If you own a home, have a first mortgage and a slew of high rate credit cards you probably would be wise to refinance all your debt. Right now rates are still relatively low.
If your credit history is bad, you will pay a rate that's higher than someone with excellent credit but deal with a group of lenders that specialize in bad credit loans. You'll do a lot better with them than your average national or local bank.
If you already have a home equity loan there may be still be enough equity in your home to consider refinancing all your debt. As the housing market softens this may be a window that is closing so you need to act now. In a refinancing scenario the debtor pays off the high interest bills using a refinancing plan with a cash out feature. Cash at closing is used to pay off all the high interest credit cards and while the interest rate on the bad credit mortgage refinancing loan may be higher than that of a conventional loan, the new house payment should still be less than the total of all the previous debt regardless of source.
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Bad credit mortgage refinancing to pay off high rate debt can be labeled a debt consolidation loan and is only possible if the value of the home being refinanced has appreciated enough so that the home's appraised value will justify a larger loan. The new loan amount has to be capable of handling the debt being refinanced as well as closing and other costs in the transaction. Be aware of all the implications before signing any intention or agreement.
The advantages of bad credit mortgage refinancing are several. First, the term of the loan will be longer and with a bit of luck the total payment every month will be smaller than the previous total of the old house payment and all the credit cards.
Now here's a new golden rule - don't fall prey to leaving those credit cards open after the new loan is consummated and then gradually running them back up again. The next step is bankruptcy or foreclosure so be smart this time and cut the darn things up as soon as you pay off the balance.If you are not strong enough to do this on your own, then you better get a debt counselor and fast, you probably are addicted and need professional help.
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