Umbrella loan is just another name for a debt consolidation loan that is secured by your home. Also called a cash-out refi.
Let's say you own a house worth $300,000 and owe $100,000 so you have just over 66% equity.
You have $10,000 in credit card debt at 19%
Car loan $15,000 at 8%
unsecured loan of $10,000 at 11%.
So the new loan pays of your current mortgage plus the additional outstanding consumer debt for a total of $135,000 . There are closing costs and pre-paid taxes and insurance that have to be taken care of at closing but those can usually all be rolled in to the new loan amount.
Keep in mind, this new loan would be in the mid to low 4's as opposed to the higher rates you were paying to your various creditors.
Obviously there is a lot more to it than that so for more questions or details please contact me at your convenience.
Elliott R. Oliva
Primary Residential Mortgage, Inc.
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