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Originally posted by Porsche-O-Phile
1. Can you use a mortgage to consolidate/eliminate other debt? In other words, could I take out say a $350,000 loan on a $300,000 place and use $50,000 to wipe out a bunch of other debt like credit cards, car loans, etc. or possibly invest? Bad idea? Is it even allowed? Obviously if we could do that and be left with a mortgage and a student loan payment and that's it, it'd simplify the hell out of things and be a lot better interest-rate wise.
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$350k on a house worth $300k is not gonna happen. I would not borrow against your house to invest. Getting a loan above the value of the home is not going to be cheap. The interest rate would be really high.
The medicine I advise now is
1) Get your credit report from the three bureaus.
2) Pay all current bills on time.
3) Clean up the credit report
4) The credit report will tell you what factor(s) are hurting your credit score. Work on those areas. For example, if the report says you have too many open credit cards, cut a few up.
There are websites that tell you how to make the biggest impact on your score.
Since this work takes time, you should start as soon as possible. A good credit score will save you mucho dollars in the long run. You get lower credit card rates and cheaper insurance rates on top of lower mortgage rates. Start a slow, but steady effort to pay down debt.
Ultimately, you're shooting for good credit (say 650 or above, 720+ would be nice), manageable debt compared to your income, and at least some money for a down payment (5-10% down would be great). Start saving a few hundred per month for a down payment. Throw it into a high-yield savings account or treasury bills.