One of the biggest stressors facing Americans today is debt. When you fall behind on student loans and credit card bills, it can feel impossible to catch up. Even when you scrimp and save, cut expenses and work a side gig, sometimes it is simply not enough. And when that happens, it can have a grave effect on your emotional well-being and physical health. However, there is another solution that can help. By refinancing a mortgage to consolidate debt, you can utilize your home equity to pay off your dues faster so you can regain your financial freedom.
The mortgage lenders in Georgia at BrightPath will work hard to find the loan option that is best for you.
Refinancing a Mortgage to Consolidate Debt
When refinancing a mortgage to consolidate debt, you are borrowing against your home equity to receive a lower interest rate for your current debt. Debts like credit card balances have higher interest rates than mortgages, so when you refinance to reduce these rates, it allows you to resolve your debt quicker, which will save you money in the long term. With a refinance, you can also consolidate several loans into a single monthly payment, making it simpler to track your progress so you will not miss repayments and incur late fees along the way.
Determining if Refinancing a Mortgage to Consolidate Debt is Right for You
According to mortgage lenders in Georgia, there are several factors that you should consider when evaluating if refinancing is the best option for your fiscal circumstances.
- Collateral. Since credit card bills are an unsecured form of debt, your creditors cannot seize property from you if you default because they are not tied to collateral. However, when refinancing a mortgage to consolidate debt, your debt becomes secure, so your home becomes collateral. As a result, you want to ensure you have a structured repayment plan you can stick to or you could be at risk of losing your house.
- Fees and closing costs. There are fees associated with refinancing including appraisals and closing costs that you should consider before making a final decision. In some instances, you may be able to roll these expenses into the new mortgage payment, but you should review to confirm that the refinance will save you money.
- Loan to value ratio. If you owe more than eighty percent on your existing loan when refinancing a mortgage to consolidate debt, you will be required to pay private mortgage insurance (PMI). This could end up being costlier to you overall, so you should calculate your loan to value ratio to determine if refinancing is best for your circumstances. To do this, divide your current loan balance with your most recent home appraisal. Then, add the debt you want to include into your refinance with your current loan balance and divide it by the home appraisal to get your loan to value ratio.
Review Your Refinancing Options with the Mortgage Lenders in Georgia at BrightPath
There are many different choices and elements to consider when determining if refinancing a mortgage to consolidate debt is the right course of action for you. As a result, the mortgage lenders in Georgia at BrightPath will give you the guidance and insights you need so you can resolve your debt and be on the path to a brighter tomorrow.
Contact us today to schedule a free consultation.
At BrightPath, you will get the refinance you need so you can meet and exceed your long-term goals.