Can You Roll Credit Card Debt Into Mortgage?

Rolling Credit Card Debt Into A Mortgage Loan

It is perfectly legal and more and more common for consumers to roll their credit card debt into their mortgage.  You will however have to be shopping for a new mortgage.  This process will not work with an existing mortgage loan you have already formalized.  With a credit card roll in, you are essentially taking the credit card debt you currently owe and adding it to the amount you will borrow for the purchase of your home.  It will have to be approved by your mortgage lender.  By doing this the goal is to make your monthly payout lower.  Meaning with your new mortgage loan you will pay less each month in bills, but the mortgage payment will include your consolidated credit card debt.  Use this example to see how credit card debt rolled into a mortgage can be beneficial:

Prior to finance:

Mortgage owed: $200,000 with 6.25% interest rate (APR).  Monthly payment is: $1,231.43

Total Credit Card debt: $30,000 with an average APR of 15% if paid off over 30 years: Monthly payment is: $379.33

Total Combined Monthly Payment Amount: $1,610.76

After new mortgage with credit card debt rolled in:

Mortgage owed: $230,000 with 30 year loan at 5.5% APR.  Monthly payment is: $1,305.92

Difference between old monthly payments and “rolled in” mortgage: $304.84 in monthly savings

Caution On Rolled In Credit Card Debt

While the example above clearly illustrates that there are savings to be had with a rolled in credit card mortgage loan, there is a word of caution.  First and foremost, whenever you are consolidating to eliminate your credit card debt, you must remember the spending behavior that got you in debt in the first place.  If you are living out of your means and charging too much, your credit card debt problems will simply come right back.  Also with a mortgage loan you are paying off your credit cards over a substantially long amount of time: 30 years.  If you can manage to pay off your credit card debt in 3-5 years with normal monthly payments, you will save money over rolling it into a long term mortgage loan.

Related posts:

1. Will Going Into A Debt Consolidation Program Affect Getting A Mortgage?
2. What Are Credit Card Consolidation Loans?
3. If You Make A Reduced Settlement With A Credit Card Is The Difference Reported To The IRS As Income?
4. How to Eliminate Credit Card Debt?
5. Who Can Help With Credit Card Debt Consolidation?