Debt Consolidation Through a Mortgage Refi: Is It Right for You?

By Gil Mackey
Local Lender Columnist
Nov 28, 2007
Wisconsin homeowners with high credit card debt often look to a mortgage refi as a great solution to get things under control. Could this be the right move for you?

The Benefits of a Mortgage Refi

There are many cases where Wisconsin homeowners can benefit from a mortgage refi. Some examples include:

• Refi to a new loan with a lower interest rate
• Shorten the term of the mortgage
• Lower monthly payments

Lower payments through a mortgage refi can be a short-term solution, but might come back to haunt you later. Shortening the term of your mortgage can save you money on interest in the long run, but your payments will be higher -- if you can't afford it you will cause yourself trouble. It is important to remember that everyone's situation is different, so you have to make a decision based on your needs.

Debt Consolidation with a Mortgage Refi

If you have high-interest credit card debt and a sufficient amount of home equity to pay everything off, this can be an excellent solution. However, you will be taking unsecured debt and converting it to a secured debt. If you're stripping your home of equity then you will be taking away a significant resource that may have taken you years to build up.

Before you get a mortgage refi on your Wisconsin home for the purpose of debt consolidation, ask yourself this question: will you change your spending habits? Debt resulting from a medical emergency is very different from having a frivolous spending problem. Home values are starting to flatten in Wisconsin just like many other real estate markets. Before you apply for your refi make sure that you won't get right back in the same situation -- but without the equity to save you.

About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelance writing, Gil writes for his local paper, and lives with his two children in Nevada.