Can Debt Consolidation Help Me Pay Off My Mortgage?
When you’re in debt, it can feel like you are buried in a hole without any hope of escaping. If you are currently just making your minimum payments and struggling to balance all of your bills, debt consolidation is the best answer to getting out of debt quickly and paying off your mortgage.
Many consumers fall into the trap of the ease of paying for things they want or need with a credit card, without realizing the true consequences.
That television that you paid $2000 for may actually end up costing over $8000 by the time you’ve paid off all of your interest on the purchase. Hindsight is always twenty-twenty, but you can break free of your debt cycle by making a few wise decisions.
Debt consolidation is often misunderstood. Let’s take a look at how this process works. You’ve got several credit cards, all with interest rates in excess of 15% per month. You’ve maxed them all out and now you’re struggling to pay the minimums and keep paying on your mortgage. Instead of just barely getting by, you can get a consolidation loan that will help you pay off those high interest, high balance cards.
Here’s how it works:
You get a debt consolidation loan that will pay off all of your credit card balances. This reduces the amount of interest you’ll be paying every month since you will now only have the low interest rate on one loan. Instead of making numerous small payments every month, you’ll have just the one payment to make.
In some cases with debt consolidation, you can even negotiate your balances down a little bit to save even more money when you use the loan to pay off those cards.
Now that you’re saving money every month, you can in turn use this money to help make extra payments on your mortgage. Even as little as a few hundred dollars every month can end up saving you thousands of dollars of interest on your mortgage over the course of your loan.
The one trap you want to avoid is getting back into credit card debt once you’ve consolidated your balances. This is a common issue for many and can result in truly overextending yourself and ending up in bankruptcy and foreclosure.
While you don’t want to close all of your credit cards once they’ve been paid off since that can have a negative effect on your credit score, you do need to make a commitment not to use those cards until you are completely debt free. If this means putting them in a safe deposit box or even cutting the cards up, remove the temptation to use them.
Breaking free from the debt cycle requires patience and will power, but it can be done. Debt consolidation is one of the quickest ways to get out of debt in less time and save money on interest payments in both the short and long term.
If you would like to lower your monthly expenses and pay your mortgage off faster, talk to a credit counselor about debt consolidation and your other credit options today.