Should I refinance my home to consolidate the debts?

Guest 0.10 Dollars($)

My credit score is poor and a lot of credit cards are pending. Should I refinance my home to consolidate the debts? Need advice. Thanks.

Guest 0.10 Dollars($)

Hi,

I don't think it's wise to put your home at risk by consolidating your unsecured debts in a mortgage loan. Think once again and check if you are sure you can afford the payments and don't lose your home in the process.

Samantha · Posted: Thu Jul 13, 2006 1:22 pm Post subject:

Hi,

It is quite possible to get attracted in consolidating your unsecured debts by including all of them in a mortgage loan as it can give you relief from those high interest rates that you face with these unsecured loans.

But you must analyze the disadvantages too before taking any decision. By including your credit cards and other unsecured debts in a mortgage loan you are converting the unsecured debts into a secured mortgage debt. You can lose your home once you fail to meet the payments.

Initially it may seem that you have to make much lower monthly payments but in the long run you will find that you need to make much higher interest rate expenses by taking 30 years to pay down your credit cards.

With poor credit it means higher interest rate on the new mortgage loan and thus you are paying even more in terms of higher total interest expense.

Home equity loan can be a better option compared to refinancing where the closing costs are much lower and here you are not increasing your term for the loan and not increasing your rate on the current mortgage.

But this home equity loan also should be taken care as it can put your home at a risk too if you fail with the payments. But home equity loan can certainly be a better option here compared to refinancing.

God bless you.

For MortgageFit,
Samantha

Guest 0.10 Dollars($)

i have a chance to refinance. I would rather not put credit cards
in my house loan, but pay them off one by one. And pay my current
loans off as loans not as some giant new loan

larry · Joined: 27 Jun 2007 Posts: 2951 411.26 Dollars($)

Hi Dave,

I agree with you that it is always better not to put the funds of credit cards for the home loan.

wildstorm_films · Joined: 22 Aug 2007 Posts: 131 8.58 Dollars($)

I all I can say is make sure you can afford to do that. If you can't don't even go through with it. It is better to try and payoff what you can.

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