Mortgage ?

[Kathy Jetson]

Hi everyone. I received a letter from Franklin Mortgage Solutions in the mail. I've gotten these before and just shred them and get rid of them. Well I read this one. It says they will consolidate my mortgage and credit card debt into 1 new loan for 3.5% So this sounds good. Does anyone have any experience with them? Or can think of a reason why I should not do this? I want to make sure I think of all the angles before I call and talk to 1 of their people. Thank you for any help you can give me.

[Janmac]

Perhaps you can contact your state's Attorney General and speak with them about this company? Here in Missouri, our Attorney General is proactive in dealing with bogus companies and even insurance companies that drag their feet in paying claims. I have been very impressed and surprised at how helpful the staff at the AG's office is.

Also, your first instincts are generally correct. There are probably several local genuine debt counseling agencies that can help you figure out your best solutions. The ones that are trolling through the mail are maybe not the ones to contact.

Jan

[BrerGnat]

You should never roll unsecured debt (credit card) into secured debt (a mortgage). Not a good idea. Ever.

Plus, most companies charge fees to refinance. There has to be something significant in it for them.

I'd just throw that letter out like you usually do.

[dnickels]

If you want to refinance you should contact a lender or mortgage broker and do so. I would not go with a lender who is soliciting your business.

Also, ditto on what BrerGnat said. Rolling your credit card debt into your mortgage is a terrible idea.

[VWL Mom]

You should never roll unsecured debt (credit card) into secured debt (a mortgage). Not a good idea. Ever.

If you want to refinance you should contact a lender or mortgage broker and do so. I would not go with a lender who is soliciting your business.

[brownie]

I wouldn't combine credit debt into a mortgage.

Another thing to consider is that although the APR may sound great, what's the term? You're going to end up paying more interest than principal in the beginning; although your monthly payment may be lower it may cost you more in the long run depending on how much time was left on your existing mortgage.

[Ian]

I completely disagree that rolling unsecured debt into secured debt is always a bad idea. And you're talking to a guy who worked in the financial services industry for over a decade (including 6 years working for a mortgage company).

If you have excessive credit card debt and sufficient available equity in your house it makes perfect sense to consolidate it under a mortgage where you'll likely pay 10%-15% less in interest on it.

Obviously, it depends on your personal situation, but to say it's always a bad idea is really not accurate.

[Kathy Jetson]

Well because of a recent situation I do now have high cc debt. One card has 9% interest and one has 12%. I always pay off the 12% each month UNTIL I had a recent emergency and now have high debt on both cards. I have $111,700 left to pay on mortgage at 6.37%.

[Kathy Jetson]

I completely disagree that rolling unsecured debt into secured debt is always a bad idea. And you're talking to a guy who worked in the financial services industry for over a decade (including 6 years working for a mortgage company).

If you have excessive credit card debt and sufficient available equity in your house it makes perfect sense to consolidate it under a mortgage where you'll likely pay 10%-15% less in interest on it.

Obviously, it depends on your personal situation, but to say it's always a bad idea is really not accurate.

Sorry I replied to your post but forgot to quote you.

[White Rose]

I completely disagree that rolling unsecured debt into secured debt is always a bad idea. And you're talking to a guy who worked in the financial services industry for over a decade (including 6 years working for a mortgage company).

If you have excessive credit card debt and sufficient available equity in your house it makes perfect sense to consolidate it under a mortgage where you'll likely pay 10%-15% less in interest on it.

Obviously, it depends on your personal situation, but to say it's always a bad idea is really not accurate.

I'm going to echo Ian here as well. Depending on how much credit card debt and what your interest rates are, it is COMPLETELY feasible to roll it into a secured loan. While I don't have the financial background he does, I work for a financial institution and I see people who did this all the time. Most of the home equity loans and home equity lines of credit people do involve rolling unsecured debt into secured debt.

Honestly, it is much easier to be approved for secured loans (at times) then it is for unsecured debt. Furthermore, while everyone has debt, it is the unsecured debt that kills you more than the secured debt because the secured debt has collateral.

But, in the case of Franklin Mortgage, I'd maybe set it aside. Contact your financial institution or credit unions in your area to figure out if they offer refinances for you at affordable rates where you could take cash out of the refi to put towards your CC debt.

