Save More With Debt Consolidation Mortgage Loan
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 those who are not so familiar with it, a debt
consolidation mortgage loan allows homeowners to obtain low-interest
cash loan by refinancing an existing mortgage. A homeowner can then
pay off his or her high interest credit card debt and at the same
time pay the mortgage once a month. The savings comes from the lower
interest rates as well as the writing off of late penalties.
If you are caught in a web of debt, it might be
very tempting to take out a debt consolidation mortgage loan. Keep
in mind though, that if you have a bad credit history (which has
been duly noted by the credit bureaux), you will have to pay a higher
interest rate and can cause your monthly mortgage payments to balloon
by as much as 30%. You can only benefit from a debt consolidation
mortgage loan if the total of all your debts (credit cards, arrears
in utility bills, etc.) is still much higher than the mortgage loan.
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 have a second mortgage on their
home equity loan. When they opt for this, the interest rate on the
original loan is pre-defined, and they will pay their mortgage for
a fixed number of years, from ten to thirty years.
Under this type of mortgage consolidation, you
can prepay your loan without getting slapped a penalty. The interest
rate on this type of loan is also tax-deductible. However, if you
default on a payment even just once, you could 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.
Just when should you take out a debt mortgage
loan? It all depends on your current total amount of debt actually.
If you only have a small amount of debt, then fast tracking your
payments through your savings might be the best option for you.
Debt mortgage loan companies do charge hefty interest rates on their
loans and also charge fees for their services. You might actually
end up paying more for the interest and the fees when you take out
a debt mortgage loan.