Is a Mortgage Loan the Right Form of Debt Consolidation for You?
Contributed by Melanie Vannuys
Is A Mortgage Loan The Right Form Of Debt Consolidation For You?
If you're like many Americans swimming in a mountain of debt with too much month left at the end of your money, you've probably considered a mortgage loan as a form of debt consolidation.
Mortgage loan debt consolidation is one way for in-debt consumers to free up the equity in their home to cover their existing debts and take control of their finances.
While the primary reason people may try a mortgage loan for debt consolidation is to save money, many appreciate the fact that there is only one payment a month to cover all of their debts and it is easier to control your finances.
Keep in mind, however, that using the equity in your home to cover the unsecured debts of your credit card is undertaking a certain amount of risk. While the premise behind a mortgage loan is a good idea, you have to keep in mind that if you fail to pay the monthly payment, the bank can take your house.
What's The Difference Between A Debt Consolidation Loan And A Second Mortgage Loan?
A debt consolidation loan and a second mortgage is essentially the same thing. The difference is, instead of using the equity in your home for your children's education or home improvements, you're using the money to pay off debt that you probably could have avoided in the first place.
Credit cards are the most popular form of unsecured debt that a second mortgage or debt consolidation loan pays off. Do you really want to lose the equity in your home simply because you couldn't live within your means? Probably not.
