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Consolidating High Interest Loans into a Mortgage

Consolidating High Interest Loans into a Mortgage

If you find yourself paying the minimum on your credit cards, or just a little more, most of your payment is going to cover the high interest rates associated with the debt. This means that it often takes two or three times as long to pay off the debts as it would if you were just able to pay the principal.

But what if you could change that interest rate from, say, 18 percent to 2 or 3 percent on that debt? What if you could roll that debt into your mortgage and make it part of a long-term loan? There are many reasons to take a look at this alternative to your debt management.

1. You’ll pay less money over time.

If your credit card debt is in the high four or low five figures, rolling it into a mortgage renewal or refinance is a smart idea. That large minimum you’re paying into your credit card each month, while your new mortgage payment will only go up by a comparatively small amount. Because you’re looking at a 30-year amortization, depending on the amount of debt you have, this could end up saving you a considerable amount over time. If you are able to start paying more than your minimum monthly mortgage payment, the extra goes straight to principal, which means that you’re knocking your debt out dollar for dollar, instead of having to deal with more interest.

2. Your credit score will improve.

A part of your credit score comes from the percentage of your credit card balances that you have in use. If you have a $5,000 limit on a credit card, but your balance is over 50 percent of that (so $2,500), your credit score takes a hit. Consolidating that into a mortgage renewal means that your credit card balances go down to zero. If you can resist the temptation to take those credit cards out now that they are paid down, that will continue to benefit your credit score. Also, while your mortgage balance will go up somewhat, as long as you keep making your mortgage payments on time, you will get that positive effect on your score.

3. Your sense of financial panic will go away.

If all of your credit cards are maxed out, or close to it, and you’re just making minimums each month, your life develops a great deal of stress. If your car breaks down, or if your refrigerator conks out, you don’t have any emergency credit on hand to take care of that immediately. This is where having credit requires a great deal of discipline. Just because you have a zero balance on your card doesn’t mean that you have to use any of it. You’ll want to review your card agreement and see if there is a minimum use fee on a monthly, quarterly or annual basis, but if you don’t have to use your card, put it in a drawer and only get it out when there is a true emergency. You’ll feel better about your financial picture, and you will be a happier person.

If you’re ready to talk about debt consolidation in your mortgage refinance or renewal, give us a call today! We have helped hundreds of clients in the Vancouver area improve their financial situations, and we look forward to working with you.

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Does Your Bank Provide You with Alternative Choices?


Advantages of using a Mortgage Broker over the Bank

For first time home buyers and previous home owners alike, getting a mortgage is stressful. Not only are you thinking about the up-front cost of a new home, but prospective home buyers are also plagued with finding the best mortgage rate and the most attractive monthly payments. Wouldn’t it be nice to have someone that can do all of that for you? And better yet, you don’t pay until you’re happy with what they’ve found for you. A mortgage broker isn’t for everyone, but for home buyers that want to avoid the anxiety of finding the best rates and wading through lingo and paperwork that quickly becomes too much to handle, a mortgage broker is essential.

They Can Find the Best Fit for You, Not Everybody Else

Unlike popular mortgage and real estate websites, working through a mortgage broker is a very personalized experience. A mortgage broker can sit down with clients and look at all the factors that may affect the kind of mortgage you get and how much you pay every month. When using a broker, you can express any needs and concerns that would impact what you can afford and the type of mortgage you need. This allows them to find the best possible policy for you. And, the advantage of using a local mortgage broker over someone a thousand kilometers away is that he or she can empathize with your concerns. Cost of living, home repair and utility bills are every day worries, and someone familiar with your area would be better suited to addressing these needs. It helps to know that the person talking to you about money knows just how expensive milk and bread is at the local grocery.

A mortgage broker also doesn’t work for a bank. This is a huge benefit because he or she isn’t getting paid to sell you anything. Rather, they are getting paid simply to represent you to banks and financial institutions. While some banks may try to take advantage of you, a mortgage broker merely wants to find what works best for your budget and needs.

And, most mortgage brokers have the advantage of connections in the financial world. Some programs and loan offers may not be available to you on your own, but a mortgage broker would have access to them. With a mortgage broker, you’ve got the added addition of their experience along with having a representative out there finding you the best deal. Because their goal is to find the best deals, mortgage brokers know about a lot of companies and a lot more policies. Some of these are only available to brokers, so there are opportunities that may be available to you that you couldn’t have found on your own. Plus, in some cases a mortgage broker may beable to waive costly closing fees, saving you hundreds.

They Understand the Language and Can Help You With It

One of the biggest obstacles buyers face is language. A mortgage broker is not dissimilar from an attorney in this regard. Terminology like amortization, porting and shared-appreciation mortgage might require some explanation as these words crop up in a mortgage agreement. The average person doesn’t know a lot of legal terminology because put simply, you don’t have to. Professionals like mortgage brokers or attorneys have a thorough and complete understanding of this, and it is in your best interest to take advantage of that.

A mortgage broker can explain what will be required from you to satisfy the terms of your mortgage and can clearly explain what happens when payments are missed or if you are able to pay off your mortgage early. Most importantly, because of a mortgage broker’s understanding of this particular financial language, he or she can make certain that you aren’t taken advantage of by a bank or financial institution.

Another obstacle that can seem very daunting is paperwork. Some of it goes to the government, but quite a bit of it is returned to the lender. While the paperwork is designed to protect you from unlawful actions by the bank or financial institution that loaned you the money, a lot of it is also agreements and proof of income, credit, and other related material essential to home buying and ownership. With so many deadlines and so much legal talk’, it can be overwhelming to deal with. Mortgage brokers can help organize this tidal wave of information. If your mortgage broker is local, handling the paperwork is considerably easier because you have the benefit of meeting with them in person, going over exactly what you need to sign, and getting it taken care of without the hassle of return dates or lost paperwork. By using a mortgage broker, you can ensure that you get your paperwork in on time and complete in the way it needs to be so that you’ll be in your new home that much quicker.

You Can Establish a Relationship Now and For Later

Mortgage brokers can also help you with an existing loan. There are a lot of reasons why you may need to adjust your loan in the future, and it is important to know that now. By going with a mortgage broker for your first mortgage, you are establishing a relationship that will ultimately be beneficial for you as your family grows, your needs change, or even as you look into another property that can better meet your needs. Your broker will know your history and above all else, they’ll have helped you get a favorable first mortgage, essentially establishing a bond of trust between you and your broker.

When a mortgage broker searches for the best loan to fit your needs, a lot of shopping and browsing is involved, and the same thing occurs with refinancing. Your new mortgage will buy out your old one and a mortgage broker would be able to help find the best options available to you. In the event that you’d like to move but find the current terms of your mortgage so attractive that you don’t want to lose them, you should speak to a mortgage broker. This is called porting and is a good thing to consider if your mortgage rate is better than anything currently being offered. A mortgage broker can help you determine if this is what’s best for your financial future and also navigate any new terms or additions that need to be made to your existing mortgage.

Regardless of your needs, it’s good to have a professional in your corner who is looking after your best interests.

Some people prefer to do the leg work themselves in order to have a better understanding of the financial waters, so to speak. Others prefer a sense of responsibility. For most of us however, it is so much easier to work with a professional when it comes to our money and how it’s spent. And, it’s nice when they personally know your concerns and the beautiful, diverse city you are a part of. A mortgage broker can find you the best rates with the best policies not because they are trying to sell you their policy, but because they are trying to find the policy that benefits you the most. And, not only will they save you money in the years to come, but they can do it right now.

As you browse for a new home and look for how to pay it, ask yourself if a mortgage broker can help.

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