortgage consolidation loan and it's more expensive
long-term. Even though interest rates on a debt consolidation loan are
lower, you're paying it for 10 to 30 years.
- You could end up in more debt than
you already are. Chris Viale, general manager of Cambridge Credit
Corp., a nonprofit credit counseling agency based in Agawam,
Mass, says, "70 percent of Americans who take out a home equity
loan or other type of loan to pay off credit cards end up with the
same (if not higher) debt load within two years."
- If you can't keep up with the
payments, the lender can
foreclose and take your home because your home secures the loan.
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Maria Ny is an experienced free-lance
writer. She writes articles covering a broad range of subjects ranging from
Bankruptcy Reform, Credit Repair to mortgage refinancing. Check out her
informative articles online at
Nationwide Home
Equity Loans.
To learn more and get accurate rates quotes
2nd mortgages and home equity loans from loan professionals online please
visit the loan resource center at
Second Mortgages or check out
Debt Consolidation Loans.
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