Debt consolidation through a refinanced home loan can offer a tempting promise — the exchange of your maxed-out credit cards for a clean slate. The trouble is, consolidating debt with a refinance doesn’t reduce it by a cent. It just moves your balances to your mortgage lender.
Industry experts put the failure rate of debt consolidation programs as high as 80 percent. If you’re part of the four out of five who take out these loans and don’t pay them off, you could be worse off. The better you understand debt consolidation — what it can do and what it can’t do — the less likely you’ll make a bad financial move.
Understanding debt consolidation home loans
The critical thing to understand about consolidating your credit card debt with your home mortgage is that doing so extends the repayment period, which can greatly increase your overall interest paid.
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