Is your home worth more than you’re currently paying for it? You can pull that extra value from your home to pay other debts with a debt consolidation mortgage. This can help you lower interest rates and improve your overall financial health.
Credit cards have notoriously high interest rates—some even exceed 20%, an amount that can have devastating effects on your ability to satisfy the debt. It’s true: Debt accrues interest, which accrues more debt. Once you’re in that cycle, it can be extremely difficult to break out and set yourself on the path to financial freedom. Home interest rates can get below 4%, so when you refinance you’re effectively lowering your interest rates by 10 percentage points or more.
The money you net from debt consolidation should be used smartly. Think about the debt that’s proving most difficult to shake—the payments that, for whatever reason, have followed you around for years and prevented you from taking those next steps in life. This is where your debt consolidation can have the greatest effect and where you can feel the benefits the most. Use the money from a debt-consolidation refinance to pay off credit cards or student loans, consolidate all monthly payments into one recurring fee, or even pay off your mortgage early. Whatever your situation, you can get relief.
Cash-out refinances are the most popular option for debt consolidation. This type of refinancing usually provides the lowest rates and longest payment terms, which results in low monthly payments. The cash-out refinance form of debt consolidation is a process that sees you take out a new loan in order to pay off other loans—whether that’s student loans, medical bills, auto loans, credit card balances, or any other credit accounts that require regular payments. The goal of the cash-out refinance is to alleviate the financial burden of the interest rates tied to these types of personal debt.
Cash-out refinance isn’t your only option for debt consolidation. The other avenue you can take to consolidate your debt is a home equity loan. This type of loan uses the homeowner’s best friend, home equity, to satisfy debt obligations. It’s a loan that’s backed by your house, but separate from your primary mortgage. Typically Home Equity loans can be the right choice if you want to keep everything separate in your finances or if you have current home mortgage terms you don’t want to touch.
First-time home buyers may qualify for various conventional and government-backed loans, such as those offered through Fannie Mae, Freddie Mac, the Federal Housing Administration, U.S. Department of Agriculture, and Veterans Affairs.Read More
Renovation costs can be added to specific rehab loans offered through the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac for borrowers meeting specified criteria, such as down payment amounts, project scopes, credit scores, and other requirements.Read More
It’s best to have all documentation, financials, commitment letters, and mortgage options prior to making an offer on a property in the current record-breaking spring home-buying season led by low interest rates, pent-up demand, and decreased inventory.Read More
Insured and subsidized by various federal agencies, U.S. government-backed mortgages can help borrowers achieve home ownership through low interest rates and down payments, closing fee allowances, flexible credit scores, and other advantages.Read More