Refinance mortgage loan debt consolidating
A debt consolidation refinance may be a great solution that helps improve your finances.
However, due to certain risks involved, you should do so only after careful consideration.
You need to make sure that you can handle the new payments and that you will be able to pay them for the life of the loan.
You need to think carefully about how and why you acquired the debts you consolidated, making sure that you do not run up new debts that will place you under even greater financial strain.
Also, the more debt you tie up in your home, the greater the chance that you can end up trapped in your home. If a job change or other life event requires you to move, you do not want to be in a home that is worth less than what you owe.
If the value of your home drops below the amount you owe, your options are severely restricted. Too many Americans who treated the equity in their home as if it were a piggy bank are now trapped in homes that are worth far less than what they owe on them, facing a series of unpleasant choices.
Then you can focus on repaying that personal loan, which requires just one monthly payment and, ideally, has a lower interest rate than what you were paying across multiple debts (it may not have a lower rate, but it’s in your best interest to find the lowest one you can).
The benefits of consolidating debt through a refinance can get away from you if you do not act carefully.
A debt consolidation mortgage loan allows you to get a new mortgage, at a lower interest rate, and also pay off some of your creditors.
However, you are not actually paying off your debt.
Some people prefer a debt management plan, while others benefit from simplified singular payment of a consolidation loan.
It all depends on the person and the type of debt they’ve accrued.
"I wanted to pay off my high interest credit cards, because the monthly payments don't seem to make a dent in the total debt owed.