Should I Take Out A Debt Consolidated Mortgage?
By Ann WhiteFind out how to profit using a debt consolidated mortgage to lower monthly payments. Careful review is necessary to receive the greatest benefits.
Total obligations owed by typical homeowners remain at record levels. Although national spending is down after the recent recession, obligations remain constant or continue to increase. A debt consolidated mortgage provides homeowners with an alternative for reducing monthly payments and eliminating high interest rates.
Qualifying for a Debt Consolidated Mortgage
Qualifying for a new debt consolidated mortgage is slightly more difficult than receiving approval for a traditional home loan. The new loan must cover the balance of all existing home loans and provide sufficient additional funds to repay additional expensive obligations. Higher loan approval amounts may require better credit ratings. Loan to home value ratios also increase when requesting additional funds and may further restrict maximum loan amounts.
Experienced lenders consider the ratio of total monthly payments to net monthly income as a prime indicator of creditworthiness. When using a debt consolidated mortgage, the addition of real estate as collateral and lower monthly payments may be sufficient for qualification.
Additional Considerations
All states recognize homestead exemptions. A homestead exemption provides the most effective asset protection strategy available today. When accepting a debt consolidated mortgage, loan balances increase and home equity declines. In effect, a new loan may convert unsecured credit card accounts into a secured real estate loan.
Additionally, payments typically drop significantly when using a debt consolidated mortgage. The cost for repayment however may increase when spread over the life of a home loan. Rather than pay a high rate of interest for three years, homeowners may pay a low rate of interest to carry credit card accounts for 30 years. Before accepting a new loan, analyze total costs and fees when considering immediate benefits.
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- What Refinancing Options Should I Consider?
