Mortgage questions, answered
Real questions borrowers ask, answered in plain English by The Mortgage Advisory, a mortgage lender and broker licensed in California, Texas, Florida, and Colorado (NMLS #1549739).
6 answers in Debt Consolidation
Clear searchCan I use my home equity to consolidate debt if I have bad credit or a high debt-to-income ratio?
Often, yes. Paying off your cards at closing removes those payments from your debt-to-income, which can be the very thing that helps you qualify. Depending on your score and age, an FHA cash-out refinance, a Non-QM loan, or a reverse mortgage option may work when a standard HELOC doesn't. The Mortgage Advisory will tell you honestly which path fits, and when to wait and rebuild first.
I'm a homeowner with credit card debt. What are my options to pay it off?
As a homeowner, you have more options than most people: balance transfer cards, a personal loan, a debt management plan, and your home equity through a HELOC, home equity loan, cash-out refinance, or, if you're 62 or older, a reverse mortgage. At The Mortgage Advisory, we steer people toward the option that lowers their Life Rate, the blended rate on everything they owe, and their total cost.
Should I use a personal loan or my home equity to pay off credit card debt?
It depends on the amount and your credit. A personal loan is fast and doesn't put your home at risk, but its rate is usually higher and its term shorter, so payments are bigger. Home equity usually costs less and spreads payments out, but your home secures it. For smaller balances with good credit, a personal loan can be the better call; for larger balances, home equity usually saves more, and The Mortgage Advisory will show you both honestly.
Can I use a reverse mortgage to pay off my credit cards and other debts in retirement?
Yes. Homeowners 62 and older can use a reverse mortgage, or a reverse mortgage second that keeps their current first mortgage, to pay off credit cards, medical bills, and other debts, with no required monthly mortgage payment on the reverse loan. You still pay property taxes, insurance, and upkeep, and the balance grows over time. The Mortgage Advisory arranges both in California, Texas, Florida, and Colorado.
What are the risks of turning credit card debt into debt secured by my home?
Three big ones: your home becomes collateral for what used to be unsecured debt, stretching it over a longer term can raise the total interest you pay, and running the cards back up leaves you with both debts. Each risk can be managed with a fixed payment, a set payoff date, and a plan for the cards. The Mortgage Advisory shows you the total cost, not just the lower monthly payment.
What is my Life Rate, and why does it matter more than my mortgage rate?
Your Life Rate is the blended interest rate on everything you owe, including your mortgage, credit cards, car loans, and solar or PACE liens, weighted by how much you owe on each. Many homeowners are proud of a 3% mortgage while cards at 22% and liens at 11% quietly push their real cost of borrowing much higher. The Mortgage Advisory calculates your Life Rate for free and shows you how to lower it.