Will this "Combo" mortgage hurt my credit?

Question

My hubby and I have a first mortgage, home equity loan, 2 auto loans and credit card debt. We are doing ok - but never have any extra money. We are interested in the combo loan from Countrywide - where they are combined.

I've heard that consolidation can hurt your credit. Will this do that to our credit? Since we are doing good, and just want to lower our payments into one, we don't really NEED to do this, and don't want to cause any credit damage.

Your insights please! :)

Answer 1

Dumping short-term debt (credit cards and car loans) onto a long term loan is about the worst financial decision you could make. You'll be paying on them for up to 30 years but will need to buy another car in 3 or 4 in most cases. It's even worse with CC debt as most of the things you purchased with the cards are probably long gone or used up.

Answer 2

Restructuring your debt will not help if you do not change your habits. You will be only complicating the future. The problem is not your debt structure and Countrywide, or any other mortgage company, is not your friend.

I tremble to go beyond this because you will probably just ignor what I have said.

The benefit of restructuring is often lost by the loan that is placed to restructure the debt. The term "combo loan" is just a marketing scheme. There is no such thing as a combo loan.

If you proceed, please be very carful about the terms of the loan that is suggeted. Remember that they are not your friends and are trying to make as much money off of you as possible.

Change your habits which will change your life by choosing to be disciplined and wourk your way out of your problem. If you choose to incur the additional expense of refinancing you are no better off if you continue in your ways.

Choose to apply 9% of the cash flow savings back toward the new debt therby paying off the credit cards and cars in a reasonable time. You are not free to spend any savings on your desires.

A minor point is that you would be making non tax deductable expenses deductible but this is not an overdiring factor.

Understand that a refinance is not free and comes with a high cost. That cost will probably be added back to your loan so you don't feel the pain but it is there and is increased by the interest rate on the loan over the term of the loan.

The very best way is to learn discipline and work your way out of your issue.

I would sugget a book that might help" The Total Money Mkeover" by Dave Ramsey.

I hope that this helps.