Consolidation loan for more than the value of my home?
A financial institution has made an offer to combine all of my credit card debt (,000), my mortgage (0,000) and my second mortgage (,000) for a total loan value of 4,000. I believe that my home is only valued around 165,000-170,000. The offer is for a 15 year loan at 8.89% APR. (My current mortgage is 6% and the second mortgage is 6.4%). It would only reduce my monthly payments by a couple hundred dollars, but the thought of having my home paid for in 15years is appealing. They are charging a pre-paid finance charge of 00, which I really don’t understand. They are adding that to the value of the loan making the total principal to be 4,000. I am really leaning towards going forward on this, but would really appreciate any advice. I am a little uneasy about the fact they are offering the loan for more than the value of my house. I realize that I will have to change my spending habits and get rid of my credit cards or this is useless. Thanks!
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