The uncertainty and tension caused by debt is a heavy burden to bear. It can have a negative effect on your mental, emotional and physical well-being. And even when you make efforts to find additional employment and sell your belongings for cash, sometimes it’s just not enough to stay on top of your bills. But if you find yourself struggling, you may also be considering refinancing your mortgage to consolidate debt. But with so many loan options available, it can be difficult to discern which will work best with your financial situation. The experienced loan officers at BrightPath can work with you to find the right mortgage that suits your specific needs.
How Does Refinancing a Mortgage Consolidate Debt?
When you refinance your mortgage to consolidate debt, you are able to get a new loan that replaces your current one. And while there are many benefits to doing this, one of the ways it helps to consolidate debt is that it lowers your interest rate. Since most consumer debt like credit cards and student loans have higher interest rates, lowering your interest rate with refinancing can help you to pay off your debts faster and save you money while doing it. And since you consolidate multiple loans together into one payment when you refinance your mortgage, it is less likely you will have to deal with fees and late payments that can hinder your progress towards getting out of debt.
Loan Options to Consider When Refinancing Your Mortgage to Consolidate Debt
While there are many ways you can go about refinancing your mortgage to consolidate debt, there are certain loans that are widely considered to be the best loans for refinancing.
- FHA loans. FHA loans are mortgages that are insured by the Federal Housing Administration (FHA). There are many benefits to FHA Loans including lower costs, lower interest rates and easier qualification. And because they are backed by the government, lenders can offer better deals and opportunities for relief due to future financial hardship. When you use them to consolidate debt, you are able to refinance your debt into a single, low cost loan.
- VA home loans. Veteran Administration (VA) home loans are designed specifically for qualified veterans and military personnel. For those that are eligible, VA loans are beneficial because they offer special programs with low or no down payments that don’t require mortgage insurance. These initiatives allow veterans consolidate dues with low, fixed rates.
- Cash out refinance loans. Cash out refinance loans allow you to utilize your home equity to receive a loan amount that is higher than your mortgage. The difference between the loan and mortgage amounts is then given to you in cash. When you use this cash to consolidate debt, you improve your debt-to-income ratio and credit score.
- Home equity loans. A home equity loan uses the current equity value of your home to secure a fixed loan amount. This type of loan can be advantageous because it is rolled into a single payment with low interest rates. While it can help with debt consolidation, some consider it to be a risky option because if you default on the payment, you are at risk of foreclosure. So, it is essential that you are able to make the monthly payments when you take out this type of loan.
Mortgage Experts at BrightPath Can Help You Refinance Your Mortgage to Consolidate Debt
No matter which type of loan works best for you, refinancing your mortgage to consolidate debt can help you quickly pay off your dues. Contact BrightPath today to schedule your free consultation.
When you work with BrightPath, you are guaranteed to be on the path to a better, brighter future.