Mortgage refinancing offers several ways to pay off debts and reduce the burden on your monthly budget. Refinancing your mortgage could allow you to lower your monthly payments and pay off your credit cards and other high interest debts. Borrowing against the equity in your home could even allow you to purchase a new car. Lastly, if you’re able to qualify for a lower mortgage rate you can lower your payment and pay less to the lender over the lifetime of your mortgage.
Mortgage Refinancing to Consolidate Bills
Taking out a new mortgage allows you the opportunity to borrow against the equity in your home. You can use this cash for any reason including paying off your bills including those high-interest credit cards. The advantage of consolidating your debts under your mortgage loan is that you gain a tax-deduction for all of the interest you pay. Cashing out when refinancing is a convenient way of borrowing against your equity and allows you to qualify for a lower mortgage rate than you would get with a second mortgage or equity line of credit.
Mortgage Refinancing to Lower Your Payment
There are several ways to lower your mortgage payment even if you cannot qualify for a lower interest rate. You can still lower your payment amount by extending the term length of your loan. By switching to a 30 or even 40 year term length you’ll spread your payments out over a longer period of time. This gives you a lower payment and more cash at the end of the month.
Another way to lower your monthly mortgage payment is to switch to an Adjustable Rate interest-only or option loan. These are risky mortgages; however, when used correctly they could save you a lot of money. You can learn more options for saving money when refinancing your home mortgage with our free, six-part mortgage refinancing video tutorial.