Unfortunately, the American people are suffering from a high amount of debt. It has become necessary to find solutions for these individuals. A plethora of debt management companies exist solely for the purpose of helping consumers manage their debts in a better way. One of their suggestions will be debt consolidation mortgages.
You should already know and understand what a mortgage is if you own your home. With debt consolidation mortgages you are using your home as collateral for the loan. If you do not have a mortgage on your home at the moment you will need to take one out for the debt consolidation mortgages solution. Most people already have a mortgage, which means the debt consolidation mortgages are a refinance mortgage or a home equity loan.
If you elect for a home equity loan as a secondary loan keep in mind that you will have two mortgages to pay on. If you can refinance your original mortgage you would have one debt; therefore the refinance debt consolidation mortgages are often the better way to go. There is a catch for this type of loan. You must have equity in your home to consolidate your debts. If you have no equity or cannot refinance your loan to produce a bit of equity you would not be able to use the debt consolidation mortgages.
You will be using the equity you have in your home to pay off your other debts. For instance, you have three credit cards, a car loan, and a personal loan. You have elected to pay off these five debts with your home equity. You have enough equity in the home to refinance your mortgage, pull out the equity, and encompass the closing fees in the new mortgage.
When the closing occurs you are given a check for the equity you obtained. This money will be deposited in your account and you can then pay off each of the debts you have. The mortgage company will not know if you paid these debts, but it is wise to use it for that purpose instead of using it elsewhere.