Debt Consolidation with Mortgage Refinancing

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Using Mortgage Refinancing for Debt Consolidation

As you accumulate your purchases using your credit card, your credit balance increases. You can opt to use another credit card to purchase, which also limits the expenses on your other card. This will be problematic if you have multiple lines of credit and/or if you are having financial troubles. They will be difficult to manage and confusing due to the different interest rates and the payments that you will have to make each month. Debt consolidation with mortgage refinancing is a great option for anyone who is looking for a source of extra money by refinancing your existing mortgage.

Debt Consolidation

A loan or credit contract will state that you have an interest rate and a fixed term. Since you have multiple ones, they have their own rates and terms for payments. Some are high, which makes it difficult to pay. Debt consolidation is refinancing your multiple high-interest loans to a single lower interest loan.

Debt consolidation can help in many ways:
  • It will help you be more organized with your credit portfolio.
  • It will merge your multiple lines of credit into a single form of loan with
    a single rate.
  • It will make the payment more efficient; you will pay only one
    account, instead of paying various creditors individually.
Mortgage Refinancing
  • In order to consolidate your multiple lines of credit, you have to apply for a mortgage using your property as a collateral. This is more secure from the perspective of the creditor. You will use this to pay off your existing loans which will then be replaced into a single, more manageable loan. This how debt consolidation with mortgage refinancing can benefit you:
  • Giving a much lower interest rate so that you will have smalleramortization payments per month
  • Having a term which can also be extended, making your payments more flexible

Be careful when applying for a mortgage loan. The bank or the financial institution will have your real estate property as a collateral, which means that consecutive failure of payments will end up with the bank taking possession of your property. Using your real estate as a collateral is an assurance for the bank or the lending institution — that you will be paying the monthly payment on time, every time. Both Debt Consolidation and Mortgage Refinancing have certain fees and have their own terms and conditions. Both are simply saying that you apply for a new and much better loan to pay off your previous loans. Both options can help you improve your credit rating due to the better handling of your portfolio, which will make you a better candidate for a loan in the future.

Other Ways to Settle Debt

Aside from Debt Consolidation and Mortgage Refinancing, there are other ways to settle debt. One is through Debt Settlement where you can pay less than what you owe. You can have a mutual agreement with your creditor to pay less because you currently don’t have the financial capability to pay the original amount in full. The creditor can agree to this because a lower payment is better than non-payment at all. The ultimate method is having a more responsible spending habit. This will help you handle your finances by knowing the consequences of purchasing certain items. It will make you prioritize what you need the most and what you need the least.

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