Grappling with debt can be an extremely heavy burden. And as you sink deeper into late fees and interest payments, you may worry that you will never reach the light at the end of the tunnel. If you are struggling with this yourself and unsure of where to turn, there is a solution that can help. By refinancing your home to pay off debt, you can utilize the equity of your property to resolve your dues and receive the financial relief you need to start over again.
At BrightPath, we are passionate about providing first-class mortgage services to help you handle your debt.
Refinancing Your Home to Pay off Debt
By refinancing your home to pay off debt, you can utilize your property value to receive cash. With a cash-out refinance, you can renegotiate your loan term for a new amount that is higher than the balance on your existing mortgage. By doing this, you receive the difference between these two amounts in cash that can be used to settle your debt.
The Benefits of Refinancing Your Home to Pay Off Debt
Mortgage companies in Texas recommend refinancing your home to pay off debt because doing so allows you to take advantage of lower interest rates than those associated with credit cards and other dues. This enables you to pay off your debt much faster, as well as save money in the process. Also, refinancing a home to pay off debt permits you to bundle several loans into a singular monthly payment. This will help keep you organized to ensure you do not miss any dues and incur late fees, which can also help you get out of debt sooner rather than later.
Factors to Consider When Refinancing Your Home to Pay Off Debt
Mortgage companies in Texas advise you to evaluate the following factors when refinancing your home to pay off debt.
- Loan-to-value-ratio. If you are contemplating a cash-out refinance, make sure that it won’t result in a loan-to-value ratio that is higher than 80% after the refinance. If the ratio is more than that, you will be obligated to pay for private mortgage insurance, which can add up over time.
- Risk of foreclosure. By refinancing your home to pay off debt, you are using your property as collateral. This means if you default on the new loan, you could be in danger of losing your home. As a result, you should weigh this risk and feel confident in your ability to keep up with your payments before going through with it.
- Closing costs and fees. Whenever you refinance your home, there are closing costs and fees including the home inspection, title search and insurance fees, home appraisal, recording fee, and more. Therefore, you should calculate these estimated expenses when determining if refinancing your home to pay off debt is the right option for you.
The Professionals at BrightPath Will Help You Resolve Your Debt
While it can be difficult to see the forest through the trees when you are struggling to keep your head above water, refinancing can be an effective strategy to settle your dues. When you work with the professionals at BrightPath, you will have the partners you need to resolve your debt so you can get back to enjoying a stress-free lifestyle.
Contact us today to schedule a consultation.
At BrightPath, we will work hard to help you regain your financial freedom.