Tax Deductions

Well...

Your credit affects your ability to get a home loan, and the interest portion of your home loan is tax deductible.

This means that if you consolidate all your debt into your home mortgage you will not only lower your payments but you will also pay less taxes.

In addition, it generally a better idea to carry debt on secure items that appreciate over time, like your home, and not on unsecured credit cards, or other depreciating items like your car.

More good news:

The more debt you have on real estate the higher your leveraged appreciation return will be.

Consider the following example:

A $100,000 house in a market that is appreciating at 5% per year will add $5,000 of value or equity each year.

If you owned that house outright then the $5,000 would represent a 5% return on the money ($100,000) that you have invested in the home.

If you owe the bank $90,000 on the home your equity would be $10,000 and if your mortgage payments totaled another $10,000 for the year, then your total "investment" would be $20,000.

The $5,000 appreciation increase represents a 25% return on your investment in this case.

So... if you have lots of miscellaneous debt and some equity in your home it is worth considering consolidating it.

As you can see the advantages go beyond simply gaining tax deductions.

Click here for credit repair, (not tax deductions.)