payable under a second mortgage on my house cc debt?

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Hey, I take a loan for 50K on the debt and finishing my basement … What a smooth credit ok … Is that the film is a bad idea? The payment will save me about $ 600 per month. I pay more than 2 large CC debt a month and now I’m going to be about $ 600

4 Comments
  1. Reply
    John
    May 2, 2011 at 8:01 am

    The general answer would be yes. How much would it increase the value of your home with a finished basement and can you easily handle the new payment? I would not reccommend that you do this for the credit card debt. I don’t know how much you credit card debt is so it is hard to give you a definate answer. First of all, you are extending you credit card debt to 30 years. Secondly, if the credit card debt increases your overall loan payment by quite a bit you could put you house in risk. If you get into some financial trouble later on then would this extra payment cause you to default on your loan. I would keep them separate.

  2. Reply
    robertcfranklin
    May 2, 2011 at 8:29 am

    Why would you want to convert unsecured debt to secured debt? If you fail to pay on unsecured debt, you lose nothing of value other than a good credit score. If you fail to pay on secured debt, you WILL eventually lose the item that secures that debt AND the good credit score. I strongly advise you to leave the credit card (unsecured) debt separate from the house (secured) debt.

  3. Reply
    Chase R
    May 2, 2011 at 9:05 am

    This is almost always a good idea, but you have to be cautious when making this decision. Before consolidating debt and adding it to your home, make sure you are still left with enough equity (value) to sell your house if you ever want to. Today’s market values are not climbing like they used to. Values have been stagnant to declining in many markets. You never want to use up all your equity and then risk being upside down on your home. That being said, if you can take 50K in cc debt which is probably at 18-25% in compounding interest (meaning your charged interest on your principal balance as well as any interest that has been added to the balance) and converting that to a mortgage at a rate of let’s say 7,8,9, even 10 or 11% fixed interest, GO FOR IT!

    #1 the interest is tax deductable
    #2 you can save 1000’s in interest charges
    #3 if you use the monthly savings to pay down your new mortgage, you can pay off the debt much faster than the loan term.

    The idea that you shouldn’t convert unsecured debt to secured debt because they may take your house is irresponsible. If your goal is to pay the debt off and not to walk away from it, then refinance and enjoy the savings. The trick is to make sure you don’t reuse the credit cards that you just paid off!!

  4. Reply
    mister ed
    May 2, 2011 at 9:31 am

    yes if is a very good ideal as long as you cut up your credit cards other wise you will be back in the same boat except you will have a extra 600 dollars payment to worry about!!!

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