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Are You Thinking About Using Your Mortgage to Pay Off Debt?

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Are you thinking about using your mortgage to pay off debt?

Taking high interest credit card debt and turning it into a low interest mortgage does have its benefits, but if you are thinking about refinancing your mortgage to pay off debt, there are some things to consider.

• Credit card debt is an unsecured loan. If you miss credit card payments, your credit score will suffer, but you still have your home. Your mortgage is a secured loan. If you miss payments, you can lose your home.
• Also, the fees associated with refinancing your mortgage need to be taken into account. The fees you would pay to transfer your debt into your mortgage could end up costing you more than the interest you end up paying on your credit cards.

If you are still considering using your mortgage to pay off your debt, make sure you can afford the payments today and in the future.
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If you have equity available in your home and you have credit card or other high interest debt, consider using your mortgage to pay off your debt. Here are two methods for using the available equity in your home to consolidate your debt worth considering.
 

Refinancing Your Mortgage to Pay off Debt

 
If you are carrying expensive credit card debt and have equity available in your home, it may be worth considering refinancing your mortgage to pay off this debt. Mortgage interest rates are typically much lower than unsecured debt interest rates. By refinancing your mortgage, you would use your new mortgage to pay off your outstanding debt and you start with a clean slate with only one outstanding loan to worry about.
 

Home Equity Loan to Pay off Debt

 
Homeowners with available equity in their home may be able to consolidate debt that has a high interest rate into one low interest rate monthly payment with a home equity loan. Using the equity you have built up in your home may be one of the most cost effective ways to lower your borrowing costs.
 
If you are drowning in debt, using your mortgage to pay off debt may be a good decision for you. Learn more about using the equity in your home to consolidate your higher interest rate debt from mortgage lenders in your area. 

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