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:
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.
eLEND offers the following refinance mortgage programs which may often be used to consolidate debt: