Archive for Debt Consolidation Articles
Is Mortgage Refinancing the Best Way to Consolidate Debt?
Posted by: | CommentsHomeowners seem to have the ability to accumulate more debt than non-homeowners. Maybe it’s because typically their housing expenses are greater than non-homeowners or maybe it’s because homeowners have been leveraging the debt with tax deductible mortgage refinancing for the last few decades. Credit card debt is the most common debt that homeowner look to refinance by they also like to refinance home equity credit lines, automobile loans and existing second mortgage loans. If the borrower has the ability to make their mortgage payments on time, then we recommend refinancing a large amount of debt if doing so doesn’t increase the interest rate of your first mortgage. If your job or income is unstable then we would likely not advise you to use your home as collateral for a loan you may not be able to pay back.
Second mortgage refinancing would be less of risk in this case, because 2nd mortgage lenders can rarely foreclose on a home if the borrower is current with their first mortgage. Home equity loans can also be used as a debt consolidation loan. All of these types of loans are considered cash out refinance loans and this form of financing is used as a vehicle for homeowners to consolidate debt and lower their monthly payments.
Before utilizing the cash out refinancing features, homeowner should consider the pros and cons of leveraging their debt with a secure mortgage loan that uses their homes equity to pay off debt. Debt consolidation refinancing can offer many benefits, but you should evaluate your financial goals before committing to another mortgage.
