From student loan debts to revolving credit card debts to auto loans, efficient debt management is needed to avoid a crisis. If you are receiving multiple bills each month and it takes a lot of time to handle the paperwork, consider refinancing your existing mortgage. This option allows homeowners to consolidate all of their debts into a single monthly bill and payment.
Please note: By refinancing an existing loan, even to consolidate debt, the total finance charges may be higher over the life of the loan.
Debt consolidation is the process of taking out a new loan to pay off one’s existing debts and liabilities. In other words, multiple debts are combined into a single debt, typically with more favorable payoff terms. For example, the individual may get a lower monthly payment rate and/or a lower interest rate. Today, consolidating debts is becoming increasingly popular when dealing with debts pertaining to credit cards, student loans, medical bills, auto loans, and more. The key thing is that individuals are simplifying their finances by exchanging multiple smaller debt obligations for a single bill that they can pay every month.
Debt consolidation, however, is not a one-size-fits-all solution. For example, if you are having trouble paying mortgage loans, it is important to consult directly with your loan servicer.
So, how does a person apply for a debt consolidation loan? Homeowners with substantial equity in their properties may consider using home equity lines of credit (HELOCs) or home equity loans to consolidate debt. In addition to getting better interest rates, it may also be possible to stretch out one’s payments over a longer period of time, e.g., between 15 and 20 years. This means homeowners deal with lower monthly payments.
An alternative is to do a cash-out refinance. This option involves homeowners refinancing their current mortgage and borrowing against their home equity. As a result, these individuals receive a sum of money at closing and the balance owed on the new loans will be higher than the old amounts. This is a suitable option if people are paying a higher interest on their existing mortgage than they could get by refinancing. It is important to note that the origination fees might be higher than on a standard home equity loan.
When homeowners refinance their mortgage loans, they may access money to pay other bills. In addition, taking cash out to pay off high-interest debts quickly can help improve your credit rating. At Stockton Mortgage, we have helped homeowners with less-than-perfect credit refinance their mortgage loans. Their new loans featured lower interest rates than what’s charged on their student loans, auto loans, and credit cards. Therefore, our clients can save a lot of money. In some cases, mortgage interest can be tax deductible so do not hesitate to consult with Stockton Mortgage’s loan officers for assistance before refinancing.
Headquartered in Kentucky, Stockton Mortgage is a full-service, independent mortgage bank that is licensed in 17 states and is an approved Ginnie Mae issuer and Fannie Mae/Freddie Mac seller/servicer. We serve a wide variety of homeowners in Georgia, Indiana, Kentucky, Michigan, Ohio, Tennessee, and more. Our team is comprised of professional underwriters, has access to a Borrower Intelligence System, and funds and closes 100% of our loans in-house. When you work with us, expect streamlined and efficient services from application through closing.