If you’re a homeowner currently experiencing financial hardship due to escalating consumer debt, you need to do something fast to avoid jeopardizing your credit. Depending on your specific situation and how much equity you have in your home, it’s possible you could refinance in order to consolidate and pay off your consumer debt with one affordable monthly payment.
If your credit is still in relatively good standing, you may find refinancing to consolidate debt works to your advantage in more than one way. To start with, you could actually qualify for a lower interest rate that would result in savings on your mortgage. Of course, the benefits of a lower interest rate come at a cost. Refinancing isn’t free, and if you don’t plan to stay in your home very long, you probably won’t benefit from a lower rate.
The benefits of paying off your consumer debt with a consolidation refinance are substantial for many people. You no longer need to worry about multiple payments and high interest rates on credit cards. Of course, these benefits come at a cost, too. You will probably need to extend the terms of your present loan, plus you are trading off your home equity for yet another loan.
If your credit is already poor, the costs of consolidating debt with a bad credit home loan refinance will be high. But it could still save you thousands of dollars in the long run. You can use a debt consolidation calculator available for free online to help you determine whether the benefits of debt consolidation make a bad credit home loan refinance worthwhile.