Mortgage Refinancing For The Purpose Of Debt Consolidation
By refinancing your mortgage loan, you may get a better interest rate and save a great deal of money. But did you know that with the same loan, you can also eliminate other debts? Debt consolidation refinancing allows you to do just that!
Debt consolidation is the process of combining all or part of existing debt into a single loan. This enables you to save money with a lower interest rate and by making one monthly payment. That new loan is called a debt consolidation loan. With a debt consolidation loan pre-existing debts are paid in full resulting in improved credit ratings. This type of loan also eliminates harassing phone calls from collectors, large multiple payments and higher interest rates.
Combining debt by refinancing through using a mortgage consolidation loan, homeowners may qualify for lower interest rates and lower payments. Be aware that taking advantage of lower interest rates on a refinance loan and lower payments will extend the overall length of the loan. You will pay more interest over a longer period of time. The duration of the loan and how quickly the loan is paid off are also considerations.
If you combine loans that originally had, for example, a 12 year repayment schedule into a new debt consolidation refinance loan, you might be extending the overall period of repayment to as much as 30 years. The total amount of interest paid, despite the lower interest rate, will increase based on the time it takes to repay the loan.
It is important to understand that a loan of this type is not without its problems. Your immediate cash flow problems may be diminished, but overall the amount of credit you have outstanding may remain the same or even increase in some cases. By using a free online calculator you can do the math for yourself and decide if a debt consolidation refinance is a smart choice for your situation.
The primary goal should be to find the lowest interest rate for the consolidation loan. Then plan to pay that debt off as soon as possible. If the refinance loan company allows for principal payments above the regularly scheduled payments, you may be able to reduce or eliminate the debt quickly. Additional payments designated towards the principal will reduce the total debt quickly and in a shorter time span.
For homeowners, a mortgage refinance with a lower rate of interest may be a smart choice. A debt consolidation provides the opportunity to eliminate high interest credit card debt. The overall terms and conditions are more favorable than those offered by credit card companies. Research and asking the a lot of the right questions will put you in a better position to determine where you stand and identify the potential benefits (or not) of a debt consolidation refinance loan.
The right option for mortgage refinancing to consolidate debt is out there! Find it!
Interested in mortgage refinancing? Visit benefits of mortgage refinancing.com