Refinancing Mortgages and Debt Consolidation are Not the Same
 
There are two ways of paying down your debt – and really they depend on whether or not you have a home. If you have a home and have equity in it you can use this as your debt consolidation and it will be called a refinancing of your mortgage, or a second mortgage, or a home equity loan. However, if you do not have a home, then your debt consolidation will only be that and nothing more. This could be an unsecured loan if you have not put any collateral towards it, or it could be secured if you attach it to savings, bonds, a car, etc. Obviously the former is secured as you are using your house to guarantee the loan.
 
Which one you get really depends on your financial situation. If you have the money to pay down your debts fairly quickly and are not worried about not being able to pay, you might want to look into a refinancing of your mortgage. This way you only have one payment each month and it is at a significantly lower rate. However, if you have a great interest rate on your mortgage and today’s rates are not as good, you could do home equity on your home, and then you still get a low rate and the interest is tax deductible.
 
But if you have any doubts, do not attach your current unsecured debt to your home. If you can’t pay it they will come after you and take your home if you do. This is why it is best to use a debt consolidation loan that is unsecured if you are worried about being able to pay it off. This happens quite often where someone is knee deep in debt but they think that by restructuring it they will be able to pay it back, and then it turns out it didn’t work.




 

 

 

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