Rolling All Your Debts Into a Housing Loan – Should You Do That?
It is a shared practice among credit consumers to consolidate their debts into a housing loan or a new refinance. A question that I frequently encounter is what kind of debts should be consolidated?
Most people keep up lines of credits like credit cards, personal loans, education loans, car loans and etc. Consumers are typically advised by their bank officer to consolidate all of their debts, which they claimed is a very wise financial move. That may not always be the case. Facilities like credit cards are very useful in times of emergency, and if you are a prudent credit user, there is really no need to consolidate these types of debts into a housing loan or a second mortgage. Keep your credit card and similar facilities by your side as a safety line of stand by credit. It is always wise to have some additional cash when the need arises.
Another thing is that certain types of credits get wiped out when one has declared a bankrupt. A housing loan does not get wiped out when you declare as a bankrupt. consequently, think carefully before consolidating such debts into your housing loan. You are truly converting loans that may get wiped out into loans that will not get wiped out. The resultant can be pretty nasty if you make the wrong move. Some of you may think that bankruptcy is a far fetched idea, but it is always better to be prepared for all kinds of financial possibilities.
Think carefully before consolidating all of your debts into a single loan. That may not be the best move to you. Talk to a mortgage broker or a financial planner before committing to any of such decision.