When Is The Best Time to Refinance to Pay off Your Debt

Refinance To Pay Off Debt

Refinancing your mortgage is the process of taking out a new mortgage loan to pay off an existing loan. When refinancing to pay off debt, if the new loan has a lower interest rate than the existing loan it is possible to save money by lowering your monthly mortgage payment.

You can also refinance to pay off any non-mortgage debt you may have.

For some people, using the equity in their home, refinancing to pay off credit card debt is a great option over the more common “balance transfer credit card” method. Doing a balance transfer often does not give you much monthly payment relief.

If you’re struggling to make your current payments, you need a lower-payment solution.  A VA cash-out refinance may be your best option.

Refinancing can also help change the terms of your loan, such as shortening the length of the loan, to better suit your needs. 

Usually, the longer loan you have, the more interest you have to pay.

VA Cash Out Refinance Loan

When you refinance your mortgage using a VA cash-out refinance, you’re essentially taking out a new mortgage loan to pay off your existing mortgage balance – you will need to qualify for a new loan to do this.

That said, if you do qualify for a new loan, a cash-out refinance loan can be a great way to use your mortgage to pay off higher-interest credit cards and consolidate your debts.

Depending on your financial situation, by consolidating your debts into one monthly payment, you save money on interest and get out of debt faster.

Plus, if you have high-interest debt like credit card debt, refinancing can help you save big in your monthly payments.

If you’re thinking about refinancing to pay off debt, talk to a VA refinancing expert with HomePromise to see if it’s right for you: 800-720-0250

Best Time to Refinance to Pay off Your Debt

If you’re struggling to make ends meet each month or you’re simply looking to save money on interest and reduce your monthly payments, refinancing to pay off debt may be the best option.

But before you refinance, it’s important to understand when the timing is right.

Here are a few things to keep in mind when considering whether or not to refinance:

1. How long do you plan on staying in your current home?

If you’re planning on selling your home within the next year, it may not make sense to refinance as you’ll likely have to pay fees to do so.

However, if you plan on staying in your home for more than a year, refinancing could have a big impact on lowering your monthly payments.

2. What’s your current interest rate on your mortgage?

This is an important factor to consider as it will affect how much money you’ll save by refinancing. It’s worthwhile to think about refinancing as a solution.

This is especially true if you can get a lower interest rate than what you are currently paying. Even a small difference in interest rates can make a big difference over time.

But, even if your current mortgage interest rate is lower than you can get today, a VA cash-out refinance may still be a good idea. Interest rates on non-mortgage debt are usually much higher than mortgage rates so paying them off with a new mortgage may make sense. 

Call a HomePromise VA loan expert to find out if mortgage refinances to pay off debt are in your best interest at 800-720-0250.

Conclusion

Refinancing to pay off debt with HomePromise is a great option for those looking to reduce their monthly payments, obtain lower interest rates, or even get cash out for home improvements.

There are many reasons why someone may want to refinance debts they have – whether it be to ease the financial burden or simply have more breathing room in their budget.

Call HomePromise today and speak to a VA refinancing expert: 800-720-0250