Debt Consolidation Mortgage Refinancing Loan

Improve Your Finances with a Debt Consolidation Mortgage Refinancing Loan

If your high-interest rate credit card debts are costing you a fortune, you could save money, reduce your taxes, and pay off your debts faster with a debt consolidation mortgage-refinancing loan. You have two options for a debt consolidation loan: mortgage refinance or home equity.

Mortgage Refinance Is Best for Big Debts

If you have credit card debt totaling more than $50,000 dollars or other high interest debts, then a mortgage refinance loan is the way to go. You’ll need to qualify for a new loan, but most people are offered a low rate if they’ve built equity in their homes and have a credit score over 700.

With a mortgage refinance loan, you can set a term anywhere from 10-30 years and the interest is tax deductible. It’s recommended for larger loans because the longer time frame stretches out the payments to an affordable level. Depending on the amount of equity you have, you could also borrow extra money to make home improvements like installing a new roof or remodeling an antiquated kitchen or bathroom.

Home Equity Loans Are Best for Small Debts

If you have smaller debts in the $10-20,000 range, then a home equity loan is a better choice. Your rate will be slightly higher than a fixed rate mortgage loan, but you’ll have little or no closing costs and receive the money much faster. You can also set payment terms for just a few years rather than 25-30.

There are several advantages to getting a home equity loan instead of other debt consolidation loans:

* Your interest rate will be lower than you can get with a credit card

* You won’t pay any balance transfer fees

* Your interest is tax deductible.

Borrow Safely to Protect Your Home

Whether you get a home equity or mortgage refinance loan, make sure you only borrow an amount you can afford to repay. If you can’t make your payments, you could lose your home. When deciding how much to borrow, keep in mind that you should never borrow more than 80% of the current value of your home so you have a cash cushion in case home prices decline and you need to sell.

You should only borrow funds against your home if the interest rate on the debt is higher than the interest rate on your home equity loan and isn’t tax deductible. It wouldn’t be worthwhile to get a 7% home equity loan to pay off a student loan fixed at 4%.

If you borrow smartly, a debt consolidation mortgage refinance loan or home equity loan can save you hundreds of dollars in interest and reduce your taxes. If you own a home, consider this solution for medium to large debts.

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Consolidating debts can save you money if you know how

The financial outlook of our country has change over the last year and now more than ever consumers need to look at their debts. Maybe consolidating these debts onto the mortgagewill save you money. To start with write down on a sheet of paper all of your debts, who they are owed to, the time left to pay, how much they cost each month and the interest rate. By organising your finances in this way you will have a much clearer picture of how much you owe and to witch creditors.

Once you have a list of payments you can see which loans and credit cards are costing you the most money on a monthly basis? Some credit cards may have come to the end of their introducer rate. You will also want to pay off the cards with the highest interest rate first.

Some loans maybe near the end of the term and it would be advised to leave them as they are, but for credit cards with a high rate of interest and loans with more than a year to run it would be cheaper to consolidate these debts and remortgage.

Some people say that consolidating existing debt onto a mortgage is not a good idea. However if you are smart a debt consolidation mortgage can save you thousands. Most lenders these days will let you make overpayments on your mortgage of up to 20% of the mortgage balance on a yearly basis.

After consolidating all of your debts on to the mortgage this will free up money each month, which can then be used to not only pay down the mortgage but also over pay and reduce the term of the mortgage. There by saving you even more money each month as the debt gets smaller.

It’s easier than ever before to get one of the homeowner mortgages that you require for debt consolidation. All you really have to have is sufficient equity in your property and full time employment so the bank can see that the new mortgage will be repaid.

A mortgage advisor is a good person to speak to, they not only advise you on which lender would be best for your situation, but they can also advise on which lenders will let you make the overpayment that you require to bring down the mortgage debt quickly.