The benefits of refinancing: consolidating debt
Are you struggling to manage your debts? Putting all your loans into one loan with lower interest rates, might be a solution for you. But, how do you do it?
Using your home equity. If you've paid the mortgage for some time and the house has gained value, then you have built home equity. Let´s see a simple example: if the bank considers that your home is worth $250,000 and your mortgage is for $200,000, then you own $50,000 of your home. This portion is called your “equity”. In this case the bank can lend you money against the portion of the house that you own.
This kind of loan has been called “Home equity line”, “home equity loan”, “refinancing your Mortgage”, “second Mortgage”, etc. No matter what it is called, this new loan is transferring all the debts into the home loan. The main advantage of doing this is that mortgage rates are lower than that of credit cards. Thus the total amount of monthly payments will go down and the interest paid on the Mortgage will be tax deductible. In the best case you will be paying the same monthly payment for all your debts.
However, “not all that glitters is gold”. If you decide to refinance, you need to be careful because many people get back into debt because of the new available credit in their credit cards. So when this happens, the cycle of debt is repeated and at the end you can fall into bankruptcy. One last tip: do not make the decision before talking to an expert. Contact YourCcasa here or call us at 1-866-200-5250 so you can have a free consultation.