Debt Consolidation Refinance
If you’re living from paycheck to paycheck rest assured you’re not alone. Many folks barely make ends meet on a week to week basis. Sadly many people can’t even remember where they spend their money. They only thing they know is that it’s all spent before their next paycheck. This lack of financial wisdom is causing many consumers to file for bankruptcy as a means of relieving themselves from their high debt and financial obligations. What many folks don’t know is that this method of erasing your debts also destroys your credit rating and any hope for having a good financial status. Instead there may be another alternative – A debt consolidation refinance may be just what the doctor ordered to fix your current financial disarray.
Most people are looking for a refinance like this because they are trying to either make less monthly payments by rolling everything into one loan, or they are trying to get smaller payments by getting a better interest rate. Both reasons are valid. For many, the simple act of this kind of consolidation can make life so much easier.
When looking at different kinds of loans, what is the best? Well, in general, you want to find one that is going to give you the best, most favorable rates. You don’t want to end up paying more monthly than before. Keep that in mind, it’s important.
However, as previously stated, there are risks you should be aware of before taking out this kind of loan. First, doing cash-out refinance results in a longer time to pay off your mortgage because even though the first mortgage is paid off, you now have this second loan with more money owed. Also, the equity on your home is diminished. There is an associated concern that the extra money you needed to take out with the cash-out refinance loan will increase your monthly payments from what they were with your original mortgage.
Are you reeling under debt and planning to file for bankruptcy? Hold on. Consider debt re-consolidation refinance as an alternative.
The main reason you should consider utilizing a debt consolidation refinance is because it usually can help eliminate the harassing phone calls from your creditors and debt collectors. It is designed to consolidate all of your bills into one monthly payment. When you compare your new monthly payment with what you have been paying previously, you will notice that the new monthly payment is slightly lower.
In an ideal situation, a debt consolidation refinance loan will encompass your mortgage and all of your high interest rate debt for a monthly cost that would be similar to the cost of your original mortgage.
Since you are already used to budgeting for that mortgage payment, the difference would be minimized. Now you are paying your mortgage payment, and you are paying off your high interest debt as well. The extra money you have freed up by consolidating can be used to get the rest of your personal debt under control.