Need to Consolidate Debt? Use Your Home Equity
Have you ever talked to your local bank about consolidating your existing debt into a consolidation loan? It’s something that I’ve done in the past and I always seem to regret it, particularly when I hear what the interest rate is. It seems that as soon as you tell the bank that you want a “consolidation loan” the interest rate jumps by two or three per cent.
You’re trying to be responsible; to reign in your spending and give yourself a fresh start and it feels like the bank is taking advantage of your weakened financial state.
Every time I open my mailbox I find credit card applications exhorting the value of consolidating my debt into one credit card account with an unbelievably low interest rate. But what happens after the first three, six or nine months? Move your debt to a new card and start again?
So what to do?
A couple of years ago I was tired of playing the debt consolidation game with my bank and credit card companies and decided to ask my mortgage broker about consolidating my debt into my mortgage. We took a look at the amount of debt I had in contrast to my equity and decided that it would be a good move. Despite the fact that there were fees involved in refinancing, when I did the calculations, it still made sense given the low interest rate.
Afterwards, it’s important to look at your spending habits and make sure that you don’t end up in over your head in debt again.
Talk to the mortgage professionals at CMI to see if debt consolidation using the equity in your home for refinancing, a home equity loan or second mortgage makes sense for you.
