Refinancing Your Home to Pay Off Debt

Refinancing Your Home to Pay Off Debt

Are you a homeowner who currently holds a significant amount of debt, and looking for a way to consolidate what you owe? One way to manage debt and help you lower your monthly payments is to refinance your mortgage to a lower rate. If you are located in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to learn more about how to consolidate your debt by refinancing your mortgage, contact Foundation Mortgage. We can work closely with you to help you determine a financing option that will benefit your unique situation.

How Does Debt Consolidation Work?

Debt consolidation is intended to make paying off debt more affordable for a borrower on a monthly basis. The aim of a debt consolidation is to pay off your higher interest debt, (usually from lending sources such as credit cards), by borrowing from another loan with lower interest rates. Consolidating your outstanding balances into a mortgage with lower interest can save you money in the long run and can reduce the stress of multiple monthly payments by giving you money to pay off your debt and by reducing the amount of payments you have to make into one monthly payment. A mortgage loan is one of the most affordable ways to borrow money because it offers lower interest rates than credit cards and most other types of loans.

Refinancing Options For Debt Consolidation

A mortgage refinance can allow you to pay off higher interest debt and transform it into a lower interest rate, and there are a few different ways you can refinance your mortgage loan.

  • Cash-Out Refinance – In a cash-out refinance, you take equity that has built up in your home out as cash. In exchange for the cash, the lender replaces your old loan with a higher-balanced loan. The borrower then continues to make monthly payments on the new loan amount.
  • Rate and Term Refinance – A rate and term refinance changes the rate and terms of your current loan. If you take a lower interest rate or a longer term, you can lower the amount you pay each month, allowing you to pay off more of your debt in the process

Home Equity Line of Credit (HELOC) – although not technically a refinance, a home equity line of credit allows you to draw money from the equity in your home. You borrow the money when you need it, and make a repayment when there is a balance due.

Assistance With a Home Refinance

If you are looking for a way to consolidate and manage your debt, and interested in refinancing your home in order to help you do that in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help. Our loan specialists can work with you to help determine the best refinancing option for your situation. Contact us today for a consultation.


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