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Consolidating debt buying house

Downsizing your home is a two-part transaction: You must sell your current property and buy a more affordable one.

This requires both a financial and lifestyle adjustment — along with the financial benefit comes the necessity to live much more efficiently.

“If that’s the case, you need financial counseling, but for people who will not do that — who had medical expenses, business expenses and ran up their credit cards — a debt consolidation mortgage is a good solution.” He cites the case of a client who had a mortgage-free investment house and more than ,000 in credit card debt.

The homeowner had used credit cards to pay for repairs after the home was damaged by Superstorm Sandy.

Downsizing also may reduce your monthly mortgage payment — that leaves extra cash in your bank account each month to deal with other needs.

If you own your house outright, selling it and buying a less-expensive one allows you to purchase a new home and pocket the difference.

writer Glenn Ruffenach says the savings that come with a smaller home make long-term sense for many people.

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Think of the equity in your home as a sacred savings account: You can tap into it but only when truly needed, says Rick Harper, director of housing and senior vice president for the Consumer Credit Counseling Service of San Francisco.That’s why the responsibility of not falling into the debt trap a second time lies in the hands of the homeowner.“Be very responsible and diligent,” Harper advises.For instance, you might switch over to a condo or townhouse, or you could move to a home similar to yours in a more affordable area of town.When you downsize successfully, not only do you reduce your mortgage debt by taking on a less-expensive home, you might also have enough cash left over to pay off your other debts, such as a student loan or credit card.A ,000 credit card balance at 16 percent interest plus a 0,000 mortgage at 4.5 percent interest yield about

Think of the equity in your home as a sacred savings account: You can tap into it but only when truly needed, says Rick Harper, director of housing and senior vice president for the Consumer Credit Counseling Service of San Francisco.

That’s why the responsibility of not falling into the debt trap a second time lies in the hands of the homeowner.

“Be very responsible and diligent,” Harper advises.

For instance, you might switch over to a condo or townhouse, or you could move to a home similar to yours in a more affordable area of town.

When you downsize successfully, not only do you reduce your mortgage debt by taking on a less-expensive home, you might also have enough cash left over to pay off your other debts, such as a student loan or credit card.

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Think of the equity in your home as a sacred savings account: You can tap into it but only when truly needed, says Rick Harper, director of housing and senior vice president for the Consumer Credit Counseling Service of San Francisco.That’s why the responsibility of not falling into the debt trap a second time lies in the hands of the homeowner.“Be very responsible and diligent,” Harper advises.For instance, you might switch over to a condo or townhouse, or you could move to a home similar to yours in a more affordable area of town.When you downsize successfully, not only do you reduce your mortgage debt by taking on a less-expensive home, you might also have enough cash left over to pay off your other debts, such as a student loan or credit card.A $20,000 credit card balance at 16 percent interest plus a $200,000 mortgage at 4.5 percent interest yield about $1,480 in monthly payments.Consolidating the two into a new, 30-year mortgage at 4.5 percent saves about $364 a month.If you are trying to get the maximum loan amount, which is generally 85 percent of the value of the home, you should expect to need a credit score of at least 700, he says.But if your current mortgage and the amount you plan to borrow totals less than 80 percent of the value of the home, then the credit requirements are fairly similar to when buying a home, he adds.“Depending on the circumstances, (use equity) for big-ticket items such as tuition, a sudden illness that devastates the budget, sometimes even the purchase of an automobile when you have thought things through and you have compared that financing cost to what might be available,” he says.“But don’t run out and use it for credit cards for vacations, for frivolous things because it is not an unlimited source, as we saw when the market turned.” The main concern with using equity to pay off credit cards is that often, it is a temporary solution to a much bigger problem.

,480 in monthly payments.Consolidating the two into a new, 30-year mortgage at 4.5 percent saves about 4 a month.If you are trying to get the maximum loan amount, which is generally 85 percent of the value of the home, you should expect to need a credit score of at least 700, he says.But if your current mortgage and the amount you plan to borrow totals less than 80 percent of the value of the home, then the credit requirements are fairly similar to when buying a home, he adds.“Depending on the circumstances, (use equity) for big-ticket items such as tuition, a sudden illness that devastates the budget, sometimes even the purchase of an automobile when you have thought things through and you have compared that financing cost to what might be available,” he says.“But don’t run out and use it for credit cards for vacations, for frivolous things because it is not an unlimited source, as we saw when the market turned.” The main concern with using equity to pay off credit cards is that often, it is a temporary solution to a much bigger problem.

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