Use a Second Mortgage to Consolidate Debt

You can get yourself into debt for many reasons. Some of these reasons are outside of a person’s control. A loss of a job is at the top of the list, but the list is a long one. Suffice to say, if you find yourself with more debt than you ever anticipated as well as too many creditors to deal with each month, you need to consider a 2nd mortgage.

If you own a home and it has a value that is greater than the mortgage that you are paying on, then you have equity in your home. This equity can serve as collateral for a second mortgage. This loan can then be used to pay off all of your other debts. There are several advantages to this type of consolidation loan. The first is that you will no longer need to pay several creditors each month. By making only one payment for all of your debt, the chances of missing a payment is almost zero, so you will avoid paying late fees for a bill you forgot to pay during the month. In short, when you have a single payment for your debt, your personal finances are simplified.

A second reason to use a second mortgage for your debt is that it has the potential to improve your credit rating. It is much easier to make a single payment on time each month than several payments. Making payments on time is one of the important aspects of having a good credit rating. In addition, by having only one balance owed to one creditor or your credit report and showing other balances as zero, your credit score will most likely increase. Having a many accounts with a balance can affect your credit score.

A third reason for a second mortgage is to save money on interest. If much of your debt is in the form of credit cards, the interest is most likely high. This is because the debt is not secured. However, 2nd mortgage rates can be quite low because these loans are secured by the equity in your home. The money you save on interest over time can be substantial.

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