Falling rates in the last two weeks has sparked an influx of home refinancing applications. Pay off credit card debt is the smartest strategy to take advantage of this situation.
Consolidating credit card by refinancing your mortgage could be a great option to save money on interest, pay it sooner and have just one schedule to pay every month.
If you’re planning to stay in your home long term and you have a good amount of equity, you can take advantage of the current low interest rates and refinance your mortgage to pay off high interest credit cards.
Pay off credit card bills by refinancing your loan
Answer the following questions and see if you fall into this category and start the refinance process.
- Do you have a decent credit score?
- Are the rates lower than my current mortgage?
- Are you going to stay in your home long term?
If you answer “yes” to all consider a cash-out refinancing and consolidate your credit cards to a lower fixed rate and save money in the long run.
Typically, credit card interest rates hover around 14-16%, Mortgage rates, in comparison is around 3-5 percent.
Saving you more money in the long run
That is a significant amount of savings, not only per month but on the life of the loan.
Call a local lender so you can ask around for specific rates that you can qualify for.
Usually local lenders have more loan programs that can fit your specific need and situation and take advantage of it.
There are cost associated with refinancing which ranges from 2%-4% .
Do you know your home’s worth?
You can determine your home’s worth by accessing a basic property profile report. This report will give you a brief overview of your current home value and determine if the value can cover the cost plus the credit card bills that you are consolidating.
There is a comparable section that shows the recent sold houses in your area as well. Giving you an idea how to price your home realistically.
Depending on current rates and your existing rate, you may also lower your mortgage payments and save more money in the long run.
Take action and gather the following documents
If you prepare the following documents, lenders can determine what you qualify sooner and proceed much faster with the refinance process.
-2 years of tax returns
-2 recent pay stubs
-2 years of W2s
Act fast on conditions from the lender
Mortgage processors and lenders moves fast when they receive the conditions from the underwriter.
Underwriters may require additional documents but it’s not impossible to acquire.
Frequently, they would ask for a more recent paystub or verification of employment from your employer.
Start your mortgage refinancing process
With home values steady and rates are low, refinancing your home is almost a no brainer.
Always keep in mind that you can shop for loan rates. Contact up to three lenders and compare rates and cost.
Stick to your goals! Pay off credit card debt, that way you can compare objectively the program that you qualify the best and save in the long run.
