Bill consolidation with a 2nd mortgage can save you thousands of dollars on interest charges and help you get out of debt faster. But before you sign for that home equity loan, make sure you have looked at all of your financing options. Only by researching loan quotes and knowing your legal rights, can you protect yourself from predatory lenders.
Benefits Of Consolidating Bills With A Second Mortgage
Mortgages offer the lowest costing financing for most people. By tapping into your home equity, you can cut your interest costs from credit cards or other personal loans by more than half.
With the right type of second mortgage, you can choose to speed up your repayment schedule or opt for a lower payment. You will save more money with a shorter loan period. But if you are in a financial bind, you have the option of reducing your monthly payment with a longer loan term.
Remember too, that paid interest is deductible for most people on the federal taxes.
Ask For Good Faith Loan Estimates
Lenders donít all charge the same rate or fees for second mortgages. Thatís why itís so important to ask for a good faith loan estimate from potential lenders. When you compare the loan term, interest rate, fees, and penalties, you can be sure you will find the best lender.
Make sure that you look at several different type of financing companies. Most often banks or credit unions will offer you the lowest APR on a home loan. But mortgage brokers may also have some low rate deals.
Use Your Legal Lending Rights
Once you have selected a lender, look to see that your loan terms donít change without your consent. Ask questions about changes in the quoted rate or fees.
Also, read through your loan contract before you sign. You have a legal right to inspect the final settlement statement, called a HUD-1 or HUD-1A form, one day prior to signing. Even after you sign for your second mortgage, you have three days to change your mind.
The more money you save on your second mortgage, the faster you can get out of debt. So take the time to research lenders to find the best rates and terms.