Homeowners, hoping not to lose their home through foreclosure may want to eliminate a lot of other bills to make sure they have enough cash to make the home loan payments. One way might be with a debt consolidation mortgage loan, where in the other loans are include in the mortgage taken out on the property. There are two basic downfalls to this plan, but it can still provide a significant financial benefit to outweigh the additional costs of the loan.
First, the difference between the value of the property and the amount for which it is purchased has to provide enough equity to allow for the inclusion on the additional amount of the debt consolidation mortgage. It is a similar plan to taking out a home equity loan, except the equity is available at the time the house is purchased. This may be more possible with a property that is purchased through foreclosure or through a government tax auction, where the price of the home is considerably less than the amount of the mortgage.
When you take out a debt consolidation mortgage, all other bills that were included will be paid along with the mortgage payments meaning, any credit card purchases for instance, can take as long as the life of the mortgage to pay off.
Being Stingy With Credit Can Help Get You Through
If you qualify for a debt consolidation mortgage, that includes several other pre-existing debts, make sure you do not go overboard with extra loans and credit cards. You will need to remember that the majority of your home equity is already spoken for in terms o the debt consolidation mortgage, and it can take a few more years before additional funding through an equity loan is available.
While all the other creditors will have been paid at the time of the mortgage, it is advised to let the lender send the payment to the other creditors, making sure they received them in a timely manner and the proper notation has been made on your credit report. This can insure that the purpose of the debt consolidation mortgage is serving its purpose.
Remember, the amount of money added to the debt consolidation mortgage from your credit cards can take up to 30 years to be paid and, if those cards were used for several small purchases, you could be paying for that fast-food meal for three decades.