Consolidating debt into home loan

Regulations aside, it’s very important to make sure that refinancing helps you meet your financial goals.

Deciding if it makes sense to refinance your home depends on a number of factors: Does your current lender have a prepayment penalty? Are interest rates lower now than they were when you first got your home loan? Use our refinance calculator to see if refinancing your home can help you meet your goal.

You may be tempted to consolidate your credit card and other high-interest debt into a mortgage with much lower payments. Lenders now require the homeowner to keep at least 15 percent to 20 percent equity after cashing out.

Today’s debt consolidation mortgages are more conservative than those seen during the housing boom, when lenders allowed homeowners to refinance and cash out as much as 110 percent of the value of their homes.

Talk to a Home Loan Expert or use our refinance calculator to see if refinancing your home can help you consolidate your debt.

Some states have limits on how soon or how often their residents can refinance a home loan; these limits are often designed to ensure that the refinance process benefits the homeowner.

As well as the interest rate savings you make, you‘ll reduce the hassle of making those multiple repayments by replacing them with a single, regular loan repayment - weekly, fortnightly or even monthly. For more information, read up on Consolidating debt.

The information contained within this page is general in nature.

By consolidating these debts into your home loan, you can significantly reduce the amount of interest you pay since the interest rate on your mortgage is usually much lower than on credit cards or personal loans.If the current value of your home is greater than your current mortgage balance, it means you have equity in your home.You may be able to use this equity to refinance your current mortgage and receive cash at a low interest rate to pay off your credit card debt.Home equity is the appraised value of your home minus the amount you still owe on your loan.The more equity you have, the more money you may be able to get from a cash-out refinance.

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Consolidating the two into a new, 30-year mortgage at 4.5 percent saves about $9,642 in interest.

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