If you have credit card debt, a second mortgage, or other loans in addition to your first mortgage, debt consolidation can take a chunk out of your monthly expenses, freeing up money to cover other bills.
Consider exploring the following options for consolidating debt.
Refinance your mortgage.
Take out a home equity loan.
Take out a home equity line of credit.
When you’re already having trouble paying your bills, you may have damaged credit, which makes obtaining the loan you need to consolidate your debt that much more difficult.
If that’s the case, look at other means of consolidating, like getting
An unsecured loan, which allows you to pay off the old debt and make one monthly payment to the bank.
A secured loan, which requires that you put up some form of collateral so the bank has something it can take from you and sell to cover the debt.
Which is best — a secured or unsecured loan? That depends on your situation. Discuss your options with a qualified loan officer or mortgage broker in your area.
When you borrow money, read and fully understand the documents before signing them. Know what the provisions are, when payments are due, what happens to surplus funds if collateral is sold for more than is required to pay off the loan, and so on. Have an attorney review the document and advise you of any potential issues before you sign.
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Source:http://www.dummies.com/how-to/content/how-to-use-home-equity-to-consolidate-debts.html
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