What is a Debt Consolidation Mortgage?

2007-03-08 10:33:40

( Financial )



What is a debt consolidation mortgage?

If you are struggling to make your monthly payments, consider taking out a debt consolidation mortgage. In simple terms, a debt consolidation mortgage is a loan with your house as the collateral. It is one type of residential mortgage. The only difference is that it combines all your existing debts into a single loan. As long as the residence involved has good commercial value, this can be an ideal mortgage for people with bad credit.

With a debt consolidation mortgage, you will only need to make a single monthly payment to the financial institution that offered you the debt consolidation loan. The most important factor in your debt consolidation mortgage is the monetary value of your home. This will determine the size of your loan. Assuming that your home has good value, there are many financial organizations that will be willing to offer you a debt consolidation loan.

Before you decide on a lender, however, be sure to conduct a little bit of research. Compare each lender’s offer and choose the one that is best for you. Make sure you negotiate for better interest rates. Many lenders are quite flexible with the terms they offer in a loan.

Debt Consolidation Mortgage Versus Bankruptcy

A debt consolidation mortgage is also an excellent alternative for people who are on the brink of bankruptcy. Since you should only use bankruptcy as a last resort (it reflects on your credit report for a number of years), a debt consolidation mortgage is a better option when trying to cope with your debts. It also allows you to salvage your credit score.

Debt consolidation loans will not only save you money in the long run, they will also spare you from many penalties and late fees. The biggest advantage of being on a debt consolidation program, however, is achieving peace of mind. If you want to leave those creditors and their strong-arm tactic behind, a debt consolidation mortgage is a great choice for you.


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