Home refinancing
Home refinancing and the credit card debt consolidation loan have become an incredibly popular in recent years, due to record low interest rates and rapidly escalating property values.
Combining home refinancing with debt consolidation has the advantage of securing a significantly lower interest rate than might otherwise be possible.
Another potential benefit of consolidating your credit card debt with your mortgage is that the interest on your consolidated mortgage might well be tax deduct able, whereas the interest on your credit card most likely was not.
However the disadvantage of this route is that you are transferring debt from an unsecured credit card onto a secured mortgage - in other words a loan with your house as collateral.
If the amount of your credit card is relatively small compared to the value of your house or the size of your mortgage, then this might be a reasonable option to consider.
For instance, if your mortgage is $225,000 and your credit card debt is under $10,000, then consolidating that moderate amount of credit card debt with your mortgage might make good financial sense, especially when tax benefits are weighed into the equation.
However such a decision is best discussed with a professional consolidation consultant, as the many variables need to be calculated and the upside and downside must be weighed.
If you are in this position, you might want to refinance
If you have not refinanced your home in the past 5-8 years and you are paying higher than current market interest rates, it might be wise to investigate this possibility while the interest rates are still relatively low, as the seem poised to rise further in the near future.
Thus you would be killing two birds with one stone - securing a lower mortgage interest rate while also consolidating your credit card debt onto that same loan.
Possibly you would be getting tax breaks as well on the interest from your former credit card loans that has been consolidated with your mortgage.
While there are positive and negative elements to this method of debt reduction, the credit card consolidation loan and home refinancing remain very popular options.
To learn about another popular method of eliminating credit card debt, continue on to SETTLEMENT FIRMS.