If you are planning on buying a new home, or applying for a new home loan, you may be wondering if you can add your credit card debt into a new mortgage.
Since mortgages usually have lower interest rates than credit cards, many people think about just transferring that credit card debt to their new mortgage. But is that possible? Can you add credit card debit into a new mortgage?
Get an answer to this question and some helpful related information below!
Can You Add Credit Card Debt into a New Mortgage?
Yes, you can consolidate your credit card debts into your new mortgage. But, we caution you that this will not be an easy process. And it might not be a good option for you. There are pros and cons to doing so.
There are two ways you can add your credit card debt into your mortgage.
First, you can refinance your whole home loan. Refinancing your home loan means that you are buying out your current loan so that you can replace it with a new one. The refinanced loan will have a whole new set of terms and agreements. And, very likely, a new (hopefully lower!) interest rate as well.
The other way you can add your credit card debt into your mortgage is through a home equity loan. A home equity loan is a second loan. Similar to refinancing, your second loan also has its own terms. Both options have similar requirements.
To be eligible for one of these options you should have a good record of on-time payments on your first mortgage. You should also have a good credit score and strong credit history.
Consolidating your credit card debts into your home loan by either method has its fair share of pros and cons. Let’s look at them next.
Advantages of Adding your Credit Card Debt to your Home Loan
Here are some of the advantages of adding your credit card debt to your home loan:
You Will Have Fewer Monthly Bills
Adding your credit card debt to your mortgage takes care of two bills at once as you pay for both simultaneously.
You Will Pay Lower Interest
There is a decent chance that your credit card interest may actually be lower than what you used to pay. But that is dependent upon the market and the state of your credit.
You May Be Eligible For Interest Deductions
Adding your credit card debt can help you save some money during tax time. There is the possibility that you will qualify for a mortgage interest deduction. This would allow you to claim a reduced income depending on how much interest you paid on your home loan.
Disadvantages of Adding your Credit Card Debt to your Home Loan
On the other hand, here are the cons of adding your credit card debt to your home loan:
It Is Pretty Difficult To Qualify.
Unless you have a good credit rating, it is pretty difficult to qualify for refinance or home equity loan. And to get one with favorable terms.
This Could Add Years To Paying Your Debts
Normally, mortgages are paid in 15 years or 30 years. So adding your credit card debt may increase drag out the time that you have that debt for decades.