A home mortgage refinancing is an option open to homeowners with equity in their home that is accessible in the form of cash. Homeowners can obtain a loan which essentially means the amount of equity that is in their property can be removed in the form of cash or payoffs of debts. The additional equity funds are usually borrowed at a lower interest rate, similar to the interest rate paid on the home. This loan replaces the high interest credit card debt that would otherwise be paid. Another reason to refinance the mortgage is pay a lower monthly payment on the existing loan.
Pay off debts
Sometimes small debts add up. Maybe you purchased a new appliance on a store card when the old one broke down. You may have had to put a tooth extraction on your credit card. You took a trip to the Bahamas and spent more than you planned on food and entertainment while there. Whatever the reason, you find that your credit cards are all maxed out and the penalties and late fees are costing you hundreds of dollars each month. Some home owners use a drastic plan called home mortgage refinancing in order to pay off a number of outstanding debts that create stress each month when the income won’t cover the outgo for these bills.
Put your child through college
Another great use for the cash you can obtain by a home mortgage refinancing is to educate your children. College bills are overwhelming today and in order to avoid starting off a career with thousands of dollars in college debt, many homeowners are accessing the equity in their homes to pay for the education of their children. The interest rates are equivalent between a student loan and a home equity loan, so either method is a benefit to your education debts.
Take a vacation
Sometimes you have planned a scrimped for a vacation of significance for years and it just hasn’t come together for you. If the children have all left the nest and your business is doing well, a month long cruise in the Bahamas may be just the thing to start on the new phase of your life. Obtaining home mortgage refinancing through borrowing against the equity in your house to pay for your vacation is certainly less expensive than putting the costs on a credit card. If you shop for a better interest rate, you can even end up with a lower monthly payment than you were previously paying.
Remodel your home
Another good use for the cash you obtain through home mortgage refinancing is to remodel or renovate your home. Perhaps you need new carpets or a better room. The kitchen may look dated or you might have your heart set on adding a pool or a 3rd bathroom off the family room. If you use the equity in your home, you can often access the cash to do these projects with very minimal effect on your mortgage payment.