Unsecured debt may be an expensive way to finance purchases--because the lender has no collateral, interest rates can be high, in some cases over 25%. Miscellaneous fees, such as late charges and over-limit fees can also be prohibitive, and monthly payments can become so burdensome that borrowers have trouble making even their minimum payments.

Enter the debt consolidation mortgage loan. Consolidating unsecured debt by using equity in the home may be a very sensible option for several reasons:

•           Debt secured by a home generally carries a much lower rate. Home mortgage rates are almost always many points lower than rates for unsecured credit card accounts. Homeowners can realize significant savings in interest paid just by shifting balances from credit card accounts to a mortgage.

•           Mortgage interest rates can be fixed. Obtaining a fixed rate mortgage to pay off revolving accounts can stabilize finances, the payment and rate won't fluctuate with financial markets. Also, many credit card issuers immediately raise the borrower's rate in the event of a change in credit score; a fixed rate mortgage rate and payment remains the same despite changes in the borrowers' credit profile.

•           Debt consolidation can help homeowners gain control of large balances. Stretching out repayment of large balances associated with college education, home improvement, or medical emergencies can make the difference between comfortably managing debt and struggling every month.

•           Debt consolidation mortgages can be convenient. Given the choice of making and tracking many payments each month, or a single payment to their mortgage lender, most borrowers would elect for convenience.

•           Debt consolidation mortgage interest may be tax deductible.  Those who itemize their deductions on a 1040 Schedule A can probably deduct the interest paid on a debt consolidation mortgage. Consult a tax professional or financial advisor for details.

Debt consolidation can be a valuable part of a financial management and investment strategy. Homeowners who think they might benefit from a debt consolidation mortgage should investigate--online, in person, or via phone--the programs available from a variety of lenders to get the most appropriate loan and the best pricing.