Bill consolidation into a new mortgage?

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I like most of America have a little debt. I have had people mention that when they built a house, they have also rolled all there little bills (credit cards and small loans) into there mortgage right off the bat. How is this done? Is this one of those little things that aren’t allowed anymore due to the past economic problems in the US?

  1. Reply
    February 9, 2011 at 8:38 pm

    Forget it. That can no longer be done. A mortgage lender will not give a loan for more then 80% of the homes value

  2. Reply
    February 9, 2011 at 9:02 pm

    You may refinance your home if you have sufficient equity to do so. During the refinance you may do what is called a cash out mortgage loan a oppose to a rate and terms refinance, where you would simply be refinance to lower your mortgage interest rate.

    With the cash out mortgage loan you may pay off credit card debts, car notes and as well as any other debt you so desire.

    You may not do this on a purchase as the appraised value of the property will set the sales price. Based on this appraisal the lenders will lend a maximum of 100% of this value as in Veteran loans.

    Most lenders will lend some percentage of this appraised value with you expected to pay the difference, called the down payment.

    Therefore based on this information, you will not be able to roll debts into a purchase mortgage, only on a refinance.

    The same apply to a house you would build. If you are paying off the construction loan, and there is equity in the property you may roll your debts into this type mortgage also.

    If you do roll your debts into a refinanced mortgage you must consider the savings from not having to pay these debts any longer therefore a certain portion should be saved. Then another, just because you have paid off the credit card debts, does not give you carte blanche to run up these credit cards once again. This is counter productive.

    I hope this has been of some benefit to you, good luck.

    “FIGHT ON”

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