Debt consolidation with a 1st Mortgage
Have a 1st mortgage? You may consolidate your debts by redoing your current 1st mortgage and increasing the amount to cover the consolidation of your existing debts. It is possible also to increase the amount to cover cash out purposes. These include things like personal emergency funds, home renovations, kid’s education and any other use.
Advantages of using a new 1st Mortgage
Keeps to a single mortgage payment. All you payments will be reduced to one.
Easy Bill and payment management
Significant monthly savings of total payment by eliminating and reducing debts.
May be open to prepayment penalty to discharge current mortgage
Increases the monthly mortgage payment
Decreases your home equity
Debt Consolidation with a 2nd mortgage
Consolidation of debts with a 2nd mortgage instead works well for some home owners. Usually is the better method when the 1st mortgage has many years to maturity. Also a better option for borrowers that do not need large amounts of consolidation and might be able to save the amount to discharge the 2nd mortgage at anniversary. Amounts of less than 50k make more sense via a 2nd equity take-out mortgage.
Advantages of using a 2nd mortgage:
No prepayment penalties as the 1st mortgage is being untouched
Very fast process, usually funding in several days
No concern for income or credit. Much less documents required to close and fund
Better Bill payment and management control. If all debts are consolidated there will be 2 payments to deal with: 1st mortgage and 2nd mortgage
Reduces the overall monthly payment amount, although not as significant as with the 1st mortgage consolidation. 2nd mortgage rates and pricing tend to be significantly higher.
Overall higher monthly payment for an equal amount of total debt consolidated
Shorter term to maturity. 2nd mortgage usually are structured over 12 month period
Interest only payments. Majority of 2nd mortgage are priced with no principal repayments
Looking for an APPROAL?
Let’s Talk About Your Debt Consolidation
Free NO OBLIGATION Consultation for debt Consolidation 1st and 2nd mortgages