Refinancing is when you pay off your current mortgage with the money from a brand new mortgage. Many people refinance their home if they would like to take advantage of lower interest rates, switch mortgage companies, or change the terms of their loan. Additionally, refinancing can also help pay for other bills, aside from your mortgage.
If you have a mortgage then you may be able to refinance in order to consolidate your debt. Today’s mortgage rates are historically low so it is a good time to refinance. Continue reading to learn more about refinancing your mortgage.
Certain types of refinancing allows homeowners to take out new home loans that are worth more than the current mortgage balance on the home.
This is known as cash-out refinancing because the extra money from the loan amount is given to the homeowner when they take on the new loan.
With a cash-out refinance, you could use the extra money from the loan to pay off other types of debt that usually have higher interest rates than the refinanced mortgage.
If you are able to refinance and sign the dotted line on a cash-out mortgage, you could then use the extra money to take care of other expenses, such as credit card payments and student loans.
To consolidate your debt by refinancing your mortgage, you will need to qualify for a new loan. These requirements include credit score and equity minimums. There are refinancing options for people with poor credit scores but these loans usually end up having a higher premium.