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Consolidating debt into your mortgage good idea

For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a $100,000 home has a principal and interest payment of $804.62.That same loan at 6% reduces your payment to $599.55.

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One is that usually a mortgage has a lower interest rate than other debt.Some of these motivations have benefits and pitfalls.And because refinancing can cost 3% to 6% of the loan's principal and – like taking out the original mortgage –requires appraisal, title search and application fees, it's important for a homeowner to determine whether his or her reason for refinancing offers a true benefit.If you have a car loan or credit card debt, the interest rates could easily be twice that of your mortgage rate.By refinancing and consolidating debt, you will see immediate monthly savings in your payments.Another pro is that you will eliminate multiple bills.

It can be confusing trying to pay several credit cards and car loans that are all due on a different day of the month. So are certain fees involved with the closing, like prepaid points.

Refinancing a mortgage means paying off an existing loan and replacing it with a new one.

There are many reasons why homeowners refinance: the opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa; the opportunity to tap a home's equity in order to finance a large purchase; and the desire to consolidate debt.

Today, many lenders say 1% savings is enough of an incentive to refinance.

Reducing your interest rate not only helps you save money, it also increases the rate at which you build equity in your home, and it can decrease the size of your monthly payment.

In some cases, this provides unique benefits to the consumer and can be a viable option.