Refinancing Your Mortgage is NOT debt elimination

What do I hear a lot? I'm going to refinance my mortgage and pay off my credit card debt, which will lower my payments. (Listening to a mortgage broker who is going to make a huge commission when you do this is dangerous!)



What you are really doing: Moving unsecured debt to secured debt-against your most important asset-your house. Now, if you can't make a payment, they can foreclose on the roof over your head.



You did NOT eliminate any debt, you have just restructured it and if you restructed it into a new 30-year mortgage, you will be paying off that same debt over the next 30 years. It might be at a lower interest rate, but you need to study your loan ammortization schedule and see what this new 30-year plan costs you. That mortgage broker may not be your friend - remember, his/her first interest is padding his/her pocket.



Your least cost option? Submit the debt to arbitration, eliminate it with no interest cost over the next 18-39 months.



Also, talk to us about how you can use a MMA to eliminate your mortgage in half the normal time.

Need credit counseling? Don't make hasty choice by "The Motley Fool"

This is the text of an article from "The Motley Fool":

Question: Should I use consumer credit counseling organizations (CCC) to help me get out of debt? Do they have any drawbacks?

Answer: Be careful with such outfits. Using them can do serious harm to your credit rating. If your credit report reflects that you've sought professional help, it can decrease your credit score significantly--sometimes as much as a bankruptcy can. Worse, while you proceed to dig your way out of debt (and sometimes for years afterward), many mortgage lenders won't consider you for a loan.

Roger's comments: CCC companies were started and supported by the credit card companies. They will show on your credit report as "third party payers." You will be paying interest. Most times, you cannot buy a car either.

The program we recommend is debt negotiation. You have the federal right to arbitrate your debts, which our law firm exercises for you. It does not show as a third-party payer, because you are actually paying from your own escrow account. You will pay no interest.