Personal Finance

should I roll $19,000 credit card debt into low-interest mortgage?

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  • Feb 24th, 2010 9:12 am
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[OP]
Newbie
Mar 1, 2009
12 posts
Victoria

should I roll $19,000 credit card debt into low-interest mortgage?

Hi! My bank manager says my credit score is falling because of my credit card debt. Should I try to roll it into my prime-rate, interest-only mortgage? I need lots of advice on this,please!
16 replies
Newbie
Sep 30, 2008
68 posts
If you can, and your credit card interest is higher, then of course you should...what's the catch?
Deal Addict
Feb 4, 2008
3132 posts
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I highly doubt your bank will just add it to your mortgage. I am guessing you will have to refinance and depending on the math it could be a good thing.

Are you looking for additional credit? Is your credit rating important to you in the next couple of years?
www.mortgagecalculatortoolkit.com

Do your mortgage math correctly!
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Oct 15, 2007
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tuxedoo wrote:
Feb 23rd, 2010 5:09 pm
Hi! My bank manager says my credit score is falling because of my credit card debt. Should I try to roll it into my prime-rate, interest-only mortgage? I need lots of advice on this,please!
first thing you should do is cut up that card
if you can consolidate it into your mortgage thats the best thing to do
Everything has been said before, but since nobody listens we have to keep going back and beginning all over again. - Andre Gide
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Aug 17, 2004
2154 posts
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Toronto
Absolutely not

[QUOTE]"I would only suggest this as a last-gasp strategy," says Susan Reynolds, author of "One-Income Household." "In general, rolling credit card debt into mortgage loans is not a good idea. You will pay significantly more in interest over the life of the homeowner's loan than you would if you chipped away at your credit card debt over a period of three to five years. Remember, home equity loans are secured. Credit cards are not. If you renege, they can pester you for payment and ding your credit report, but they cannot confiscate your home."[/QUOTE]
"Our lives are defined by opportunities. Even the ones we miss."
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Oct 1, 2001
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shawn99 wrote:
Feb 23rd, 2010 7:39 pm
Absolutely not

Quote:
"I would only suggest this as a last-gasp strategy," says Susan Reynolds, author of "One-Income Household." "In general, rolling credit card debt into mortgage loans is not a good idea. You will pay significantly more in interest over the life of the homeowner's loan than you would if you chipped away at your credit card debt over a period of three to five years. Remember, home equity loans are secured. Credit cards are not. If you renege, they can pester you for payment and ding your credit report, but they cannot confiscate your home."
Absolutely!!! :P
Actually what's quoted above seems very strange advice. If you are paying 19% interest on the money and have a chance to knock that down to 4% interest you absolutely should. BUT that should not be counted as a free pass to start racking up credit cards again. If you roll all the debt together then I would suggest telling the bank that you want to set your mortgage payment to your mortgage payment now + what you are paying towards the credit card. You will pay off the debt much faster, you just have to be have a plan and stick to it.
Deal Addict
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Sep 26, 2007
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SC
Both seem to be sound advice. Depends on which perspective you think about.

If i take the OP to have an over spending problem, he may put himself into more debt because just having a lot of credit is his problem.

For everyone else who doesn't abuse credit, the facts is you can get a lower rate by rolling debt into the lower interest mortgage.
Deal Expert
Oct 6, 2005
16515 posts
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I would roll the debt into a secured line of credit. Then I would pay off the line of credit as fast as possible.

19 - 22% a year on $19000.00 is over $4000.00 in interest a year :| Or $300.00 - $400.00 a month in interest!
Newbie
Feb 18, 2010
57 posts
2 upvotes
Some banks offer a same term refi-- they can waive the 3 month interest penalty or IRB/ if you refi above a certain threshold-- $10K - $25 however you will still need to pay a legal fee of around $500. Still may be worthwhile.
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Sep 3, 2006
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xlfe wrote:
Feb 23rd, 2010 8:31 pm
If i take the OP to have an over spending problem, he may put himself into more debt because just having a lot of credit is his problem.
But...

If the OP (or anyone) has never addressed their spending habits, they'll never solve the problem. Plus, they'll continue to pay interest at the higher amount.

If you're serious about tackling your cc debt, you're just as likely to make additional contributions against your mortgage to pay down that increased amount as you are to paying down the cc company, but you'll be paying them at a higher rate.

Address the cause not the symptoms.

Plus, wouldn't higher cc debt (as opposed to mortgage debt) look worse for your credit score/report?
Deal Addict
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Sep 23, 2009
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Brampton
Yeah it all depends on the situation. I would not recommend to consolidate debt into mortgage ever. UNLESS, you are horrible at repaying debt. Ask yourself, have you ever incurred debt and then watched as you payed it off and saw it go to a zero balance? Or have you for your entire life just consolidated one debt into another for many years and only use lump sumps that come into your life to pay down or off debt?

Even at 2% mortgage which is cheaper then the 19.75% card, (or whatever) you've just tacked on debt for the next 20/25/30/35 years of your life. You really have to make the choice that suits you best.
Deal Addict
Nov 27, 2005
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Doesn't necessarily have to extend his mortgage. He could make prepayments when possible as if her were paying the CC debt.
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Nov 23, 2005
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shawn99 wrote:
Feb 23rd, 2010 7:39 pm
Absolutely not
Do some math and figure out how long it would take to pay off a $19k CC at 20% interest making minimum payments.

There are plenty of "experts" now days with opinions.
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Jul 7, 2003
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coolspot wrote:
Feb 23rd, 2010 9:56 pm
i would roll the debt into a secured line of credit. Then i would pay off the line of credit as fast as possible.
+2
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Dec 12, 2005
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coolspot wrote:
Feb 23rd, 2010 9:56 pm
I would roll the debt into a secured line of credit. Then I would pay off the line of credit as fast as possible.
++i

You get the benefit of a lower interest rate, more payment flexibility than a mortgage, without needing to refinance or pay penalties.

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