In addition, your new mortgage interest rate is typically lower than the interest rates on your credit card accounts.
By getting rid of the high interest rates on your current credit card debts, and combining all your bill payments into one, you’ll end up paying less each month than with all the bills separately.
More important, the total cost would be the lowest of all the options at ,867.
A critical question is what borrowers do after they consolidate? If you feel yourself weakening, you might try joining a debt consolidation community at
This mortgage is sometimes called a “cash-out” refinance, because you are getting cash out of your home’s equity to use for other things.
By consolidating your debt into a refinanced mortgage, you can save time and money.
However, this consolidation option raised total costs over 5 years from ,681 under the status quo to ,058.
Consolidating in this way would be selling out your future wealth for a lower payment, which I view as a pact with the devil.
Unfortunately, many borrowers in this situation interpret a payment-reduction consolidation as a license to take on more non-mortgage debt. If their house has appreciated enough, they may be able to, but sooner or later they run out of equity. "We kept adding to our second mortgage to pay off credit card debt…the rate is now up to 13.75%…we don’t have enough equity to break even if we sell...
One is the total monthly payment, which consists of mortgage payments, mortgage insurance premiums if any, and non-mortgage debt payments if any.
Borrowers on tight budgets must be concerned with the monthly payment, but it should not be the major determinant of their choice.
The better alternative would be to consolidate your non-mortgage debt in a new second mortgage, leaving the first mortgage alone.
The payment would be 49, which is higher than the payment under the comprehensive consolidation option, although well below the status quo payment of 90.