High interest debt on credit cards or loans hinders financial management. But if you are a homeowner, you can use the equity of your home. Can you roll a home equity loan into your mortgage?
Can you use refinancing to pay off HELOC?
Yes. In fact, thousands of homeowners do this every year.
Many are afraid that their variable HELOC frequency will increase rapidly because it is probably based on the current base rate. The base rate has been rising since 2015. From half 3.5% it increased to 5.5% in mid-2019. How high will it go?
In addition, many homeowners are approaching HELOC 10 years old when they switch from only interest-bearing payments to full depreciation. In addition, the rate may also increase at this time. Double payment often happens.
Potential Solution? Refinancing withdrawals.
Lenders have no restrictions on how to use the proceeds of refinancing your payout.
Fortunately, mortgage lenders have no restrictions on how you can use your refinancing income. This means that you can use these proceeds to pay back HELOC as easily as you can put it on your bank account.
At closing, the escrow company simply cuts off the final payment from the HELOC lender (assuming you have enough capital) and you’ll never have to pay back two monthly mortgage payments.
HELOC refinancing options
If you can pay off your loan balance quickly, it’s a great way to avoid increasing payments and additional interest charges. But not everyone can do it. Fortunately, you probably have additional options:
- You can replace your HELOC with a new HELOC. This gives you more time to pay off your balance and can lower your payment.
- You can replace your HELOC HELOAN, which gives you a fixed interest rate and extra time to pay off your balance. Your payment should also be lower.
- You can combine HELOC and your first mortgage into a new first mortgage.
Define your refinancing goal. Limiting current mortgage payments, lowering interest rates or gaining access to new funds are important goals. Everyone has their pros and cons.
Regardless of the refinancing chosen, it can provide greater liquidity and financial relief. However, extending your loan balance repayments can increase the total cost of interest, even if the new rate is lower.
What is debt consolidation?
Debt consolidation is debt financing that combines 2 or more loans into one. A debt consolidation mortgage is a long-term loan that gives you the means to pay off several debts at once. After paying off your remaining debts, you only have one loan to pay, not several.
To consolidate your debt, ask the lender for a loan equal to or exceeding the total amount you owe. Consolidation is especially useful for loans with high interest rates, such as credit cards. Usually the lender pays all outstanding debts and all creditors are repaid at the same time.
