efinancing your home Unfortunately, you can only tap
mortgage loan is a smart into these sources of cash if you
way to pay down your debt have equity in your home. How do
faster and save money at the same you know if you have any equity?
time. So is applying for a home You start by determining your
equity loan. Either can be viable home’s market value. From that,
options for those whose debt has you deduct the amount owed on
become unmanageable and who are your mortgage. So if your home is
looking to consolidate their debt worth $200,000 and you owe
into one loan with a more $180,000 on your mortgage, you
favorable interest rate. What’s have $20,000 worth of equity.
even better is that the interest
paid on a home equity loan or How your house helps reduce your
mortgage refinance loan is tax debt
deductible whereas the interest
you pay on your credit cards is The benefit of a home equity loan
not. or line of credit is that you use
the money as you need it. Home
There are some who caution equity loans are generally easier
against tapping into these to get and they won’t cost much,
sources of cash for debt if anything, to obtain. With a
elimination because the home is home equity loan you are taking
used as collateral. If for some out a second loan which sometimes
reason the home equity loan or causes home equity loan rates to
the refinanced mortgage loan be higher to offset the higher
cannot be repaid, the borrower’s risk.
home can be at risk.
When approved for a home equity
Determining your home’s equity loan or line of credit, you can
use the money to pay off your
individual credit card balances, more than is needed to pay off
bringing the balance due on each the principal due on your home.
down to zero. Instead of having For example, if you still owe
to pay multiple bills each month $180,000 on your home and you
thereafter, you need only focus need $20,000 to repay your debt,
on repaying one: your home equity you would refinance for $200,000.
loan. Since home equity loan By doing so, you’ll get a check
rates are typically much lower for $20,000 at closing which you
than those on a credit card, more can then use to pay off your
of your monthly payment will go debt!
towards paying down the
principle. As you pay down the This is a very simplistic
principle on a home equity loan explanation of how home equity
or line, that money becomes loans and home mortgage
available again, should you need refinancing can help you
it. eliminate your debt. If you think
either option sounds like it
Cash out refinancing works a bit might benefit your situation, why
differently. In this type of not sit down with a refinancing
transaction, you are refinancing expert and discuss your options
your home mortgage loan. You’ll in detail!
refinance at an amount that’s
About the Author:
Home Mortgage Refinancing
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12 Day Refi
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