The general pitch from Ditech is that you, the consumer, likely have holiday debt stacking up on credit cards with nowhere to turn. That’s where the Ditech Freedom Loan comes in.
Considering property values continue to stagnant and drop nationwide, securing a negatively amortizing second mortgage behind your first mortgage is probably a bad idea.
Ditech has an example on their product landing page, which explains that you’ll reduce your monthly credit card payments by $200 a month if you pay off $24,500 worth of credit card debt and move that balance to a $27,000 Freedom Loan.
But if you read the fine print, they’re assuming your credit cards have an interest rate of 18%, and your new Ditech Freedom Loan has an interest rate of 12.75% with a 2-mortgage point cost (13.635% APR), and a monthly mortgage payment of $299.44 for 300 months.
So the repayment of your $27,000 Ditech Freedom Loan is roughly $90,000. You do the math.
It might be best to just pay off the credit cards, consolidate them with your present bank at a low APR below 5%, or do a balance transfer to a 0% APR credit card.