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Improving Credit by Refinancing Your Mortgage
By Karen Lawson
CMR Columnist
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Mortgage rates are rising, but so are the interest rates on your credit cards and consumer loans. Many credit card companies are issuing cards with adjustable interest rates, and when the prime rate goes up, so do your credit card rates. If you've had trouble making payments, you've probably also incurred late fees of up to $35.00 per month. These charges add up, and late payments can affect your credit standing. Refinancing your mortgage can help you pay off credit cards and loans, eliminate late fees, and improve your credit rating.
High interest rates and late charges: Taking a Bite of Your Budget
If you're having trouble paying your monthly bills, it's easy to focus on what you can't pay rather than options for paying your bills in the most cost effective way. You've probably seen calculations showing how long it takes to repay credit card balances when you're only making minimum payments. You can save money by paying off your credit card balances through refinancing your mortgage. How do you do this and why is it a good idea?
Refinancing Your Mortgage to Pay off Consumer Debt
Refinancing your mortgage depends on the amount of your home equity. Chances are, with the rapid increase in property values in many areas, you have enough equity to refinance your mortgage for enough to pay off your old mortgage and for debt consolidation. If you have an adjustable rate mortgage, it may be a good idea to refinance to a fixed rate that will stabilize your monthly payment amounts. Although your mortgage payment may increase, you'll want to compare your present mortgage payment amount and interest rate with all of your credit card payments, late fees and interest rates. This can give you a clear idea of how much credit card balances can cost over time. Refinancing your mortgage can help you eliminate high interest debt while possibly increasing your mortgage tax deduction. If you're in debt, refinancing can give your budget a breath of fresh air.
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.
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