Is A Debt Consolidation Mortgage Right For You?
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- čas přidán 20. 07. 2024
- What is a debt consolidation mortgage and how could it help you?
A debt consolidation mortgage is more commonly referred to as a cash-out refinance. This is where you pull out some equity in your home to pay off debt.
For example: let's say your current home is worth $200,000 and you owe $100,000. Also, you have $20,000 in credit cards and other loans you want to consolidate into a lower interest debt.
If you did a cash-out refinance, you could get a check for $20,000 at closing and you would now owe $120,000 on your mortgage. Essentially, the debt gets absorbed into your mortgage.
So, why would you do a debt consolidation mortgage? This type of cash-out refinance helps you turn unsecured, high-interest debt (credit cards, auto loans, etc) and convert it into secured, low-interest debt.
A debt consolidation mortgage is a piece of the puzzle towards becoming debt-free in the future. It's not a full solution to a debt problem, it's simply a tool.
The big thing you have to keep in mind with this strategy is that it doesn't just make the debt dissapear. The debt will still be there. But, instead of the debt being held at high interest (usually 15-25% by AmEx or Visa, etc) it will be help in your mortgage (usually around 3-5%).
But, is it smart to take short term debt and convert it to long term debt? Here's what I mean... If you have $10,000 worth of debt in credit cards, that debt will get paid off in about 7 years. If you take that $10,000 and wrap it into your mortgage, it will get paid off in 30 years if you don't intervene.
So, in that case it's not smart to do that. But, it is smart if you continue making similar payments on debt. But, instead of paying the credit card company, you pay extra into the mortgage.
Again, a debt consolidation mortgage does not make debt disappear. It simply restructures the way you're paying back debt and can help you avoid the massive interest charged on credit cards and other high interest, risky debt.
Hey, my name is Kyle and I'm a Mortgage Advisor serving Tennessee, Florida, and Ohio. My goal is to help you get a crystal-clear home loan that helps you win the house you love. If you're ready to create your home-buying plan, you can reach through any of the ways below:
winthehouseyoulove.com/
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Motto Mortgage Alliance
www.winthehouseyoulove.com/
8900 N. Dixie Dr.
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Thanks for watching! If you want to jump around to different points in the video, here are some quick timestamps:
0:06 What is a debt consolidation mortgage
0:44 Cash-out refinance and the debt consolidation mortgage
1:19 Taking debt and wrapping it into a mortgage
2:01 Why consolidate debt with a mortgage
3:40 Should you take short term debt and convert it into long term debt?
4:58 Limits of a cash out refinance
6:26 When a debt consolidation mortgage WONT work
7:45 Recap
www.winthehouseyoulove.com/
Stumbled across this video doing research on HELOC vs Home Equity Loans. Great information here! Are you still available to run comps on properties or further discuss options for certain situations? Either way, great information!
Hi! Yes, sometimes during my live streams I do computations... just watch out when I'll go live. Thanks for watching!
Have a question after you do a sept consolidation and your mortgage goes up. Can you refinance if you you the interest rate drop after 6 months or a year?
Great video! Hey is it possible to add a car loan to a mortgage ( I guess consolidate) to save$$$. I've paid mortgage down by 45%.
what happens to credit cards when they are paid off with the consolidation, are limits lowered what happens ?
They shouldn't have their limit lowered
what is best way to pay off $80k in mortgage to avoid foreclosure?.. is a heloc or home equity loan possible?
You likely won't be able to get a new loan to pay off the foreclosure. You may need to talk to the bank about restructuring
@@WinTheHouseYouLove were in process of that now but theyre stalling the process in hopes of a foreclosure obviously..so funding of some type to pay of the past due amount is the only route to avoid it
Is it okay to put all personal debt to your mortgage then rent the property out to someone and let them pay your debts
Yes, you can cash out refi to cover your debts and then rent out that home
How do we contact you
kyleseagraves@hey.com
the first time I listened to this channel, he seemed to be very honest and therefore I started going over other videos. Here I think that the whole truth is being circumvented a bit... secured loan also means that if you can't pay the bank will take your house where as if you can't pay your credit card, they might garnish your pay check but at least you still have a roof over your head until you can pick yourself back up... I am not in the finance industry and he may be able to be more specific on this in his response as I did noticed that he does actually addresses comments. But just a thought to consider so that no one looses their house in a bad situation.
The only wrong assumption here is that the future financial planning in your post is based on just not paying loans back, which I don't believe is an ethical gameplan. Instead, a solid financial plan is understanding different ways debt can be secured by assets so we can get ourselves out of trouble if trouble arises.
If you can't make payments on a secured loan, you have the benefit of selling the asset to pay back the debt that cannot be afforded. No financial harm is caused.
If you can't make payments on an unsecured loan, you risk litigation and a severe wreck on your credit history.
The benefit of transferring debt from unsecured to secured is mainly that (1) you have the option to sell the securing asset if needed to get you out of hot water and (2) secured debt almost always has lower interest than unsecured debt allowing you to pay off the debt faster.
I believe he covered it very clearly in the video by stating the differences of secured vs unsecured loans. The kicker doing it this way is if you cant control your spending/lifestyle you have an out by selling the home and making the debt go away. But if the root issue isn't addressed, then you're going to be in the same spot in 3-5 years.