Mortgage Debt

First, you have to understand that the mortgage business can be a shady world and there are many brokers and account executives that are too busy chasing a big commission that they forget about your needs. Be aware of this and don’t believe everything that your mortgage person tells you.

There are a few debt consolidation mortgages to choose from and it all depends on your situation. If you have plenty of equity to work with, over 30% free, then a refinance of your first mortgage is best. Just make sure that you are paying off debts that are at least double the interest rate of your mortgage.

Also, don’t get talked into a longer term to save money. If you have paid on a 30 year mortgage for 18 years, then you should be considering a 20 year mortgage or a 15 year mortgage. It will not save you any money if you refinance on another 30 year mortgage.

Another option is to take out a second mortgage. These are a bit easier to qualify for and will go up to 125% of the appraised value of your home. The rate is going to be higher so you should only use a second mortgage if you have a serious mortgage debt issue and your debts are over $20,000 at a rate over 18%.

One thing to be aware of with second mortgages is that they are going to use up more of your equity. Do not get talked into a 125% second mortgage because you will just end up in a worse situation than you are already in. If this is all you can qualify for to take care of your debts, then contact a debt counselor before you do anything.

Now you have an idea of how debt consolidation mortgages work and which ones are right for which situation. Use this knowledge and any other knowledge you can find to help you make the right decision.