Consolidating debt with a new mortgage
Consolidating debt with a new mortgage - Dirtysex dating
One way to do this is to perform a cash-out refinance.This type of refinance allows you to turn the equity you’ve built up in your home into cash that you can use for whatever you like.
But if you can move debt that costs you 13.66% to a vehicle that charges you only 3.71%, you can effectively give yourself almost a 10% return on your money.If you think a cash-out refinance might be a good idea, make sure you have enough equity that the cash you take out of your home won’t leave you with a loan-to-value ratio of more than 80%, post-refinance.Exceeding that ratio means that you’ll have to buy private mortgage insurance, which can easily cost 1% of the loan value every year.You’ve probably noticed how low mortgage rates have been during the past few years.The 30-year mortgage rate hit 3.31% in November 2012, the lowest rate in history.According to Nerd Wallet.com, the average balance in April 2014 for households with credit card debt is ,191.
While consumers can use techniques such as the “snowball method” (paying off your lowest balance in full while paying the minimum on other credit cards, then tackling the next debt with as high a payment as you can handle), the concept of debt consolidation for one overall payment is appealing.It might seem as though there’s no relief from high-interest balances, but you can take steps to lower your burden.For homeowners, one of them is to consolidate your debt and lower your monthly bills by refinancing your mortgage.(Current mortgage amount) / (approximate home value) = loan-to-value ratio If you want to cash out some home equity to pay off high-interest credit card debt, add the amount of debt you’re paying off to the loan amount, like this: (Current mortgage amount) (credit card balance to pay off) / (approximate home value) = loan-to-value ratio Here’s an example: Let’s assume your current mortgage balance is 0,000 on a home worth approximately 0,000, and you’d like to pay off ,000 in credit card debt.Your calculation would look like this: (0,000 ,000) / 0,000 = 0.7 or 70% Since your loan-to-value ratio is less than 80%, you can cash out enough equity to pay off your credit card debt without having to pay for mortgage insurance.When you perform a cash-out refinance, you’re increasing your mortgage balance by the amount of credit card debt you’re paying off.