LOWERING YOUR MONTHLY PAYMENTS
Debts that go unpaid can damage your credit and make it difficult to obtain a home loan. In some cases, it is recommended that before obtaining a home loan the borrower consolidate or pay off his debt. Debt consolidation will lower your monthly payments while simultaneously increasing your credit rating. Paying off debt, without the assistance of consolidation, prior to applying for a home loan is another good way to improve your chances of being approved for a home loan. Refinancing your first mortgage or obtaining a new home equity loan may also be a financially practical way to relieve the burden of high monthly payments and will likely increase your credit scores.
Often times the interest portion of a debt consolidation loan or second mortgage may be tax deductible. The total deductions depend on your individual tax bracket and state tax laws. Check with your tax advisor for more details. The tax savings can be substantial when compared to your non-deductible monthly bills.
DEBT CONSOLIDATION LOAN TERMS
Many mortgage lenders give borrowers the option of using all or part of your new home loan for debt consolidation. If you prefer, you can choose to use some of the money to renovate your home. This money can also be received as cash for personal use. Most programs that are offered have terms anywhere from 5 to 30 years.