As you talk with mortgage companies in Georgia, you’ll find that the cash out refinance loan is a great option for getting out of debt. Cash out refinance loans can be used to cover a variety of expenses or home renovations, but you can also use a loan to pay down your revolving debt. To help decide if this option is right for you, advice from mortgage companies in GA, like BrightPath, can give you a closer look at how this process works.
What is Revolving Debt?
Revolving debt refers to money you can borrow, repay, and borrow again. The most classic example is your credit card. You can spend up to your limit, repay the funds, and re-spend the money on something else. However, lines of credit also fall into this category. These loans are called revolving because the debt just keeps on cycling.
Paying Down Your Revolving Debt
It can be difficult to pay off revolving debt. When you pay off a credit card, you know that the credit line is open and available to use which can be tempting. As a result, you are likely to use the card again when you need supplies for the holidays or new clothes for work. Because these loans are so easy to pay and take out again, it can be hard to pay down these debts.
At the same time, a lot of revolving debt—credit cards in particular—have high-interest rates. When loans have high-interest rates, the minimum payment may barely cover the interest, and by extension, your payments only cover a small amount of the principal balance. Due to these factors, it can take decades to pay off revolving debt.
Should You Consider a Cash Out Refinance Loan from Mortgage Companies in GA?
A cash out refinance loan lets you take equity out of your home and use it to pay off revolving debt. From there you pay off the refinance loan.
Some signs you may want to take this approach include:
- You have equity in your home.
- You don’t need that equity for other expenses such as home repairs or college tuition.
- The interest rate on the cash out refinance loan is lower than the interest rate on your revolving debt.
- The monthly payment on your cash out refinance loan is lower than the current monthly payment on your revolving debt.
- An Atlanta mortgage lender shows you how long it’s going to pay off the cash out refinance loan compared to the revolving loan.
- You want to pay an installment loan instead of revolving debt. With installment loans, you pay a set amount until the loan is completely paid off.
- You are confident about your ability to not use your credit cards so that you don’t run up any new revolving debt while you pay off your cash out refinance loans.
Contact Your Local Mortgage Companies in GA for Refinancing Options
Being in debt can be difficult, and while student loans, car loans, and mortgages are often essential, most revolving debt is not essential and due to high interest rates, it can be financially debilitating. If you’re interested in learning more about cash out refinancing and other Atlanta mortgage refinancing options, contact an Atlanta mortgage specialist at BrightPath today to see which refinancing option can help you get out of debt!