Step 1- Take a Closer Look
If you are considering debt
consolidation through your mortgage,
you should begin by taking a closer
look at the debt that you have along
with the equity that you have built
in your home. Your equity is based
on your homes assessed value, so you
may have more equity than you think.
Then look at the total of your
short-term debt, like high interest
credit cards, and compare interest
rates and potential savings.
Step 2- Determine What's
Best..
Once you know how your debt and
equity relate to one another, you
can then determine what type of debt
consolidation loan will work best
for your financial situation. For
instance, if you have a low rate
mortgage loan, you may opt for a
second mortgage. This option would
also be good if you are planning to
move soon, too. Yet if you are
planning to stay in your home for a
longer term or you have a higher
interest rate on your current home,
you can consider a mortgage
refinance program where you can
incorporate your short-term debt
into your new mortgage.
Step 3- Shop Around
Once you know what type of debt
consolidation you want to take
advantage of, then you can start the
process of shopping around for
mortgage loans. There are a variety
of mortgage loans available if you
are interested in debt
consolidation, and most terms vary
by lender. This is why it is
important to shop around, because as
you look at the different companies
you are more likely to find the
right debt consolidation for you.
Our service compares over 400
companies and is a free service to
the consumer.
Step 4- Compare Rates
As you compare different mortgages
for debt consolidation, you can opt
for a variety of terms and rates.
There are low interest adjustable
rate mortgages or even fixed rate
mortgages that may offer you more
security, depending on your
situation. There are also terms that
have an impact on your monthly
payment, so you will want to read
over everything carefully.
Once you know the type of loan you want and the terms you desire, then you can also start looking for the lowest APR, or annual percentage rate. The APR includes interest rates and closing costs, and this is the figure that contains many of the hidden costs of your debt consolidation mortgage loan. However, if you are considering a second mortgage or home equity line of credit for debt consolidation, then you may find that your closing cost will be lower.
