We want to consolidate our debts and are considering a mortgage to refinance up to 120 percent of the value of our home. How do these loans work and is it a good idea?
Financing 120 percent of the home’s value puts you upside-down in your home, meaning you owe more than the house is worth. That makes it extremely difficult to sell, especially if you have to pay a real estate agent 6 percent of the selling price. If you think landing upside down in a car is trouble, try being upside down in a house. You can’t count on rising home prices to dig you out of that hole quickly.
