3 Reasons to Consolidate Debt with a Refinance
Refinancing your home loan can be beneficial for tons of reasons like lowering your interest rate, lowering your payment, or getting rid of PMI. Another great reason to refinance is to consolidate debt. Here are three reasons to consolidate debt with a refinance:
1. ONE (MOST LIKELY LOWER) MONTHLY PAYMENT TO ONE LENDER
When the debt amount is disbursed over the life of a home loan (usually 30 years), the payment is lower. Instead of paying multiple lenders and credit card companies over a shorter amount of time, you can make a payment to just one!
2. BOOST YOUR CREDIT SCORE
Consolidating your debt in to one “account” may diminish negative points on your credit repot for:
– debt to income ratios
– credit line usage (percent of credit used)
– number of credit lines open (you can choose to close the line of credit or keep it open, both could be beneficial. We suggest you seek the advice of a financial adviser as to which would best fit your situation).
3. GET A LOWER INTEREST RATE
Most credit card companies run a promotional 0% for a certain number of months and then hit you with a 20-something% interest rate. Mortgage rates are as low as 3% right now! Lock into that rate and reap the benefits on more than just your home!