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Saving Money With A Debt Consolidation Mortgage Loan

Jan 26, 2008
Never think of your home as a dead investment. In certain cases, it could actually be your best way to get out of debt.

Some people think of a house as a dead investment, but when you truly think about it, people who own homes can at least use their homes to obtain a low interest debt consolidation mortgage loan.

For people not familiar with the concept, a debt consolidation mortgage loan helps homeowners get low interest cash loans through refinancing of existing mortgages. These loans can then be used to pay off existing debts such as high interest credit cards and other loans while making small monthly payments on their new mortgages. The savings come in the form of lower interest rates and writing off of late penalties.

If you are tangled up in debt, these loans can be very tempting. It is worth noting, however, that if you have a negative credit rating, you will pay a higher interest rate than those with high credit scores, and your monthly mortgage payments can be up to 30% higher. You should do some math, and find out if the total of all your debts is costlier monthly that a consolidated mortgage payment.

Although it can be risky, a debt consolidation mortgage loan is still a better option than filing for a personal bankruptcy, which really does nothing but destroy your credit report at best, and forfeit your house as a result of the bankruptcy proceedings.

The amount of your debt consolidation mortgage loan is determined by its market value. There are many companies out there that offer mortgage loan debt consolidation. And, as with any other debt consolidation option, it does pay to compare terms and procedures between companies.

Homeowners can get a second mortgage on an existing home equity loan. When they make this option their decision, the interest on the original loan is preset and the mortgage will be paid for a specific set number of years, between ten and thirty.

With this type of loan, you can pay your loan early without a penalty. The interest rates on these loans are also tax deductible. The catch to these loans, and it is a huge one, is that defaulting on a payment even one time can cause you to lose your home.

Homeowners can also opt for a revolving line of credit with a debt mortgage loan. This means that they can use the same credit amount for a period of time. If they go over the time period, they would have to pay a penalty. Interest rates on a revolving line of credit vary depending on market conditions.

Whether or not it is wise to take out one of these loans depends on your current amount of debt. If your debt is relatively small, it might be best to pay them using savings. Debt mortgage loans come with high interest rates and sometimes service fees as well. Taking out these loans for a small debt might mean paying more than your debt in interest and fees alone. Do the math and determine if these loans are right for you before making a decision whether or not to obtain one.
About the Author
Looking for advice on debt consolidation loans , credit card consolidation or any kind of loan consolidation? Consolidation Loans Advice is a goldmine for information on all aspects of loan consolidation. Be informed.
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