Mortgage Refinancing For The Purpose Of Debt Consolidation
Refinancing your mortgage loan may entitle you to a better interest rate and save a great deal of money. Did you know that you may be able to eliminate other debts with the same loan? You can do just that with debt consolidation refinancing! Debt consolidation is the process of combining all or part of existing debt into a single loan. This enables you to save money with a lower interest rate and by making one monthly payment. That new loan is called a debt consolidation loan. With a debt consolidation loan pre-existing debts are paid in full resulting in improved credit ratings.
This type of loan also eliminates harassing phone calls from collectors, large multiple payments and higher interest rates. By combining debt into a debt consolidation mortgage refinancing loan, you take advantage of your status as a homeowner to get a lower interest rate on all of your bills. It is not without its problems, of course. By taking advantage of lower interest rates and lower monthly payments, you are extending the overall length of your loan. This will in turn mean that you'll be paying more interest payments over a longer period of time.
If you combine loans that originally had a 12 year repayment schedule, into a new debt consolidation refinance loan, you might be extending the overall period of repayment to as much as 30 years. The total amount of interest paid, despite the lower interest rate, will increase based on the time it takes to repay the loan. It is important to understand that a loan of this type is not without its problems. Your immediate cash flow problems may be diminished, but overall the amount of credit you have outstanding may remain the same or even increase in some cases. By using a free online calculator you can do the math for yourself and decide if a debt consolidation refinance is a smart choice for your situation.
The primary goal should be to find the lowest interest rate for the consolidation loan. Then plan to pay that debt off as soon as possible. If the refinance loan company allows for principal payments above the regularly scheduled payments, you may be able to reduce or eliminate the debt quickly. Additional payments designated towards the principal will reduce the total debt quickly and in a shorter time span. As a homeowner, a mortgage refinance loan that has a better rate of interest may be a smart choice.
This type of consolidation affords the ability to eliminate high interest credit card debt and the terms and conditions may be more favorable to resolving excessive debts. By doing your research and asking the right questions, you will be in a better position to know where you stand and how you might potentially benefit (or not) from a debt consolidation refinance loan. Out there is the right option for mortgage refinancing to consolidate debt. You just have to find it.
Interested in mortgage refinancing? Visit www.allaboutmortgagerefinancing.com and learn more about the benefits of mortgage refinancing and other related subjects.
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