Debt Consolidation Mortgage Loans - Using Home Loans To Reduce Debt
By: Carrie Reeder
Excessive debts cause a lot of worry and anxiety. Many people hope to become debt free. However, earning enough
money to care for daily living expenses, while paying down credit card balances is challenging. There are options
available to those burdened with debt. Owning a home has certain advantages. Debt consolidation mortgage loans
are easy to qualify for, and provide enough funds to payoff creditors.
Different Types of Debt Consolidation Mortgage Loans
If choosing to consolidate debts, homeowners usually obtain a lump sum of money. The funds can be used to payoff
credit card balances, personal loans, auto loans, etc. Once credit account balances are zero, homeowners simply
submit one monthly payment to repay the debt consolidation loan.
Because debt consolidation mortgage loans have very low interest rates, most homeowners are able to repay the loan
within a few years. Typical repayment periods consist of five to fifteen years. Moreover, the monthly payments are very
affordable. You can expect to save hundreds each month.
If opting to take advantage of a debt consolidation mortgage loan, you may select a mortgage refinancing or home
equity loan option.
How to Consolidate Debts with a Mortgage Refinancing
Cash-out mortgage refinancing is perfect for consolidating unnecessary debts. Moreover, this method serves multiple
purposes. Because of falling mortgage interest rates, many homeowners are deciding to refinance for a lower rate. In
some instances, this may greatly reduce your mortgage payment.
With a cash-out refinance, homeowners borrow from their home’s equity, and use the money to consolidate debts.
Refinancing creates a new home loan. Furthermore, if borrowing cash from your equity, the mortgage principle will
also increase. For example, if borrowing $25,000, the mortgage amount owed will jump from $100,000 to $125,000.
Home Equity Line of Credit and Home Equity Loans
Another approach for using your home’s equi