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In addition to reducing the interest you pay, mortgage interest is typically tax deductible, while credit card interest is not.
The biggest disadvantage to using your home equity to pay down other debt is this: if you cannot repay your new loan, you could lose your home to a foreclosure.
You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved. Declining mortgage interest rates in recent years have coincided with increasing levels of consumer debt for many Americans.
Those trends have made more people consider mortgage refinancing as a way to reduce their consumer debt burden.
Robert Henderson, financial advisor, Mystic, Connecticut: The advantages to refinancing your mortgage are numerous.
The first advantage of refinancing is lower interest rates.
The question: Should you refinance your house with a mortgage to pay this debt off?
With interest rates on credit cards often ranging from 12-18 percent, that can produce a real savings.
There may be other wrinkles involved - for example, some of your creditors may be willing to write off part of your debt in return for an immediate payoff - but the key thing is that you're simplifying your finances by exchanging many smaller debt obligations for a single bill to be paid every month.
What types of debts can be covered by a debt consolidation?
According to Nerd Wallet.com, the average balance in April 2014 for households with credit card debt is ,191.
While consumers can use techniques such as the “snowball method” (paying off your lowest balance in full while paying the minimum on other credit cards, then tackling the next debt with as high a payment as you can handle), the concept of debt consolidation for one overall payment is appealing.On the plus side, the house you bought for 0,000 10 years ago with a 30-year fixed-rate mortgage is now worth 5,000.