Debt Consolidation Mortgages: Refinancing Into Freedom
Refinancing to consolidate debt is an attractive option for a variety of reasons. It makes debt payments more affordable, and often times can help with building your credit.
Choosing mortgage refinancing to consolidate debt is effective because of the historically low home loan rates. Think of it this way. For every thousand dollars of finance on a house, the average person is paying around four or five dollars. Borrowing money cheaper means that it’s possible to save more money, helping individuals pay off higher debts faster and more efficiently. For example, refinancing a mortgage for credit card debt can be incredibly helpful. Credit card debt tends to be some of the most expensive in terms of interest rates, with many cards charging upwards of 12-20 percent interest.
If you decide that refinancing your mortgage to consolidate debt is the right choice for you, here are some things you can do to get started.
Make larger lump payments
One big mistake people make when paying off credit card debt is splitting payments between multiple cards. But did you know, your credit is negatively affected any time you carry a high balance on any one card? If you have two hundred dollars, many people are prone to split the money by paying off one hundred dollars toward each card. But in order to pay off cards faster, you should use these larger lump payments and put the full amount toward one card’s principal payment.
Work diligently to pay down the balance on all of your credit cards, starting with the highest interest rate cards. When it comes time to pay the next card off, you can use what you ordinarily would have put toward the first card and pay off a bigger amount of the second card. Typically, this makes it possible for borrowers to pay off debt a lot faster and can get you back on track.
Make changes to your budget
Be mindful of money going out each month. Don’t use too much on entertainment or going out to dinner. Maybe cut back on how many cable channels you subscribe to. Determine what isn’t necessary for the time being and use your spending money toward existing debt.
Keep revolving accounts open
People sometimes think the best way to decrease temptation is to close out cards as they pay them off. If you have multiple maxed out credit cards, or even just one, this is not the best choice. When all your cards are maxed out, you have zero percent of your credit available. By paying off cards and then closing the accounts, you actually just end up with zero percent of credit available again. Instead, as you pay off cards, keep the accounts open to free up some of your credit available. Let your hard work pay off by leaving revolving accounts open.
Choose the lender who works for you
There are many options when it comes to debt pay off and consolidation loans. Be sure to do your research, weigh the pros and cons, and choose the company that’s going to guide you through options -- finding the right program for your financial situation.
The key to successful debt consolidation is to keep from taking on new debt. It can take a lot of self-discipline to make it work. Ask yourself how you got into debt in the first place. People have to take personal responsibility for the debt incurred and take steps to improve their overall financial help. Doing so will, in turn, help with building your credit.
Know that everyone makes mistakes when it comes to incurring debt. If you’ve started saving and have managed to start paying off bills, you can feel comfortable with refinancing your mortgage to consolidate debt. When done correctly, people are able to save thousands of dollars a month, not only in interest rates, but also in tax breaks you only get on mortgages. Paying off debt takes dedication and hard work, but by taking the right steps, you can make it easier on yourself and become debt free.
Take control of your financial situation today. American Financing can guide you through options and pre-qualify you in just 10 minutes. You may even close in as fast as 10 days. Get started now!