Consolidating debt in mortgage

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In other words, their monthly debt expenses are too high compared with their income.

But in some cases, it’s possible to qualify for a debt consolidation mortgage by excluding the credit card debt from the DTI, as long as the homeowner agrees to pay off and close the accounts at closing, says Matt Hackett, operations manager for Equity Now.

Consolidating the two into a 15-year mortgage at 4.5 percent saves almost 0,000 more.

Those with enough equity in their homes have been able to substantially reduce the monthly payments on credit card debt, student loans and personal loans, says Michael Moskowitz, president of Equity Now, a mortgage bank in New York City.

A ,000 credit card balance at 16 percent interest plus a 0,000 mortgage at 4.5 percent interest rack up 0,936 in interest payments over the life of the loans.

Consolidating the two into a new, 30-year mortgage at 4.5 percent saves about ,642 in interest.

Think of the equity in your home as a sacred savings account: You can tap into it but only when truly needed, says Rick Harper, director of housing and senior vice president for the Consumer Credit Counseling Service of San Francisco.

You borrow enough money to pay off all your current debts and owe money to just one lender.“I wouldn’t recommend it to someone who is going to run up their credit cards again,” he says.“If that’s the case, you need financial counseling, but for people who will not do that — who had medical expenses, business expenses and ran up their credit cards — a debt consolidation mortgage is a good solution.” He cites the case of a client who had a mortgage-free investment house and more than ,000 in credit card debt.For example, what if interest rates go up, or you fall ill or lose your job?If you can’t stop spending on credit cards, for example because you’re using them to pay household bills, this is a sign of problem debt.

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