Consolidating credit card debts in a new purchase mortgage may lower total payments, but in most cases it will make the purchaser poorer. "I have ,000 in cash for a down payment on the 0,000 house I am purchasing.I also have ,000 of credit card debt at 12% that I would love to get rid of.After you sign the documents, your lender will send payment directly to each company.
However, the increase in loan size from 0,000 to 5,000 increases either the mortgage insurance premium or the interest rate on the purchase mortgage.
Indicate you want to include debt in your new home loan at the time of application.
When you fill out the form, note the amount you wish to borrow.
It takes only a ¼% rate increase on 5,000 to offset the savings from a 6% rate reduction (including the shift to deductibility) on ,000 of credit card debt.
Consolidation reduces the total monthly payment in this case mainly because of lower debt repayment.
Although including debt in your new home loan can have benefits, the debt itself can be an obstacle to approval.