Let us show you how to use a 2nd mortgage for debt consolidation and combining multiple high interest bills. We can help find the right path for financial freedom. Take a look at debt consolidation loans designed for paying of high rate loans easy. Roll your credit card payments, auto loans, liens, and personal loans into one low rate loan that is secured by your home. Learn how to qualify for a debt loan and receive cash back for consolidating debt and adjustable rate loans. Get your finances back on track today!
Home prices have continued to climb in the last three years, and home equity loans and lines of credit are being used by many homeowners to pay off their debts. If you are thinking about using a 2nd mortgage to consolidate debts, keep these things in mind:
#1 Home Equity Loan Can Pay Off Your Credit Cards
While this move should be done cautiously, it can make financial sense. The theory is that a home mortgage loan always has a much lower interest rate than a credit card. For example, a typical FHA mortgage loan today has an interest rate of less than 4%. Meanwhile, the typical credit card interest rate is 18% or higher.
So, you can save hundreds or thousands in interest per year by consolidating your credit card debt with a second mortgage. That said, you must do this cautiously. After all, you are borrowing money on your personal residence. That money must be paid back, so you have to be sure you can afford the payments.
Also, if you simply run out and run up your credit cards again, you have defeated the purpose of consolidating debt. Therefore, after you clear your credit cards, you must avoid maxing them out again. Stick to a budget and buy only what you can afford.
#2 The Interest on a Home Loan Is Tax Deductible
If you are paying $1000 per month in credit card payments, guess what? That income is fully taxable, so Uncle Sam is getting a nice piece of the action. However, if you consolidate your debt with a second mortgage, chances are that the interest is fully tax deductible. The reason for this is that the federal government encourages home ownership by making the tax laws very friendly to home owners, especially to those with a mortgage. Being able to write off mortgage interest can save many home owners $1000 or more per year in their federal tax bill.
#3 Paying 1 Payment Per Month Is Easier
If you have a dozen credit cards, you know the stress of having to make a lot of payments every month. Being able to consolidate all of that into one, single, low interest loan does not just save you money: It makes your bill paying much easier. Many people who consolidate their debt into a second mortgage find that their financial lives are made a lot easier.
Using a second mortgage to consolidate your high interest debts into one single, low interest loan can be a very smart financial move, as the above reasons show. However, when you are adding to the balance of your home's mortgage, you must do this with proper planning and caution. The last thing you want to do is to add $50,000 of debt to your mortgage, and then run up your credit cards or other high interest debts again. With proper financial discipline, you can use your home equity to your advantage.
Consolidate Credit Card Debt
|Fixed Rate Second Mortgage|
|Pay off Adjustable Rate Loans|
|Debt Consolidation Loans|
|Refinancing High Rate Debt|
Refinance Variable Credit
Many homeowners are paying off debt and getting their monthly payments reduced with a fixed rate debt consolidation loan. Refinancing your adjustable rate credit with a fixed rate mortgage is suggested if the payments are starting to increase. Select from popular debt reduction programs that were introduced for refinancing your 1st mortgage or consolidating revolving debt. If you get turned down for a bad credit second mortgage, you want to consider credit debt settlement.
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