Are you in need of some extra cash? Are you drowning in high interest credit card and personal loan debt? Do you feel the on-going stress of your current finance’s month over month?
With a high cost of living these days and life just getting in the way sometimes, it’s often easy to lose control of your finances and feel overwhelmed with your current situation.
Don’t worry though, we’re here to help provide you with the support and resources you need to get back on track and to direct your financial future.
Let’s take a deeper dive into some of those frequently asked questions below regarding Consolidation Mortgages.
- What is a Consolidation Mortgage?
- What Is Equity?
- Why is a Consolidation Mortgage the Better Option?
- What Are the Benefits of a Consolidation Mortgage?
- Do I Have to Cancel My Credit Lines if I Consolidate?
- Will my Credit Score Improve by Consolidating my Debts?
- Can I Pull Out Additional Funds with a Consolidation Mortgage?
- Are There Costs Involved with Refinancing My Mortgage?
- I’m Swimming in High Interest Debt Payments – What Do I Do?
A consolidation mortgage allows you to combine all your high interest debt payments, including credit cards, car loans, unsecured loans, personal loans, student loans, medical bills, high mortgage interest rates, and more, into one single mortgage payment. This gives you the peace of mind of having one single payment at a far lower interest rate. Thus, resulting in a lower overall monthly payment and savings in your pocket.
Lenders will allow you to refinance up to an 80% loan-to-value, which means that you can pull out of your home any equity that exceeds 20% of your home’s current value. A debt consolidation mortgage ultimately increases your monthly cash flow, giving you the additional credit to cover any financial emergencies you may face and kickstart your future savings.
Equity is the difference between your homes current value and your remaining mortgage balance - (Value - Mortgage = Equity).
How do you increase your equity?
- Home Appreciation
- Principal Payments
- Sweat Equity
Because our refinance solutions allow you to consolidate your debts in with your mortgage at a lower rate over a longer period, we can ensure that you have the lowest possible monthly payment, resulting in more money in your pocket for you and your family.
- There are many benefits to a consolidation mortgage. However, the biggest perk is you saving money!
- The way we save you money starts with a discovery call in getting to know a little more about your current situation and your future goals. A build-up of higher interest loans such as car loans, credit card loans, and unsecured loans all have interest costs in the 7% - 22% range and is the reason why consolidating these into your mortgage at a far lower interest rate will save you money.
- Your consolidation mortgage is done through a process of refinancing. When refinancing, we are often able to lower your current monthly interest rate, resulting in further savings to you and your family on your current mortgage payment as well.
- Other common reasons many benefit from a consolidation mortgage via refinancing is the additional option to access your equity for the purpose of investments such as purchasing a rental property or completing home renovations. Both options result in increased cash flow and/or equity growth.
The quick answer is no, you will not have to cancel any of your credit cards, lines of credit, or other trade lines. A good practice is to maintain your trade lines as open, utilize each trade line, and pay each down month over month. This good practice is how you will improve your credit score over time.
- While completing a consolidation mortgage won’t always improve your credit score right away, over time you will likely see your score jump as you move forward with good practices.
- If you’re carrying a balance above 40% of any credit line month over month, this is where you will typically see your score drop. Where utilization of a trade line helps improve credit, over utilizing a trade line will have the opposite effect.
- By paying down these credit products, you will see a gradual boost in your score as you maintain a balance under that credit utilization threshold.
You will have the opportunity to pull out additional funds above the debts you’re consolidating for many reasons. Some of those include for the purpose of home renovations, investments, buying a new car, purchasing a rental property, family expenses, and more.
- For an accurate quote on your mortgage penalty, we always recommend you speak directly to your lender to confirm that exact cost. We also have alternative in house tools that can help narrow in on what your total penalty would be.
- Typically speaking, the only additional cost to refinance would be an appraisal fee, which we can have waived in many cases. We also have relationships with lenders that offer cash back incentives that would otherwise cover the appraisal cost of $300 - $500 and put some cash back in your pocket.
- Any expenses to break your mortgage early or incurred legal fees can be washed into the total amount you are refinancing for so that you don’t need to pay out of pocket to complete your refinance. Lastly, when breaking your current mortgage, we always recommend that you utilize your pre-payment options by putting a lump sum payment down against your principal. This results in a lower balance and a lower total penalty to refinance.
- Consider consolidating that high interest debt into a low interest option like your mortgage.
- For every $400 in monthly debt payments that you consolidate, you will gain about $100,000 in additional mortgage financing PLUS lower your overall monthly payments.
- This strategy results in saving you thousands of dollars each month and can help you increase your total borrowing power.
o Let’s look at a quick example:
o $25,000 car loan
o $750 monthly payments
- By consolidating this car loan into your mortgage, you will save $75,000 & about $350 on your total monthly payments.