Have you considered consolidating your debt and taking out a debt consolidation mortgage? Do you understand which options you have and which one is best for your situation? Debt consolidation mortgages can be scary so read this article to help you decide which option is best for you. First, you have to understand that the mortgage business can be a shady world and there are many brokers and account executives that are too busy chasing a big commission that they forget about your needs. Be aware of this and don’t believe everything that your mortgage person tells you.
Debt Consolidation Mortgages – Getting a new mortgage to consolidate your debt is a good deal for people who having been paying their mortgages very long. This is because of the way mortgage amortization schedules work – you pay most of the interest on your loan upfront. So if you have a 30 year mortgage and needed to get a debt consolidation mortgage, it would be much better to get the mortgage in the first ten years of your mortgage’s repayment, rather than in the last 10 years. In the last ten years, you’d have already paid all that nasty interest, and would now be paying your mortgage’s principle
down. To get a new mortgage then would almost be just tossing away all that interest you paid for, for nothing. But getting a debt consolidation mortgage in, say, the third year of your 30 year mortgage, you’d be starting your mortgage payments over again fairly early. In other words, people with little equity in their homes would probably benefit more from a debt consolidation mortgage than a home equity loan or line of credit. Keep in mind that getting a new mortgage will require a new closing, and mortgage closing can cost hundreds, even a couple of thousands of dollars. In this aspect, debt consolidation mortgages aren’t as good a deal as home equity lines of credit, which can be gotten with no closing costs.
Getting the Equity Out: Home Equity Loans and Lines of Credit- Don’t think that someone who’s in the last ten years of paying off a 30 year mortgage is in worse shape that the person on only year three, though. Quite the opposite. Home equity loans and lines of credit are among the best options for a debt consolidation loan. If you meet the following criteria, all that interest you’ve been paying suddenly becomes a major tax deduction: you itemize your tax deductions, you are deducting interest for your first or second homes only, the loan is for no more than $100,000, the interest you want to deduct on any amount of the home equity loan can not be more than the difference between the market value of your home and your mortgage.
Now you have an idea of how debt consolidation mortgages work and which ones are right for which situation. Use this knowledge and any other knowledge you can find to help you make the right decision.
Learn more about Obama Mortgage Relief Plan Qualifications.
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