If you are finding yourself struggling to pay bills, you may find a great solution right within your own home. Do you own your house? If you own and do not rent, you may qualify for a refinance or home equity loan.
What does it mean to refinance my home or to get a home equity loan?
With a refinance, your home would be appraised to determine its current value. Let̢۪s say you purchased your home for $120,000 and it is now valued at $200,000, you have $80,000 in equity. This means if you sold your home for the appraised value, you could earn $80,000 in profit. You can use this equity to receive a refinance or home equity loan. The additional house value can go towards paying off your high interest loans.
Where do I go to refinance my home?
There are many financial institutions that handle home equity or refinance loans. Some ask for you to pay for appraisal and credit report fees, while others absorb the cost for you. Look for a program that works for you by calling around to a variety of financial institutions.
How will refinancing affect my mortgage?
Refinancing loans or home equity loans will make your monthly mortgage payment increase. Usually, the amount is slight and far less than what you are paying if you combine your mortgage payment with any credit card or line of credit payments. If your mortgage is $1,000 per month and you pay $600 a month in credit card and other loans, you may be able to refinance everything and pay a mere $1,300 a month. That is $300 a month you would then be able to put towards better things.
How does a home equity loan affect my mortgage?
Home equity loans are a little different from refinancing. With a home equity loan, you borrow against the additional value of your home. Usually, you have a shorter term of repayment with a home equity loan—generally ten or fifteen years. The payments still will be less expensive in most cases than paying your mortgage and credit card payments separately. Paying $200 to $300 toward your equity loan repayment is far less than the $600 you are currently paying.
What about the home equity line of credit?
A home equity line of credit is another option for settling your debt. With a home equity line of credit, you do not have a set repayment time limit. Usually, the line of credit remains open for ten years, during which you are only paying the interest. After ten years, the line of credit is restructured so that you are then paying interest plus an additional amount to reduce the loan amount.
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