Refinancing is one option for consolidating your debt.
With traditional refinancing, you replace your existing mortgage with another mortgage, potentially with a lower interest rate and lower monthly payment. If you choose a cash-out refinance for debt consolidation, then you refinance for more than you owe currently on your mortgage and can use the difference to pay off more expensive debts.
Benefits of a cash-out refi for debt consolidation:
Lower your interest rate - It may be possible to refinance at a lower interest rate than your current home loan.
Lower payments - Your home loan payment may increase slightly if you pay off high-cost debts with funds from a cash out refinance—but your total monthly expenses may be reduced.
Tax Deductibility - Often interest on your home loan is tax deductible, while other debt is not. Consult your tax advisor for information on tax deductibility. You may be able to keep more of your hard earned money in your pocket.
One convenient, easy payment - See if you can eliminate high rate credit card or personal loans and make one convenient mortgage payment instead. Write one check and avoid the hassle of dealing with many different due dates and minimum payments.
Should you refinance or take out a second mortgage?
The choice of whether to refinance your home loan or take out a second mortgage, like a home equity loan or line of credit, is a major decision in consolidating your debt. There are a number of factors to consider:
Interest rates - What is your current interest rate, compared to the rate you could refinance your first mortgage, compared to the rate of a home equity loan or line of credit? The rate for refinancing is in some instances lower than a home equity loan.
Length of loan - Refinancing is frequently, but not always, for a full 30 years, putting you into the position of owing money longer. In general, home equity loans tend to be a shorter term, potentially enabling you to get out of debt sooner—but potentially at the cost of higher monthly payments.
Closing costs - Often the closing costs for a home equity loan, and especially a line of credit, are more affordable and involve less paperwork.
Our help tools and calculators can help you compare your options.
Or, you can call one of our helpful Loan Consultants at 1-800-909-8217 for a FREE, no obligation consultation to find out what debt consolidation loan option would best fit your needs and financial situation.
Need help deciding what is the right debt consolidation loan option for you? Countrywide Bank's Full Spectrum Lending Division can answer your questions and help you choose the loan that will advance you toward your financial goals. We believe that challenges like excess debt or less than perfect credit are generally temporary. Unexpected things can happen, and everyone hits a bit of a rough financial patch at some point in their lives. That's why we do everything we can to get your debt consolidation refinance loan done as quickly as possible.
Call 1-800-909-8217 to talk to one of our Home Loan Consultants about getting your home’s available equity out of your home to help you consolidate your debt.
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