Are you moving within the next 3 years? If not refinance your debt that has compounding interest rates. Refinancing your existing home loan with a cash-out option or taking out a home equity loan as a second mortgage can provide ways to consolidate high-interest consumer debt at a lower rate. Also, the interest you repay on the refinance or home equity loan may be up to 100% tax deductible.

If you're like most people with high-interest credit card debt and other high-interest installment loans, using your equity for bill consolidation makes good financial sense. When you consolidate debt, you're using your mortgage to pay off the higher-interest creditors while "rolling" that debt into your mortgage. Credit card consolidation by mortgage refinancing could substantially raise your FICO credit scores, too! The reason: you're lowering your debt ratio. According to Fair Isaac and Company, the creators of the FICO credit scoring system, paying down the balances on your credit cards by 34% could raise your FICO scores almost 20 points. Imagine how much more your scores could rise if you paid them entirely.

How much can I borrow? The amount you borrow for a refinance or a home equity loan (second mortgage) will partly depend on what you currently owe on your mortgage(s) and how much your home is worth. The difference between these two figures is the amount of home equity you have to work with. You may qualify to borrow against part of your equity (typically 75% to 80%), or even up to 125%, and receive cash to pay off bills such as car loans, credit cards, or other installment loans.

Refinancing your home loan or taking out a second mortgage in the form of a fixed rate second mortgage loan, also known as a home equity installment loan (HEIL), or a variable rate home equity line of credit (HELOC) to consolidate your debts can help get you back on track financially. But, you have to be careful not to accumulate new debts. Otherwise, you'll pay a larger mortgage (or two mortgages) while still carrying burdensome credit card debt. Consider cutting up all but one of your credit cards and keeping the one for emergencies only. But, don’t close the accounts, or your credit history can appear younger than it actually is which could actually lower your credit scores.