Get Extra Cash By Refinancing by Melissa Kellett
There are many ways of consolidating debt. One of the smartest, though, is to refinance your home mortgage and use the extra money you can get out of your home equity to cancel other debts.
Benefits Of Refinancing
When you refinance your home mortgage you obtain a loan in order to pay off the existing one. This is beneficial especially if the new loan presents either a lower interest rate or a longer repayments schedule. In any case, the applicant will be able to reduce his monthly payments considerably.
By refinancing you will also be able to request a higher amount than the remaining of the outstanding loan and thus obtain extra cash from the equity you have built on your home. These refinance loans are known as Cash Out Refinance Loans and the surplus can be used for many purposes. However, you can raise your credit score and improve your credit history by using it for eliminating debt by paying off a certain amount of the remaining debt, especially high interest debt.
When To Refinance
If you think that refinance might be a good option for you to consolidate debt, you should pay special attention to the interest rate and the loan amount since these two issues will determine whether refinancing your home loan is convenient or not. A lower interest rate with a similar repayment program would lower your installments and thus you would have extra money for repaying your debt sooner. The same thing can be achieved if you can get a higher loan amount.
If you can obtain a lower interest rate by refinancing your mortgage, if you can get a longer repayment schedule and thus lower monthly payments or if you can get all the extra money you need by refinancing for a higher amount, then refinance is the right option for you.
If none of these benefits can be obtained by refinancing your home loan, then you should reconsider refinancing. There are other options like unsecured or secured personal loans and home equity loans and lines of credit that can help you consolidate your debt. You should also check when considering refinancing that the previous home loan does not have a prepayment penalty. Otherwise you might loose all the money you were going to save by refinancing your mortgage.
How To Find The Right Lender
Finding the right lender that will offer you the best deal on your refinance home loan is the key issue when it comes to refinance. The smartest way to go is to search online; there are some online companies that offer access to many lenders dealing with mortgages and refinance mortgage loans where you will be able to obtain free quotes and compare them in order to make a conscious decision. Refrain from contacting realtors to get advice on refinance home loan lenders. The truth is that it is not their area of expertise and they usually have agreements with lenders that will turn your refinance loan more onerous. If you want to get the best deal available you should shop around and compare rates.