This article is about Clearing Old Debt Using A Mortgage Refinance. Did you know that getting rid of any debt that you have is simple as long as you have some equity in your home? Debt is not as bad as you may think it is and going through a mortgage refinance is one of the best and quickest ways to become debt free.
Here is how it all works. If you have equity in your home you can easily pull cash out of it by refinancing your home. There are many lenders out there that love to see people take the equity out of their home in order to become debt free and start changing their life around. With all that has happened in the recent years with mortgages and the financial industry people are just now starting to understand how important it is to be debt free.
A couple things that you should know about taking the cash out of your home is to try to stay under 80% of the homes value because if you don’t you will be paying more for private mortgage insurance until it gets below 80% and you refinance again.
Private mortgage insurance can cost hundreds of dollars per month, so be careful how much you take out. The other thing you should know about taking cash out to pay off debt is to have the lender send out all the checks. When you actually have the lender send out the checks they are more likely to give you a better interest rate since they know exactly where the money is going and for what reason.
Tricks To Save Money
One trick that is very easy to do and will save you a lot of money is to actually call the companies that you have debt with and try to settle on an amount. If you can get a debt settlement with all of the companies then you won’t have to borrow as much money and this will keep more equity in your home and also keep you away from private mortgage insurance. Think about it, would you rather pay more for something that can take 5 minutes of your time and make a simple phone call?
A trick that not many people know about when it comes to refinancing your mortgage is to pay for points that way you get a lower interest rate. The nice thing about paying for points is you can take a little more out of your homes equity to pay for it and since you didn’t need that money anyway you can get a lower interest and save thousands of dollars during the life of the loan. One thing you need to know about paying for points is that lenders will not tell you about this on their own, you need to ask to do it.
I hope this cleared some stuff up for you in how to pay off existing debt by simply taking cash out of your home during refinancing. It is much easier to pay off your mortgage than it is to pay off any other debt because of the great payment structure, so make sure you use it to the max.