Mortgage Loans Versus Consolidation Loans
Credit card debts among Americans are on the rise
. Overspending is the root of the problem with at least 40% of Americans families spending more than they actually earn according to a research done by Federal Reserve Bank. Sometimes a credit card debt can get so overwhelming that you just do not have the means to pay it all off by yourself. So you end up considering alternative options and get assistance to pay off your credit card debt. It probably crossed your mind that you could get mortgage loans to pay your credit card debts.
You will be treading on dangerous grounds if you decide to use your mortgage loan to help settle your other debts. Credit card debts are considered as unsecured debts and it will be rather unwise for you to put your house up as collateral because mortgage loans are secured debts and should you fail to pay your lenders back, you will lose your home. If you keep missing due payments every month, you are basically giving your creditors the chance to repossess your property, legally.
Mortgage home loans are meant for you to purchase a home or even renovating your existing home but never to settle a credit card debt. Of course, that does not mean you cannot do it but in credit card debt cases, consolidation loans are considered a better option. So if you are looking for means to finance your home renovation project then by all means, go ahead and apply for a second mortgage to your existing home. After all you will be using the money to upgrade your house which will likely increase the value of your home. Do you see why it is not advisable that you take a second mortgage to pay off your credit card debt? It is because other than the high risk of you losing your home should you fail to make payments, it is also because your house is always increasing in value. So it makes no sense for you to put something as valuable as your house as collateral.
For your credit card debt, you might want to look at consolidation loan options. Like a mortgage loan, you will be applying for another loan to pay off your credit card debts. The difference is that consolidation loans do not require for you to put up anything at all as collateral. This is why the interest rate for consolidation loans is higher. The lenders or bank institution will not have anything of yours to hold on to until you make your payments. There are many websites now that. You just need to make sure you find the right advisor or consultant offer insights into debt settlement and consolidation one that is customized to your preference and financial capabilities.
It is always advisable that you seek professional advice regarding your debts and paying them. Although a mortgage home loan can be used to settle credit card debts, it is certainly not something a financial consultant would advise you to do due to the risks involved. Mortgage loans help lessen your burden and can be used to pay your creditors but you have to be aware of the high stakes you are taking. Again, credit cards debts are unsecured debts. So creditors will call you day and night to make sure you pay for them because once they lose you it will be very difficult for them to get their money back.
by: Ask Bill
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