Why a Mortgage Loan Debt Consolidation is a Good Idea

Mortgage loan debt consolidation is not the right option for every home owner. However, if one of the following circumstances is present for you, then you may benefit from a consolidation. You will save money over the life of the loan, and consolidating debt can make it easier to manage and prevent the hassle of multiple payments each month.

You Have Multiple Mortgages on Your Home

Consolidating debt from a number of different loans, like car loans and personal loans, with your mortgage may not be beneficial. These loans are typically short term, and paying them off separately may make more sense in the long run. However, if you have multiple mortgages on your property you may opt to consolidate these and move back to one mortgage. Consolidating your first and second mortgage eliminates the double-liens on your home. You will only be responsible for one payment, and it will likely be lower than the sum of your two previous payments. If you have multiple homes with multiple mortgages it may not be the best idea to consolidate. Defaulting on the loan for your second residence would put your primary residence at risk as well.

You Have a Variable Rate Mortgage

If you have a mortgage rate that fluctuates, you may want to lock in a low rate while you can.  Moving from a variable rate to a fixed rate may increase your monthly payments temporarily. However, you will have more stability over the life of your loan and more predictability in your payments. You may have opted for a variable rate when you were younger and making less income. If your position has changed, you may now be ready to take on a larger monthly payment in exchange for a lower, fixed rate.

Your Credit has Improved

Your initial mortgage quote was handed to you at a time when you did not have as lasting of a credit report. At this point, your credit may have improved or simply solidified over years of making your monthly payments on time. You can capitalize on this lower score by refinancing your mortgage when you consolidate the debt. Since mortgages are so large, a few percentage points different can result in thousands of dollars over the life of a loan. You will be able to get a lower interest rate on your consolidation loan, and the sum of your monthly payments will go down without adding years on to your mortgage.

The National Prime Rate has Dropped

Even if your credit has remained stable, changes in the economy may merit a consolidation. For example, a lower national prime rate will typically get you a lower mortgage rate quote, especially if you have good credit. Many lenders will be willing to accept a lower lump sum because bad economies lead to a lot of default. Lenders will be hungry for cash. If you can promise a one-time, immediate payment, you may be able to get out of a lengthy mortgage.