"I have a bad credit card habit, with 7 cards and ,000 in balances, at rates ranging from 10% to 19%. The interest rate on some of your credit card debt is lower than the rate on the second mortgage.
I have been offered a ,000 second mortgage at 14% for 25 years to consolidate them, which would substantially reduce my monthly payments, and there would be no cash required. You don't want to replace a 10% loan with a 14% loan.
I preach a lot to consumers financing home purchases about the large savings that are possible if they shop multiple lenders.
But the arguments for shopping are even more compelling for existing homeowners taking out a second mortgage.
Debt consolidation mortgages are increasing in popularity because they can lower your payments and offer additional tax deductibility that credit cards do not offer.
According to Dan Ambrose of Irwin Home Equity, "Consolidating the compounding interest from credit card debt can save you thousands of dollars a year." We suggest consumers consider a fixed debt relief mortgage solution that allows consolidation of high rate loans and revolving accounts that have high rates of interest." The most effective mortgage for refinancing debt depends on the size and current rate of your 1st mortgage.
When a first mortgage is paid off, an existing second mortgage automatically becomes a first mortgage.If you are not dissuaded by these reasons and go ahead to consolidate, you should try to control your addiction by avoiding a large drop in the monthly payment.Shift the second mortgage to 10 or 15 years, whichever provides a total payment close to the one you have now.Nationwide has become a premiere lender with low rate guarantees for no equity mortgage loans, home refinancing and consolidating high rate credit card debts.We offer fixed rate refinancing with debt consolidation loans for people with good and bad credit.