Refinancing Your Mortgage To Help Lower Your Debt

Are you currently a homeowner and also have a substantial amount of debt? If so, chances are you may be looking for ways to cut down on the current amount of debt that you owe. One way to help manage your debt, while also decreasing the amount that you pay for your monthly mortgage payments is to refinance your mortgage for a more favorable rate or term. If you are a homeowner in Conyers, Georgia, and want to know more about saving money with your home financing, Preferred Capital Funding is here to help. Continue reading to learn more about refinancing your mortgage to help you consolidate your debt.

What Does It Mean to Consolidate Your Debt?

When you consolidate your debt, it helps make paying it off more affordable by combining your monthly payment commitments into one sum, making it possible to save more money in the long run. When you start to consolidate your debt, you should prioritize paying off the debt that has the highest interest rate first, (such as credit cards, car payments, etc.), by taking out a loan that has a lower interest rate to pay it off. Consolidating your outstanding debt with a home loan with a lower interest rate decreases the overall amount you have to pay for monthly mortgage payments, which will provide more funds to help pay off other debts. Taking out a mortgage can help a borrower save more money when consolidating because they offer lower interest rates than most other types of loans or credit cards.

What Refinancing Options Do I Have When Consolidating Debt?

When attempting to consolidate your debt, there are several types of home financing options that are available for you to consider, including:

• Cash-out refinance – This type of refinance allows borrowers to exchange equity in their home for a sum of cash, and your existing mortgage is replaced with a new one that has a higher balance. Borrowers continue to make mortgage payments on the new loan, but get to keep the excess funds, which can be then used to pay off other debt.
• Home Equity Line of Credit, (HELOC) – A HELOC allows a borrower to withdraw funds from their home so that they can have money whenever they need it to pay off other debt. A borrower will then repay that money when a balance is due.
• Rate and term refinance – This refinance option lets a borrower get a new mortgage that has a better term length or rate than their current one. By lowering their monthly mortgage rate, a borrower can then be able to afford to pay off other debt.

If you are located in Conyers, Georgia, and have questions about debt consolidation, contact Preferred Capital Funding today for a consultation.