If you have ever refinanced your home, you know the temptation to get rid of those high interest credit cards by rolling them into your home mortgage. You will be tempted by the deductible interest and lower monthly payment. DON’T DO IT!!! Your house is not a piggy bank. It’s an asset. Every time you refinance, the clock starts over. In Michigan a married couple using the Federal Exemptions can protect 43,000 in equity in their home if they file a Chapter 7 bankruptcy. That means, if your mortgage is $100,000 at 5% it would take you 18 years to pay of that much on a 100,000 mortgage at 5% interest. So if you have 40,000 in credit card debt and your option is to borrow that money against you home and pay it off over 18 years, or file bankruptcy for less than $1,500, keep the equity in your home and get a fresh start, what would you do? Remember, your mortgage is secured by your home, your credit cards are not. Don’t fall for the promise of easy money to solve your debts at the expense of mortgaging your future.
