Credit card debt is a scary thing for all of us. Sometimes, in the blink of an eye, it feels like our debt has grown so big that we’ll never be able to get out from under it.
Refinancing the equity in your mortgage can be a valid option for helping manage all of your debt. While many people are anxious, it’s actually a very common practice and has helped many people get their finances back on track.
How Debt Consolidation Works
As you pay down your mortgage, you’re accumulating what’s known as ‘equity’ – which just means an amount of money you’ve put in toward paying off the total amount of your mortgage.
Your mortgage equity can be used in many ways that most people are already familiar with, such as renovating or adding features to your home. But what many people don’t know is that you can also use your mortgage equity to pay down any debt that you may have including credit cards, car loans and lines of credit.
Essentially, what happens is that your mortgage lender agrees to absorb all or a portion of your debt back into your mortgage. The amount that is available is typically determined by both your equity and the practices of the lender.
While going down this road often carries a negative stigma, the pros of debt consolidation and refinancing your mortgage are clear:
- Eliminate your high-interest rate debt, in favor of a lower interest rate.
- Save money month to month while you also increase your cash flow and get out from under heavy monthly payments.
- Change the course of a financial situation that may have gotten out of control.
- Talk to a Broker about Debt Consolidation and Refinancing.
Every financial situation is different. If you’re interested in learning more about your options for managing your unique situation, a mortgage broker can be a valuable resource
At Mortgage Guys, we’ve helped many individuals just like you take control of their finances and relieve the pressure of credit card debt. If you’d like to explore your refinancing options, get in touch today. Our expert consultants are waiting to help.