ETA: I just did a quick Google search based on your location listed at Intercot and pulled up quite a few credit unions in your area that have mortgages! One in particular stuck out to me--Carolina Trust Federal Credit Union, which is located right in Myrtle Beach. Check out their website and maybe see if you're eligible, if interested.

[princessgirls]

Kathy,

I'd try to refinance for a lower mortgage interest rate. They are under 4% now, and it's worth it for you. Most re-fi's are not giving money back, just refinancing the amount of the loan. With the extra money you won't be spending on interest you'll be able to pay down your credit card debt.

Good Luck!
Julie

[PopPhan]

Kathy,

I'd try to refinance for a lower mortgage interest rate. They are under 4% now, and it's worth it for you. Most re-fi's are not giving money back, just refinancing the amount of the loan. With the extra money you won't be spending on interest you'll be able to pay down your credit card debt.

Good Luck!
Julie

I would agree with this point....At current interest rate, you could save a whole lot of money on a month-to-month basis on your mortgage payments.

As Ian said, if you have high credit card debt and have enough equity in your home, rolling that debt into your mortgage COULD make sense....BUT you will need to be careful not to roll up more credit card debt just because you have the open lines on the cards.

You may have a bit longer to pay on the refinanced mortgage, but you can always pay down the principal a little at a time when you have 'extra' to play with.

In any event, you should probably go with your current mortgage holder, or a bank you deal with regularly, to get the best deal on your refinance. I would not go with some unknown outfit that is trying to get you to sign with them through 'direct mail' offers.

Good luck!!

BTW - I am currently in the middle of a refinance procedure myself and am getting a nice 3.625% rate on a 30-year note through a local lender. My bank actually sent me to them because it would take up to 3 months to process the refinance through them! (The bank, that is....)

[barnaby]

Another thing to consider is that although the APR may sound great, what's the term? You're going to end up paying more interest than principal in the beginning; although your monthly payment may be lower it may cost you more in the long run depending on how much time was left on your existing mortgage.

When looking to refi, I've always considered this also. Basically, if I am going to refi, how much time if it going to take me to recoup the refi costs. And also, since the interest costs "recalibrate" ie. paying more interest then principal in your monthly payment, you have to look at the cost difference long term.
If you have been in your house for say 10 years, and only plan on staying for 5 more, then you have to look at what your paying in interest vs. prinicipal.

[Kplaster]

I have no response relevant to this thread I just wanted to say it's cool to see someone else on here from Myrtle Beach. I lived there for 12 years before we moved a year and a half ago to Memphis, TN. I love going back to visit my friends that are basically family. Christmas gifts are headed that way actually today.

[Kathy Jetson]

Thank you so much everyone for your input and advice. I looked up Franklin Mortgage with the BBB and the got an A+ rating. I think I will check locally first and see what rate they can give me and then maybe call Franklin and see if it will actually be better. I really appreciate everyone's responses!

[Ian]

BUT you will need to be careful not to roll up more credit card debt just because you have the open lines on the cards.

Absolutely. Cancel the cards the minute they're paid off. Credit cards are the tool of

[BrerGnat]

Absolutely. Cancel the cards the minute they're paid off. Credit cards are the tool of

Not really. Being irresponsible with credit cards is the real problem. Credit cards themselves are amazing financial tools, especially when they offer usable rewards systems and people use them wisely (i.e. NOT carrying balances for months or years at a time).

I wouldn't part with my Southwest Visa or AMEX Gold card for anything. Both are downright amazing as far as travel rewards go.

[John]

I completely disagree that rolling unsecured debt into secured debt is always a bad idea. And you're talking to a guy who worked in the financial services industry for over a decade (including 6 years working for a mortgage company).

If you have excessive credit card debt and sufficient available equity in your house it makes perfect sense to consolidate it under a mortgage where you'll likely pay 10%-15% less in interest on it.

Obviously, it depends on your personal situation, but to say it's always a bad idea is really not accurate.

Agree with Ian on this with one caveat - if you do it, you need to cut up all but one of your cards and never carry a balance on the card again - EVER. We use AMEX and pay in full every month. We're also debt free except our mortgage.