Answer: Debt consolidation is when you take out a single
loan to pay off several smaller debts. The goal of consolidating debt is to combine all your debts into one affordable monthly payment and reduce the overall amount of interest you are paying.
Mortgage loans are commonly used for debt consolidation because they let you borrow a large amount at an attractive interest rate and pay if off over a long period of time.
You can use the proceeds from a new mortgage to pay off higher-rate debts such a credit cards, auto loans, and any other account on which you owe money. Most consumers experience a dramatic reduction in their monthly payments after consolidation. You may also save on taxes since the interest on home loans, unlike other types of debt, is tax deductible.
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