Debt consolidation is commonplace for today's consumer. Because credit cards are so prevalent, it's easy to get five or six cards and build up big balances. To relieve the debt burden, many homeowners consolidate all their debts onto a second mortgage.

Advantages of second mortgages

A second mortgage is a loan taken after your first mortgage. A home equity line of credit (HELOC) and a fixed-rate home equity loan are both types of second mortgages, and either is a good debt consolidation solution for the following reasons:

• Lower rates: Most credit cards have interest rates in the double-digit range. A second mortgage generally has a substantially lower rate. In fact, it's not uncommon for a debt consolidation loan to knock a few hundred dollars off the sum total of your monthly debt payments.
• Flexibility: A HELOC can give you the flexibility you need to pay off your debt load, because it functions like a credit card. It's a line of credit which you can tap into at any time. Although it's flexible, a HELOC's rate, which is generally adjustable, is tied to the overall financial markets. This can be a negative, because any up-tick in the prime rate could make monthly payments increase overnight.
• Tax Deductibility: The interest you pay on a second mortgage may be tax deductible (on balances not exceeding $100,000). When you factor in the tax savings you may receive, this adds even more incentive to consolidate your debt into one single payment.

A fixed-rate home equity line of credit will provide you with more stability than a HELOC, but you'll lose the flexibility of accessing the line whenever you need it. However, if easy access to credit got you into a jam in the first place, the fixed-rate loan might be the disciplined approach you need to get back on track.

Second mortgages: A consumer's best friend

These reasons alone are proof that a second mortgage is a consumer's best friend when it comes time to turning a mountain of debt into a molehill. If you owe a large amount of money, don't delay: Gather up those credit card bills and get yourself to a competitive lender. A second mortgage debt consolidation loan could be just what you need to get yourself back on track and in the black.