Consolidating credit card debt with mortgage

07-Jan-2016 15:53

This means that although your mortgage interest rate is going to be a lot lower than the interest rate on your credit card debt, you could spend much of what you save paying for the closing costs.Unfortunately, it will likely take you longer to repay your mortgage and credit card debt if you add to your mortgage balance.There are many arguments that people make in favor of refinancing a home mortgage to take out cash to pay off their debt.For instance, mortgage interest is tax-deductible, while interest on credit card debt is not.However, the opinions expressed here are ours alone and at no time has the editorial content been provided, reviewed, or approved by any issuer.

A mortgage lender has far fewer legal hoops to jump through to affect your home ownership rights, and, in some states that allow for non-judicial foreclosures, it doesn’t even have to go to court to foreclose once you stop making payments.

If you are considering doing this, realize that it’s rarely if ever a good idea to pay off credit card debt with the equity in your home.

For example, if your house is worth 0,000 but you only owe 0,000 on your mortgage, you could potentially remove some of the equity in order to pay off debt with a higher interest rate attached to it than what you pay on your mortgage.

Furthermore, credit cards can have interest rates as high as 30%, while mortgage interest rates are normally less than 6%.

Considering these benefits, why not do a cash-out refinance to get rid of your high-interest credit card debt?

A mortgage lender has far fewer legal hoops to jump through to affect your home ownership rights, and, in some states that allow for non-judicial foreclosures, it doesn’t even have to go to court to foreclose once you stop making payments.If you are considering doing this, realize that it’s rarely if ever a good idea to pay off credit card debt with the equity in your home.For example, if your house is worth 0,000 but you only owe 0,000 on your mortgage, you could potentially remove some of the equity in order to pay off debt with a higher interest rate attached to it than what you pay on your mortgage.Furthermore, credit cards can have interest rates as high as 30%, while mortgage interest rates are normally less than 6%.Considering these benefits, why not do a cash-out refinance to get rid of your high-interest credit card debt?However, under either a Chapter 7 or a Chapter 13 bankruptcy, you can’t discharge mortgage debt if you want to keep your home, and you must keep paying your mortgage and reaffirm your commitment to do so.