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by:
Natalie Aranda
Many
people discover that their credit card
debt is out of control when they get
their monthly bank statement. Mortgage
payment, everyday spending, services
and occasionally getaways or dining
out can bring your balance
over-the-limit fees. It's time to
consider debt consolidation to save
your money - credit card balance
transfer, home equity loan or mortgage
refinancing.
One
of the best ways to obtain debt relief
is by consolidating your debts with a
mortgage refinancing if the timing is
right. Refinanced mortgage is a form
of debt help for the borrower, who
will be able to pay down the old
mortgage with the money of a new loan.
The benefit of mortgage refinance is
based in not only debt consolidation
of other debt, but in getting a lower
interest rate, lower pay off, and
taking cash out of the home equity.
Although every borrower may have their
particular reason for applying for a
new loan, all of them share the desire
for debt relief by reducing their
mortgages' interests' rates and
liquidating cash from their home
equity when possible. Mortgage
refinancing usually costs a couple of
thousand dollars in closing cost
besides the time you spend on
research, application etc. Debt advice
on home mortgage can easily be
obtained through the mortgage lender,
mortgage broker, financial
institutions and Government Consumer
Protection Offices.
Because secure loans and mortgages are
backed up by collateral property or a
guarantee for any other sort of asset,
lowering the rates means more savings
and debt relief. Mortgage refinancing
could quickly reduce your debt if done
properly. Mortgage refinancing lets
you cash out your equity to be applied
for debt relief purposes, and allow
you to qualify for lower rates than a
home equity loan. A single mortgage is
often considered less risky than
having two loans.
Taking a shorter term in your mortgage
refinancing may further lower the
interest rate. For instance, if your
original mortgage is a 30-year loan,
you may consider a 15-year mortgage
while refinancing the loan. The
monthly payment of a 15-year loan is
about 20-30% higher than the one of a
30-year mortgage, not as high as out
intuition tells us.
Genuine debt help comes when you weigh
the pros and cons of debt
consolidation. Obtaining a mortgage
refinance may be the best option for
debt relief, remembering that you will
have to follow a similar process like
the first time application so make
sure to keep a good credit history
before you apply. Be sure to get
mortgage quotes from at least three
mortgage lenders before you commit.
Weight the pros and cons of your
current mortgage, and compare the
actual interest rates you are paying
off in comparison to those resulting
from your new debt management
perspective, considering collateral
involved in the debt and possible
future risks as well. Your financial
adviser can offer valuable advice for
your debt relief.
About the Author
Natalie Aranda writes on family,
business and personal finance.
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