Consolidating debt into mortgage
*Disclaimer: Please note that the calculation results are estimates based on our most up-to-date information sourced from lenders’ publicly stated methodology and first-hand accounts. The results do not include special offers, such as cash back incentives, or any discharge, registration, reinvestment or transfer fees you may also incur.For an exact penalty calculation, contact your lender directly.If you are trying to get the maximum loan amount, which is generally 85 percent of the value of the home, you should expect to need a credit score of at least 700, he says.But if your current mortgage and the amount you plan to borrow totals less than 80 percent of the value of the home, then the credit requirements are fairly similar to when buying a home, he adds.But on the other hand, having maxed out the limit on your credit cards also hurts your score.This lending requirement is somewhat useless when it comes to preventing the borrower from getting into debt again because obviously it doesn’t stop the homeowner from opening new credit card accounts right after closing, Harper says.
A ,000 credit card balance at 16 percent interest plus a 0,000 mortgage at 4.5 percent interest rack up 0,936 in interest payments over the life of the loans.
That’s why the responsibility of not falling into the debt trap a second time lies in the hands of the homeowner.
“Be very responsible and diligent,” Harper advises.
As a refinance for debt consolidation requires you to terminate your existing contract with your lender and enter into a new mortgage, you will have to pay a mortgage break penalty.
This is determined through a number of factors including your original mortgage contract date and current mortgage balance and rate.