The Downside of Bad Credit Debt Consolidation Mortgage
Written by ady on April 17, 2009 – 3:13 pm -You may have the option to roll your debts into your mortgage payment if you own your own home and can take out a second debt consolidation mortgage loan. The way a bad credit debt consolidation mortgage works is that the mortgage company pays off your outstanding debts, and you pay back the mortgage company. A bad credit debt consolidation mortgage provides you with a quick and easy answer to paying off debts. However, there are two issues you need to think about.
Most important, you need to have enough equity in your home to cover the amount of your outstanding debts. It is somewhat like a home equity loan, except that in that case, the equity is available at the time of purchase. Because foreclosed homes or homes put up for auction are usually bought at prices well below their market value, they typically get these kinds of mortgages.
Another thing to consider is the amount of time youíll be paying off the bad credit debt consolidation mortgage. This means credit card purchases, etc., will take as long to pay off as your mortgage.
Change Your Spending Habits
If you are getting a bad credit debt consolidation mortgage, you may want to really think about what debts you are going to include in it. Using up all of the available equity in your home now is going to keep you from being able to get more money for a while.
If your bad credit debt consolidation mortgage is approved, your lender will pay off your other creditors. Check to make sure that your creditors have been paid off before relevant due dates, and be sure to retain written records of your debts being paid off. Also make sure that your credit report reflects the fact that those debts have been settled. You donít want your bad credit debt consolidation mortgage to not work for you.
Just remember, youíll be paying off your bad credit debt consolidation mortgage for as long as thirty years. Is that really something you want to do?
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Tags: consolidation loans, credit card debt, Credit Card Purchases, credit report, Current Value, Debt Consolidation Mortgage, debts, Due Dates, foreclosure, Home Equity, Loan, Mortgage, Mortgage Loans, Mortgage Payment, Repayments, Tax Auction
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