The question: Should you refinance your house with a mortgage to pay this debt off?
Should you go further and refinance the entire loan into a lower interest rate, lowering your monthly payment and extracting money beyond what is needed to pay your debt?
Even if you have only one credit card, consolidating it at a lower interest rate allows more of your money to go to that principle balance than interest and gets you out of debt sooner.
If you have more than one credit card to pay off, then consolidating them into one can give you peace of mind as you make one monthly payment instead of multiple.
This also makes tracking your payoff progress much easier.
While it’s not exactly fun to be locked into the typically long repayment periods (especially with student loans and mortgages), at least you know for sure they’re going to be paid off as long as you stay the course. Think about it, with an installment loan, as long as you pay the minimum on time every month, you’re guaranteed to pay the loan off.
But if you do the same and make minimum payments on your credit cards, you could be facing endless years of debt. So what are you supposed to do to pay off your credit cards? Credit card debt consolidation can take on many forms but the the purpose remains the same no matter the form: simplify your payments and lower your interest rate or rates.
Credit card debt that you consolidate into a mortgage adds to the balance of the loan.
During the underwriting process, a bank looks at the amount you will need to borrow vs. A home that has a market value of 0,000 will need a ,000 down payment to establish 20 percent equity.
Therefore, the total equity in your home is 5,000 (minus the ,000 to ,000 in realtor’s fees and transfer taxes you would incur in selling).
This amount of money would pay off all of your debt.
If the bank requires 20 percent equity and you wish to consolidate ,000 in credit card debt, you will need to increase your down payment to ,000.