Pros and Cons of Mortgage Debt Consolidation
Mortgage debt consolidation can reduce your monthly payment amount, giving you more leeway in your budget.
And if you combine multiple mortgages into one home loan, you can reduce rates on at least one of those loans.
But sometimes mortgage debt consolidation can cost you more due to longer loan terms and closing costs.
So take time to evaluate your loan options.
Pros - Reduce Overall Mortgage Rates 2007 is seeing a reduction in mortgage rates again.
That makes it a great time to refinance multiple mortgage loans into one account.
Second and third mortgages usually are about 2% higher than first mortgage rates.
When you consolidate your loan, you qualify for first mortgage rates again.
Pros - Lower Monthly Payment In 2001, the medium mortgage payment was $1307 and that wasn't including insurance or property taxes.
Refinancing for a lower rate will reduce your payments.
But you can also choose to lengthen your loan term to keep your monthly payments low.
Cons - Can Be More Expensive With A Longer Loan Term Mortgages are amortized so you pay the majority of interest costs at the beginning of your loan term.
So if you have been paying on your loan for several years, you may find that even with a lower rate, refinancing could cost you more.
To help you decided if loan consolidation is cost effective, compare your current loans with a single mortgage.
Look at total interest costs of all your home loans verses a refinanced one.
Cons - Closing Fees And Points Add Up Closing fees and points can also make a debt consolidation very expensive.
The average closing cost in 2006 for a mortgage was about 2% of the principal amount.
To avoid this problem, shop around for a low cost mortgage.
Ask lenders for loan quotes that include information on their closing fees and points.
And if you combine multiple mortgages into one home loan, you can reduce rates on at least one of those loans.
But sometimes mortgage debt consolidation can cost you more due to longer loan terms and closing costs.
So take time to evaluate your loan options.
Pros - Reduce Overall Mortgage Rates 2007 is seeing a reduction in mortgage rates again.
That makes it a great time to refinance multiple mortgage loans into one account.
Second and third mortgages usually are about 2% higher than first mortgage rates.
When you consolidate your loan, you qualify for first mortgage rates again.
Pros - Lower Monthly Payment In 2001, the medium mortgage payment was $1307 and that wasn't including insurance or property taxes.
Refinancing for a lower rate will reduce your payments.
But you can also choose to lengthen your loan term to keep your monthly payments low.
Cons - Can Be More Expensive With A Longer Loan Term Mortgages are amortized so you pay the majority of interest costs at the beginning of your loan term.
So if you have been paying on your loan for several years, you may find that even with a lower rate, refinancing could cost you more.
To help you decided if loan consolidation is cost effective, compare your current loans with a single mortgage.
Look at total interest costs of all your home loans verses a refinanced one.
Cons - Closing Fees And Points Add Up Closing fees and points can also make a debt consolidation very expensive.
The average closing cost in 2006 for a mortgage was about 2% of the principal amount.
To avoid this problem, shop around for a low cost mortgage.
Ask lenders for loan quotes that include information on their closing fees and points.