Consolidating debt buying house trophydating com
“Depending on the circumstances, (use equity) for big-ticket items such as tuition, a sudden illness that devastates the budget, sometimes even the purchase of an automobile when you have thought things through and you have compared that financing cost to what might be available,” he says.
“But don’t run out and use it for credit cards for vacations, for frivolous things because it is not an unlimited source, as we saw when the market turned.” The main concern with using equity to pay off credit cards is that often, it is a temporary solution to a much bigger problem.
writer Glenn Ruffenach says the savings that come with a smaller home make long-term sense for many people.
For retirees hoping to stretch their savings, it can be a smart retirement strategy, freeing up money so they can live more comfortably.
This lending requirement is somewhat useless when it comes to preventing the borrower from getting into debt again because obviously it doesn’t stop the homeowner from opening new credit card accounts right after closing, Harper says.Consolidating the two into a new, 15-year mortgage at 4.5 percent costs more per month, but less over the life of the loan.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.If you are trying to get the maximum loan amount, which is generally 85 percent of the value of the home, you should expect to need a credit score of at least 700, he says.But if your current mortgage and the amount you plan to borrow totals less than 80 percent of the value of the home, then the credit requirements are fairly similar to when buying a home, he adds.
You may be tempted to consolidate your credit card and other high-interest debt into a mortgage with much lower payments. Lenders now require the homeowner to keep at least 15 percent to 20 percent equity after cashing out.