Getting out of debt can be a difficult task for any homeowner. Depending on the severity of the debts, many homeowners find it impossible to pay more than the minimum amount at their current income level. If this describes your financial situation, making minimum payments will never payoff your debts. The good news is consolidating your bills with your mortgage will help you take back control of your finances. Here are several tips to help you decide if home mortgage refinance loan debt consolidation is right for you.
Mortgage Refinancing for Debt Consolidation
Mortgage refinancing is a simple concept; you are simply taking out a new mortgage to pay off your existing loan. In the case of a home mortgage refinance loan for debt consolidation, you are borrowing more than you owe on your existing loan. After you paying off the old mortgage you will receive the difference in cash. You can use this money to pay off all of your other debt, effectively consolidating your bills under your home equity.
If is important to understand that consolidating your bills does not eliminate your debt, it simply moves it around making it easier to manage. If you control the spending habits that got you into debt in the first place, you will have one manageable monthly payment.
There is a downside to cash back mortgage refinancing. When you take cash back at closing you are borrowing against the equity in your home. If housing prices in your area decline you could wind up owning more than your home is worth. There are also costs you will be required to pay when taking out a home mortgage refinance loan. These expenses include application fees, lender fees, and closing costs. If you are unable to qualify for a lower interest rate you will pay more in finance charges on a higher loan amount.
Author: Louie Latour
0 comments:
Post a Comment