Solutions To Overcoming High Debt
If you are overwhelmed with debt and are barely making ends meet due to high credit card balances, large auto payments, student loans, and larger mortgage payments, there may be solutions to overcoming high debt. If you are a home owner and have equity, a cashout refinance mortgage loan will probably the quickest and easiest fix to overcoming high debt.
Cashout Refinance Mortgage Loan
Housing prices have been increasing in the past few years and in some areas, housing values have appreciated in the double digits. Many homeowners who have purchased their homes in the past few years do not realize that the value of their homes have sky rocketed, especially in Florida, Illinois, California, Wisconsin, Washington, Indiana, and many other states. A cashout refinance mortgage loan can be a solution to those who are overwhelmed with high monthly payments. With the excess cash from the refinance mortgage loan they can pay off all or most of their credit card balances, car loan, and other monthly installment loan. Even if the homeowner gets the same interest rate or slightly higher interest on the refinance mortgage loan, the new payment may be slightly higher but their overall monthly payment will be lower because the new refinance mortgage loan is amortized over 30 years at a rate of 4.25% ( todays mortgage rate ) versus the 20 plus percent credit companies charge and the short term amortization car loan finance charge. Most car loans are amortized over 3 to 5 years and interest rates on car loans are north of 6 plus percent.
Refinance Mortgage Loan
There are ways where you can do a refinance mortgage loan and get cash back to solve overcoming high debt and come out ahead where all of your debts get paid off and you eliminate all of your monthly debt and keep the same mortgage payment as before or your mortgage payment is slightly higher where it will not make a dent with your finances. If you can get a lower interest rate on your refinance mortgage loan, your mortgage payment will get greatly reduced. For example, if you have a $200,000 mortgage balance at an interest rate of 5.75% which is a 30 year fixed rate loan, your current principal and interest payment on your current loan will be $1,167.15. However, if you want $30,000 cash from your refinance mortgage to pay off your $15,000 in credit card debt and your $15,000 auto loan so you do a $230,000 cashout refinance mortgage with a new 30 year fixed rate loan at 4.25% interest rate, your new monthly mortgage payment will be $1,131.46 per month.
Case Scenario On Refinance Mortgage
Say on the above case scenario that your automobile loan monthly payment was $400 per month and your minimum credit card payments were $600 per month. By refinancing and paying off your auto loan and credit cards, you will be saving over $1,000 per month and your mortgage payments will even be lower than what it used to be even with a $30,000 larger balance.