Eliminating Compounding Interest With A Second Mortgage

Eliminating Compounding Interest With A Second Mortgage



Eliminating Compounding Interest with a​ Second Mortgage
Debt consolidation can be a​ confusing subject .​
There are many conflicting views on​ what a​ consumer buried in​ credit card debt should do to​ get back on​ their feet .​
These conflicting views have everything to​ do with the​ fact that the​ best solution is​ always unique to​ the​ individual and if​ you’re in​ trouble you​ should do your homework .​
What isn’t unique is​ the​ problem of​ credit card abuse .​
Let us take a​ look at​ second mortgage loans,​ which are becoming very popular avenues many homeowners are taking for consolidating credit card debt.
Of course the​ best solution is​ to​ avoid getting into credit card debt in​ the​ first place .​
Judge John C .​
Ninfo II chief judge of​ the​ U.S .​
Bankruptcy Court for the​ Western district of​ New York state noted that credit card collectors,​ are like the​ Capital One Vikings .​
They’ll rape and pillage you​ anyway they can .​
Ninfo explains that most college students leave with $3,​000 in​ credit card debt .​
This is​ a​ great way to​ begin the​ spiral of​ debt .​
Credit cards have compounding interest and if​ you​ only make the​ minimum payments your debt will compound as​ well .​
You may be out of​ college now,​ but if​ you’re credit card debt is​ out of​ control you​ should do something about it,​ starting with cutting up your credit cards .​
The next move you​ might want to​ consider is​ a​ debt consolidation loan and if​ you​ own a​ house,​ a​ home equity loan or​ second mortgage might be a​ possibility for this .​
The interest is​ much lower and if​ it’s a​ fixed mortgage rate,​ you’ll be able to​ budget better on​ a​ home equity loan,​ but keep in​ mind that this is​ because it​ is​ secure loan .​
With a​ fixed-rate second mortgage you​ may have lower payments and possibly tax advantages,​ but if​ you​ default,​ you’ll lose your house .​
This is​ important to​ keep in​ mind.
Another option for consolidating your debt or​ just to​ lower your payments is​ mortgage refinancing .​
If you​ have a​ higher rate,​ now is​ the​ time to​ take advantage of​ this possibility before the​ rates climb further .​
Adjustable rate mortgages may be too risky unless you​ plan on​ selling your house in​ a​ few years,​ but you​ may be able to​ refinance and cash out to​ pay off your unsecured debt .​
You may also be able to​ refinance so that you​ have no mortgage insurance and save a​ bit of​ money on​ your monthly mortgage payments .​
If you​ do refinance your high rate debt,​ don’t forget to​ cut up your credit cards .​
Start over .​
Don’t dig your self a​ deeper hole!




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