Mortgage Debt Consolidation Loan

A mortgage debt consolidation loan may be a solution to your high interest debts. Credit Card debt is most likely what borrowers will choose to consolidate first since interest rates and monthly payments are so high. By performing a cash-out refinance of a first or second mortgage you can consolidate your non-mortgage debt, mortgage debt, or both. Mortgage debt includes first mortgages and second mortgages such as a home equity line of credit or home equity loans. Non-mortgage debt would be credit cards, medical bills, student loans, auto loans, other consolidation loans, and personal loans. A cash-out refinance is a typical mortgage refinance method that can reduce your monthly payments, change your rate from variable to fixed, or change the term of your loan.

You have at least four popular techniques to consider when creating a mortgage debt consolidation loan. You can consolidate non-mortgage debt in a first mortgage. You may consolidate a second mortgage into a first. Another option is to consolidate non-mortgage debt and a second mortgage into your first. And finally you may wish to consolidate non-mortgage debt in a second mortgage.

Defaulting on your mortgages can lead to foreclosure and losing your home. A mortgage debt consolidation loan is not without its pitfalls. A borrower needs to be aware of all of their options when dealing with debt.

Consolidate Your Credit Card Debt

One popular debt to consolidate with a mortgage debt consolidation loan are credit cards. Over the past few years many people took advantage of easy access to credit cards with low introductory APRs or no interest balance transfers. After the introductory period the interest rates often jump into double digits. After running up a high outstanding balance the higher interest rates make credit card debt hard to carry.

Important Terminology

A cash-out refinance can reduce your monthly payments, change your rate from variable to fixed, or change the term of your loan. Typically with a cash-out refinance mortgage debt consolidation loan you refinance your existing mortgage with a larger loan using the equity in your home and keep the cash difference. This cash can then be used to payoff non mortgage debt such as credit cards, medical bills, student loans, auto loans, other consolidation loans, and personal loans. Now you will only need to repay one loan and to a single lender.

A second mortgage is a loan taken after your first mortgage. Types of second mortgages include a Home Equity Line of Credit (HELOC) and a home equity loan. A HELOC is attractive because it is a line of credit that you can tap into repeatedly. For some a home equity loan is a better choice because it usually offers a fixed interest rate.

Four Types of Loans

The simplest way for a homeowner to consolidate their debts is to consolidate all non-mortgage debt in a first mortgage. You perform a cash-out refinance and consolidate all of your non-mortgage debt. You leave your second mortgage as is if you have one or better yet you won't need to take one out.

If you have an existing second mortgage you can consolidate it into your first. In this case you do a cash-out refinance on your first mortgage to consolidate your second. This is not desirable if you want to consolidate a substantial amount of non-mortgage debt. It is worth mentioning to show you a more complete picture of your options.

A great way to go is to consolidate non-mortgage debt and second mortgage in your first. This way you can consolidate both your second mortgage and all of your existing non-mortgage debt through a cash-out refinancing of your first. This is most desirable because you can have a single payment and a single lender for all of your debt.

One additional method is to consolidate all of your non-mortgage debt with a second mortgage. A second mortgage is a loan taken after your first mortgage. Types of second mortgages include a Home Equity Line of Credit (HELOC) or a home equity loan with a fixed interest rate. This allows you to consolidate your existing non-mortgage debt by doing a cash-out refinance of your second mortgage only, leaving your first mortgage alone.

Loan Considerations

Typically credit card debt, student loans, medical bills, and others are considered unsecured debt. First and second mortgages are secured debt. Secured debt often grants a creditor rights to specified property. Unsecured debt is the opposite of secured debt and is is not connected to any specific piece of property. It is very tempting to consolidate unsecured debt such as credit cards using a mortgage debt consolidation loan, but the result is that the debt is now secured against your home. Your monthly payments may be lower, but the due to the longer term of the loan the total amount paid could be significantly higher.

For some people debt settlements or even debt counseling is a better solution to their debt problems. A mortgage debt consolidation loan may only treat the symptoms and not ever cure the disease of financial problems. Rather than convert your unsecured debt to secured it might be better to work out a settlement or a payment plan with your creditors. Often a debt counselor or advisor who is an expert in what your options are can be your best solution.

Just One Option

You have many options for a mortgage debt consolidation loan. Educating yourself is well worth it when considering your next steps. Review the four techniques mentioned above and decide if any are best for you. Also consider contacting your non-mortgage debt creditors directly to work out a payment plan or a debt settlement if necessary. Sometimes before committing to any action you should meet with a debt advisor to learn more about credit counseling.

When Debt Crises Looms Large Move To Guide To Debt Management UK

Entering into a heavy debt phase has now become an unavoidable possibility for most of the borrowers around the globe and the UK is no different. The lenders and borrowers both now take the debts as a routine event happening in the loan sector. What has acquired more importance is proper guide to debt management in UK. Borrowers who are debt ridden are able to eliminate debts or keep them at comfortable levels through guide to debt management UK.

Guide to debt management UK works closely with the borrowers in lessening debt burden. The guide has two major roles to play. Firstly, it actively participates in eliminating or reducing debts by implying different debt management techniques and secondly, advises borrowers on how to avoid falling in a debt trap.

Borrowers going through a huge debt phase are given debt tackling techniques under guide to debt management UK. Prominent amongst the techniques are---debt consolidation loans, home equity loans and debt consolidation mortgage.

Under the debt consolidation loans technique, the borrower is required to pay off all previous debts in one attempt. This is done effectively through availing debt consolidation loan to pay the debts himself or asking the lender to do the job. Thus instead of paying many monthly installments to different lenders, now borrower pays only one monthly repayment. This way borrower reduces total interest outgo and saves money which can be utilized in paying debt early.

Home equity loans are essentially secured loans and hence are offered at lower interest rate. This loan provides cheaper finance and helps in saving lot of money that again can be used in paying off debts. In debt consolidation mortgages, main advantage is that the debts are settled at the rate of mortgage.

The advisory role of guide to debt management UK is equally important. Borrowers are offered debt and credit counseling so that they avoid pitfalls on the way to healthy financial life. The debt ridden person must reach to his lenders before they come to him. This way the borrower’s sincerity towards settling debts will be clear to the lenders. Borrower should offer his plan of action for paying debts. The lenders are likely to reduce interest rate and repayment duration may also be extended as lenders prefer getting back the loaned amount rather than opting for repossession of the borrowers’ property.

Guide to debt management UK certainly goes a long way in reducing and eliminating the debt burden provided accurate techniques are imployed and proper debt counseling is taken. Borrowers must choose debt management technique keeping in mind their financial standing.