Consolidate Debt by Refinancing your Second Mortgage

Letting your debt accumulate to the point where you cannot pay your bills is not just unwise, it is also unsafe and a foolish choice to make. If, however, you just want to get rid of some of the interest payments that you are making or consolidate your many payments onto a single loan, refinancing your second mortgage might be a great way to do it.

The second mortgage can sometimes take the form of a home equity loan or a home equity line of credit, and it is a good way to get that debt down to a single, lower payment. Because your second mortgage is secured by the collateral of your home, it often has a much lower interest rate than other debts like credit cards.

Credit card debt has some very high rates, and a single missed or late payment can mean a soaring rate that keeps your credit card debt growing and growing. To get it back down to reasonable numbers, you can refianance your second mortgage to include the amount of the credit card debt and pay those cards off with that extra cash. Just be careful to keep those cards down low again once you have had the chance to start them over, and you will be in a good place.

The problem with this method comes about when your credit score is already not the best. If you have allowed your debts to go unpaid or to get too high for too long, then your credit score may have suffered and you may have trouble refinancing your home.

Still, if you have good credit then you have a great way to get yourself out of debt much more quickly and easily than if you were making small payments to several places. If you are only making payments to one place, and if those payments are going to principal more than interest because of a lower interest rate, then you will be on your way to paying off that debt.