Do I have to refinance my mortgage to consolidate my debt?

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If you have high interest rate debt and some equity in your home, you may be able to get mortgage refinance with cash. This article will explain the pros and cons of mortgage refinancing with withdrawal as well as some alternative options for paying you back. (iStock)

Did you know that your primary residence is an asset – even if you have a mortgage? This is because you can earn equity in your home with every monthly mortgage payment. This equity can be used for a variety of purposes, including helping you consolidate your debt.

Home equity is a combination of the amount of principal you have paid off and the increase in the value of your home. So if you own a house worth $ 250,000 and a current mortgage balance of $ 175,000, that means you have $ 75,000 in equity.

Mortgage refinance rates are very low right now, so if you have some equity in your home, it might not be a bad idea to consider a refinance withdrawal loan to pay off the debt. Visit Credible to compare mortgage lenders and rates and find the refinance withdrawal loan that’s right for you.

IS A MORTGAGE REFINANCING OVER 15 OR 30 YEARS BETTER WITH TODAY’S RATES?

Do I have to refinance my mortgage to consolidate my debt?

Mortgage refinancing involves getting a new home loan with possibly a new mortgage lender at a lower interest rate. Refinancing can help homeowners save money by reducing their monthly mortgage payments and paying less interest over time. One type of mortgage refinance is withdrawal refinancing, which is when you borrow more than you owe on the house and receive the difference in cash. This can be used to fund home improvement projects or even debt consolidation.

Personal factors as well as the housing market can affect mortgage and mortgage refinancing rates over time. Fortunately, low mortgage refinance rates are still available today. Check out Credible to compare your current mortgage rate to your prequalified mortgage refinance rates without affecting your credit score.

5 REASONS TO OBTAIN A CASH-OUT REFINANCING

The pros and cons of refinancing your mortgage to pay off your debt

One advantage of doing a debt withdrawal refinance is getting a lower interest rate, especially if you bought your home when the mortgage rates were much higher. You can also pay off high interest credit card debt and other loans all at once. With the average credit card interest rate ranging from 15% to 24%, taking advantage of low mortgage refinancing rates can help you pay off debt faster and save money. Plus, paying off unpaid debts can increase your credit rating.

You can explore your mortgage refinance loan options and use Credible’s free mortgage calculator to see if it’s the right move of money for you.

One of the main disadvantages of mortgage refinancing with withdrawal is that you are more likely to put your home at risk. If you can’t make your monthly mortgage payment for some reason, you could lose your home and owe more than you originally had. In addition, the repayment term on your loan could be extended depending on the equity in your home.

It’s also important to note that if you don’t have enough equity in your home, you might not be eligible for withdrawal refinance. Most lenders will not approve you for mortgage refinancing until you have at least 20% of the equity in your home.

On top of that, you will have to pay closing costs and any set-up costs again. Visit Credible to compare loan options from multiple lenders and assess fees before committing to a mortgage refinance application.

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Other options for paying off debt

Refinancing your mortgage isn’t the only way to consolidate your debt. If your credit is in good standing, you can try consolidating your debt with a personal loan.

Credible can put you in touch with lenders that offer rates as low as 3.99% and loan amounts from $ 600 to $ 100,000 and it only takes two minutes to get prequalified. If you want to get a better idea of ​​what your monthly payment would be like, you can check out Credible’s personal loan calculator.

Another alternative to consider is a HELOC line of credit or home equity line of credit. This allows you to leverage your home equity and tap into the funds on a regular basis just like you would with any line of credit. If you can get a much lower rate with a HELOC than your current debt rate, this could be a solid option to help you save money.

If you have credit card debt, you can also consolidate it by getting a credit card with balance transfer. This way, you will have a 0% APR for a number of months to help you pay off your balance without interest charges.

To learn more about 0% APR credit cards, which allow you to avoid paying interest charges for up to 18 months in some cases, check out Credible’s partners and what they have to offer.

DON’T FALL INTO THESE 3 MYTHS ABOUT DEBT CONSOLIDATION

Final thoughts

Home equity is a powerful personal finance tool that can help you meet certain financial goals, such as consolidating your debt. As long as you have at least 20% of the equity in your home and have carefully weighed the pros and cons of mortgage refinancing with withdrawal, consider taking the next steps by visiting an online marketplace like Credible to consult. refinance rates and get the money to pay it off. your high interest debt.

4 THINGS TO KNOW BEFORE REFINANCING YOUR MORTGAGE

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.

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