This topic contains 4 replies, has 1 voice, and was last updated by Anonymous 7 years, 7 months ago.
- May 3, 2011 at 1:24 am #423357
Yes, so long as there is sufficient equity in the property to do so. If you can, it can be a good move.
- May 3, 2011 at 1:41 am #423358
actually depends on the type of mortgage you have. You can refinance your mortgage and increase the liability and then use the extra funds to payoff all other debts. I normaly see people use a HELOC ( home equity line of credit) to consolidate debts as it is revolving. you don’t have to refinance in the future if you want to buy additional things for the home or if you run up the credit cards again in 5 years form now. the one drawback is that HELOC’s tend to have slightly higher interest rates and only the variable rate lines of credit are revolving. still it is more useful over the long term than a mortgage since it will remain viable for reuse for as long as you want to keep it, even after your first mortgage is paid off.
- May 3, 2011 at 2:01 am #423359
it is not always a good idea to consolidate all of your bills into a mortgage payment. Reason being god forbid you get into financial trouble and you default on this payment too many times, foreclosure will result. If everything is separate, you can pick and choose what to not pay. They cant take your home for defaulting on a credit card or a car loan, but when its all combined theres no cushion. just food for thought. If all the debts you want to finance into the new home exceed 65% of the homes asking price, dont do it. It will affect your interest rate, and you may actually end up paying more than just paying the loans separate.
- May 3, 2011 at 2:37 am #423360
It is possible and a great idea. There are a couple of reason for this to be done.
#1 You pay off all your credit card and car loans consolidatng them into one loan. The car becomes your free and clear.
#2 The interest rate you get on your home consolidation loan will be lower by a long shot than you are paying on your credit cards
#3 The interest rate on your home consilidation loan is tax deductable, where as credit card and car loans are not.
Get yourself a piece of paper. You should gather all your credit card debts as well as any car loans you want to pay off. Write the balance as well as the monthly payments on this piece of paper in 2 different columns. Now add these two columns up. Put your mortgage on this same piece of paper beneath the total of the two columns with the balance owed as well as the monthly payments. This will give you your total monthly out put on your credit cards, car loans and your mortgage payments.
The total under your balance is the loan amount you want to attempt to get.
Collect the following items to take or fax to a mortgage broker. You will need each for each person on the morgage note now.
#1 One month of your pay stubs.
#2 Six months of bank statements for each bank you bank both checking and savings. You will also need any statements from your 401-K program where you work
#3 Two years of w-2 and federal income tax
Contact a mortgage broker, tell him you want a debt consolidaion loan and you will use your house as collateral. He will want to take a loan application, it will take awhile, be patient. Give him the figures you have added up. You will need to find a way to get the documents you have gathered to him either by fax,mail or taking them to him.
He will need to run a credit check on you to get your credit score as well as see how you pay your current mortgage and other consumer debts.
This credit report will give him this information as well as your credit scores. With this information he is now able to tell you the loan programs you are qualified for as well as the interest rate.
He might need additonal information as well as documentation but shortly after applying he will have loan approval and will order your loan docs for you to sign. You will have a three day right of resession days after which your loan will close.
Your old mortgage would be paid off, the escrow closing agent will issue checks to the creditors you have indicated you want to pay off and give them to you. Make sure they are mailed and you get a statement with a zero balance.
A Home Equity Line of Credit (HELOC) is not recommended. They cost more than your closed end loans and the interest rate is higher.
Please see your tax advisor for any tax information you might need.
Now that we have gone over the fact that you can do this and it does make sense to do this, what do we do now?
I have on done lots of these consolidation loans. Normally within
12-24 months the people are right back where they were from the beginning.
They start out with a debt reduction, the loan they got normally saved them more than $ 400.00-$ 500.00 per month. They kept rght on spending as if the loan had never occured.
Suggestion: Once the loan has closed and you know the exact amount you are gonna save each month, you should take 2/3rd of the saved amount and have it go directly from your check into a savings account of some type of into an investment instrument.
If you work at a place where you are encouraged to save and your employer put in 50% for each amount you save you might add to that and get some free money.
Select the credit card that has the lowest interest rate and keep two or three of them for use. Put the others in a save place or return them to sender.
What I am attempting to tell you is don’t allow yourself to get back into the same rut you just got out of. If you do, you have wasted the cost of the loan as well as drove up your monthly out put again.
I hope this has been of some use to you, good luck
- May 4, 2011 at 8:13 pm #202173
I started this journey in March, with no revolving accounts and a couple of baddies. I disputed one baddie which was reporting incorrectly and I got a couple of credit cards to show good utilization. I’m a sucker for a visual aid, so my jaw dropped when I saw the score watch graph!
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