Take cash out of your home equity to consolidate your high interest debts.
Lower Rates Mean Lower Payments
Looking to lower your monthly debt expenses? Your home’s equity can help! Mortgage interest rates are considerably lower compared to traditional credit cards and personal loan interest rates. Taking cash out of the dormant equity in your biggest investment can help ease your monthly debt payments!
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What is Debt Consolidation Refinance?
For many people, credit card and personal loan debt takes up a large part of their monthly expenses. These debts can often have high-interest rates that sometimes become overwhelming, leaving people drowning in debts they can’t seem to pay down. Because of this, some people decide to refinance their mortgage to get cash out and consolidate their debt. This is because mortgage loans tend to have lower interest rates overall and having one debt payment a month to focus on can help borrowers get their finances in order.
How Does Refinancing
When you refinance your mortgage to consolidate debt, you take cash out from the equity from your home by taking out a new mortgage loan on your home that entirely replaces your current mortgage. The new mortgage will have a new interest rate and, typically, a longer loan term. When you begin the refinance, you’ll be required to get an appraisal done on your home to see the current market value of your home and compare it against what you owe on your current mortgage. The difference between the new home loan and your current mortgage is the cash out you receive.
Frequently Asked Questions
- Reducing or eliminating high-interest debts
- Lowering your overall interest payments
- Lowering your overall monthly payment obligation
- Minimize your stress by rolling your monthly debt payments into one mortgage payment instead of multiple sources to keep up with
- A new mortgage balance that may be larger than before
- Higher monthly mortgage payments
- Higher interest payments if you have a higher rate or loan term
- Refinancing fees associated with refinancing a mortgage
- Possibly longer loan terms
Because a mortgage refinance is essentially taking out a brand new mortgage on your home, you’ll need to get an appraisal done on your home to see what its current value is. There are some instances where you may not need to get your home appraised, talk to a loan advisor for more information.
Because everyone has their own unique situation, we recommend speaking to a loan advisor about your options as your first step. Go to newfi.com/get-started or fill out the form on this page for a free consultation with one of our licensed loan advisors to learn about what documentation and qualifications you may need!