Consolidate Debt by Refinancing
Debt consolidation through a cash-out refinance mortgage involves taking out a new loan to pay off other loans, such as student loans, auto loans, personal loans, medical bills, credit card balances, or other credit accounts. The interest rate on some of these other types of debt may be very high, so a cash-out refinance may alleviate some of that financial burden.
Consolidating debt can have several financial benefits:
- Lower Interest Rate – If you have equity in your home, tapping into it with a cash-out refinance may enable you to pay off high-interest loans and credit accounts, and refinancing may leave you with a lower interest rate with your refinanced mortgage terms.
- Lower Monthly Payment – With a lower rate, your monthly savings might be significant when compared to repaying each loan individually over time.
Qualifying for a Debt Consolidation Refinance
In order to qualify for a debt consolidation loan that will enable you to pay off your other debts, you must have enough equity in your home to be eligible to borrow that large sum. Some loan programs limit the amount you can borrow to 80% of the home’s value, while others will allow up to 95% or more. The current value of the property will be determined by an appraisal conducted by a licensed, third party appraiser.
In addition, credit history and score, income, other debts, current assets, and other factors will be examined depending on the specific requirements of the loan program applied for.
Available Refinance Mortgage Program Options
eLEND offers the following refinance mortgage programs which may often be used to consolidate debt:
- Conventional Fixed Rate Mortgages – A fixed interest rate means your payment will stay the same for the life of the loan.
- Adjustable Rate Loans – Introductory rates offer opportunities for short term savings.
- FHA Loans – Offers low down payment options and lenient credit requirements.
- VA Mortgages – No money down financing options for eligible military veterans, active duty servicemen and women, and surviving spouses.
- Jumbo Loans – Financing options for high value properties.
I want to..
Choose this if you want to apply for a mortgage.