Will Mortgage Refinance Help Me Get Out of Debt?

If you are like millions of other Americans you are no doubt worried about debt. With unemployment on the rise it can be harder and harder to stay afloat and keep your bills under control. One option that home owners consider when trying to deal wit their debt is mortgage-refinance. This may or not be the right choice, there are some factors that should be seriously considered though.

First, will the debt consolidation into a single loan by your mortgage-refinance make it possible for you to repay the debt? If the answer is no, you should not already consider get refinanced for this reason. Most consumer debt you can walk away from only damaging your credit and paying uncompletely payments in the form of charge off settlements, etc. If you will be unable to pay back the debt once it is attached to your home loan, they can take your house. A home can be a much more enticing prize for creditors than trying to get money out of someone that doesn’t have money to give.

Second, are there other ways to reduce your debt besides getting a refinance. As we mentioned above, once the debt is tied to your home, that is the collateral on the debt. Your ability to negotiate for a lower amount of rule due will be greatly reduced, now you have something to lose.

There are certainly circumstances under which a mortgage-refinance would be a good move in dealing with heavy consumer debt, and other times where it would not be a good idea at all. It is a balancing act between the risk of tying debt to your home and the reward of the lower interest rate.

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