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Second Mortgage Versus Credit Card Card Debt

Recent statistics indicated that American credit debt totals $785 billion and this comes to an average of $7,500 per household. Many of us however, carry much heavier loads. Credit card debt is insidious, growing while we pay the absolute minimum payments and still use our cards. Revolving debt will also bring down your credit rating and create a financial situation where you are working just to make your payments. If your credit card debt is getting out of hand, now may be time to take a hard look at your spending habits and your options.

There are a great many reasons to mine your home equity instead of making payments on revolving debt. Credit cards are open-end loans, unlike second mortgages. Most second mortgages have fixed interest rates and are considered closed-end loans. Credit cards calculate interest using compounding interest formulas. Home equity loans and lines of credit have mortgage interest that is tax deductible unlike credit cards where the interest isn’t tax deductible. Also credit cards are not secured by your home, which means higher interest rates and payments. The reality is that credit card debt ultimately costs you more money in interest than if you had consolidated it into a second mortgage loan.

There are many different mortgage refinancing programs available to homeowners and when considering the best financial options, choose the right loan that help you eliminate your debt problem. Find a trusted mortgage lender that you can trust and talk over your options.

Posted in 2nd Mortgage Tips.

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