Using equity in your home can be an excellent way to get yourself out of debt, if used correctly. A 2nd mortgage is secured by your home just like your primary mortgage; if you fall behind on the payments for either mortgage you could lose your home. Here is what you need to know in order to utilize home equity safely. If you are considering using a 2nd mortgage to consolidate your bills into one manageable payment, planning on staying put in your home for several years. The reason for this is that your home equity loan has closing costs and other fees; it will take a number of years to recoup these expenses. Keep in mind that some home equity loans may come with prepayment penalties which could make refinancing expensive. If you are not careful these additional expenses could negate any potential savings you might realize from consolidating your debts. There is another option available to you for debt consolidation. Cash out refinancing could consolidate your debts and possibly lower your interest rate and monthly payment amount. If you can pull of consolidating under one mortgage with a lower interest rate and monthly payment amount you will have one monthly payment to make, instead of two. To learn more about your options when utilizing home equity and how to avoid common homeowner mistakes, register for a free mortgage guidebook using the links below. |
