According to mortgage companies in Texas, interest rates are currently lower than they have been for the last several years. As a result, they believe now is a great time to refinance. And while there are many beneficial reasons to pursue a refinance, it is an especially good time to refinance a mortgage to consolidate debt. If you are a homeowner that is struggling to keep up with the bills, ask yourself the right questions to determine if you should get a refinance.
At BrightPath, our experts have the brilliant mortgage solutions you need to start living the life you deserve.
What Does it Mean When You Refinance a Mortgage to Consolidate Debt?
When you refinance a mortgage to consolidate debt, you replace your existing mortgage with a new loan that has a better interest rate compared to consumer debts like credit card bills. This allows you to save more money so you can resolve your debt faster and begin rebuilding your finances.
Why You Should Refinance a Mortgage to Consolidate Debt
There are many benefits to refinancing a mortgage to consolidate debt according to mortgage companies in Texas.
- Lower your interest rate and monthly payments. For the first years of your mortgage, interest rates make up a significant percentage of your monthly payments. So, when you refinance a mortgage to consolidate debt, you can receive a lower interest rate. This allows you to save money on interest payments and put that extra cash towards resolving your debt.
- Eliminate PMI payments. If you were unable to put a minimum payment of 20% down on your home, then you are likely paying for PMI (private mortgage insurance). Over the life of the loan, these costs can add up! By refinancing, you can receive a new appraisal with a higher home value than when you purchased your property, enabling you to remove PMI payments and put that additional money towards eliminating your debt.
- Change the terms of your loan. You may have opted to get an adjustable rate mortgage to afford to get into your home. However, if you plan on living in your house for an extended period, then refinancing a mortgage to consolidate debt allows you to update your loan to a fixed rate mortgage with stable monthly payments. Doing this will help you better budget so you can save and pay off your debt faster.
Is Now the Right Time to Refinance?
When deciding if now is the best time to refinance a mortgage to consolidate debt, consider the following factors.
- Credit score. Your current credit score plays a crucial role in your refinance. If you have a credit score lower than 580, you should work to improve it before you refinance your mortgage to consolidate debt.
- Home equity. If you are trying to refinance so that you can eliminate your PMI payments and other insurance premiums, you will need a minimum home equity value of 20% before you can apply.
- Closing costs. When you refinance a mortgage to consolidate debt, there are going to be closing costs involved including origination fees, title insurance, appraisal fees, property taxes, and more. While these costs are usually less compared to purchasing a new property, you should evaluate the numbers carefully to determine if a refinance is right for your finances.
BrightPath Can Help You Refinance
When you are dealing with debt, it can be difficult to see the light at the end of the tunnel. However, with assistance from the experts from BrightPath, you can refinance a mortgage to consolidate debt so you can off your dues and regain your financial freedom.
For additional information about refinancing and to schedule a consultation, contact us today.
At BrightPath, we will get you the refinance you need to support your long-term goals.