Can I Consolidate My Credit Card Debt & Auto Loan Into My Mortgage?
You may have the option to consolidate many forms of debt into your mortgage. This can include both installment loans, like auto debts, and revolving loans, like credit cards. Be careful when using this strategy.
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Benefits
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Debt consolidation can help reduce the number of bills you pay each month and can also assist you in reducing the total interest you pay each month. Since your mortgage is a secured loan, meaning it uses your house as a source of collateral, interest rates on a mortgage consolidation may be lower than the rates you are currently paying to your credit card and auto loan companies independently.
Warnings
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Many consolidation loans actually result in higher costs. Further, once you consolidate debts under your mortgage, you have used your home as collateral on more debt. If you are unable to make your mortgage payment because of the higher amount of debt due to your credit card and auto loan, you will default on the entire mortgage.
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Options
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If you would like to consolidate debts, consider using a cash-out refinance or home equity loan to repay your debts immediately. These options will provide you with the same benefit of reducing your total number of loans, but they have the added benefit of immediately repaying a portion of your debt.
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References
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