Debt Problems? Consolidate Loans with a Mortgage Refinance

It can happen to the best of us. Your finances are all planned out and budgeted. But then, you have some unforeseen expenses, or your income stream stops flowing. All of a sudden, your carefully budgeted balance sheet is in shambles, and you're struggling to keep up with all the monthly bills.

If you're having a difficult time with financial obligations, here's some good news. The solution to your problems may be closer than you think. In fact, you're living in it. Refinancing your home mortgage may help you get a handle on those bills in a hurry.

Bottom Line on Cash-out Mortgage Refinancing

The solution can be simple: do a cash-out refinancing, where your new mortgage loan has a higher balance than the old one. Then you can use the extra funds to pay off the other loans in their entirety.

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You'll end up with just one monthly mortgage bill instead of having multiple bills for a car loan, private student loans, credit cards, or whatever other debts you're currently juggling in addition to your old mortgage loan. Not only will it be simpler to manage your finances, but mortgage rates will be typically much lower than most other types of debt interest.

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Other Considerations

The exceptions here are federal student loans, which you may want to leave out of your debt consolidation process because of their generally unbeatable interest rates. But it's usually better to move car loans, unsecured private loans, and particularly credit cards, into home equity debt.

This plan also has its tax advantages. When you roll your non-mortgage debts into your home loan, the interest on up to $100,000 of that balance may be tax deductible.

The Bottom Line

With the lower interest and longer repayment terms of your new mortgage, you should see your paycheck stretching further than before. It's a great way to put a little breathing room into a tight budget and simultaneously start rebuilding a rocky credit history. And it all will be thanks to a refinancing that you had already planned on anyway.

In order to begin this debt relief, gather up your loans and credit cards, and visit our refinancing tools area where you can find a great new mortgage loan with the power to loosen your financial belt. And the next time life throws you some unexpected lemons, you'll be all prepared to make lemonade.