The Houston Market & Debt Consolidation Opportunities

By Joe Taylor Jr.
Local Lender Columnist
Apr 28, 2006
Many homeowners have taken advantage of soaring real estate values and low mortgage rates to consolidate their debts into one affordable payment. The slow rise in interest rates and the cooling real estate market has made debt consolidation less appealing to some homeowners. In Houston's powerhouse real estate market, however, using the equity in your house to pay off high-interest debts can be a good idea. Houston Realtors expect the market to remain strong, based on record sales in early 2006.

One of the best reasons to consider debt consolidation is to pay off smaller, higher-interest loans. There are a variety of ways to do this, including rolling your smaller loans into your mortgage payment and taking out a home equity line of credit. Interest rates have been rising, but they remain historically low. It is highly likely that you can get a new or second mortgage at a lower interest rate than you are paying on other debts.

Houston Homeowners Should Still Approach Debt Consolidation with Caution

Make sure that you can afford your new mortgage payment, since you're using your home as collateral against formerly unsecured credit. Since many home equity loans come with variable interest rates, talk to your mortgage lender about how your payment might change over the life of the loan. Successful debt consolidation also requires significant changes to your spending habits to reduce the risk that you will run up new debt while paying off the old.

If you're considering consolidating your debt into a mortgage in Houston, now is an excellent time. Houston's strong real estate market means your home value will most likely continue to appreciate. When you're ready to sell your home, your home equity should be adequate to pay off your consolidated debt.
Sources:

• Houston Business Journal
• Minneapolis Star Tribune
• Reuters
• San Diego Source

About the Author
Joe Taylor Jr. has covered business and finance news for Financial Times Television and CNBC. He coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.