Consolidating Debt - Refinance or 2nd Mortgage?

Consolidating Debt - Refinance or 2nd Mortgage? - Homeowners who need to consolidate their high interest unsecured debts often wonder what is the best way of doing it. Is it best to refinance your first mortgage or take out a second mortgage or Home Equity Line of Credit?

Recent increases in the Prime Rate have made the Home Equity Lines of Credit much less attractive than they were a few years ago.

A good mortgage broker can work out a cost analysis breakdown for you to show you the pros and cons of refinancing your first mortgage to consolidate your debt versus taking out a second mortgage or home equity line of credit to consolidate your debt. One advantage of a home equity line of credit is that many times you can obtain one without any closing costs at all. In the right situations this can be very beneficial to a consumer instead of paying the closing costs on a first mortgage, especially if there is any chance of not keeping the loan very long or moving.

Often you can get a lower combined rate and a lower payment by refinancing your mortgage instead of getting a 2nd mortgage or a home equity line of credit. Your mortgage professional can make these calculations for you.

Buying a home with bad credit - There are many options available for consumers looking to buy a home with poor credit. The first step that needs to be taken is to call a mortgage broker. Contacting a mortgage broker will let you know how much of a home you qualify for and provide you with a pre-approval. A mortgage broker works with hundreds of different lenders throughout the nation which allows him or her to be able to access thousands of more home loan programs than a traditional bank. What this means to you is a better chance of finding a mortgage lender that will provide you with a loan and a better chance at obtaining a better interest rate.

Many people assume that their credit is worse than it is. Before assuming your credit score is too bad to buy a home, contact a mortgage professional. He can pull your credit report and review it with you. Then you will have a good idea what your options are.

Buying a home with bad credit is more common than you might think. As people's financial situations turn around, they often begin thinking about buying a home. Their credit scores and histories can take years to catch up to their new financial situation.
Your initial interest rate will be higher than if you had good credit. However, your mortgage professional can help you set up a plan to improve your credit score and refinance to a lower rate and payment in one to two years.