Are you tired of paying high interest rates on your consumer debt? Do you wish you could consolidate your debt with a debt consolidation loan?
If you have equity in your home, you can! A cash-out refinance, home equity loan, or HELOC can wrap your debt into one loan using your home’s equity, giving you a lower interest rate and one payment.
When you consolidate your debt into one loan, you pay it all off using your home’s equity. Your home equity is the difference between your home’s current value and any outstanding mortgage loans.
You can use up to 80% of your home’s value, so if you have room after taking into consideration your 1st mortgage, you can use the remaining funds to consolidate your debt.
A cash-out refinance is a refinance of your first mortgage but for a higher loan amount than you have outstanding. You can use the difference from the amount left after paying off your mortgage to pay off your consumer debt.
You'll then have one payment that includes your mortgage and consumer debt.
A home equity loan is a second mortgage on your property. You don’t refinance your first mortgage. Instead, the home equity loan takes a second lien position on the property. You’ll receive the proceeds as one lump sum which you can use to pay off your debts.
Home equity loans have a fixed interest rate, and you make principal and interest payments right away, with a 20 to 30-year term.
A home equity line of credit or HELOC is also a second lien on your property. You receive a credit line that you can access when you want, much like a credit card. You only pay interest on the funds you withdraw. Any unused funds don’t accrue interest.
You can withdraw funds from the line for the first 10 years, using them to pay off your debts. In that time, you make minimum payments which is the interest on the outstanding balance. You can also pay back the principal and reuse it during the first 10 years if you want.
After the draw period, you enter the repayment period in which you must make principal and interest payments to pay the balance off in 20 years.
If you have debt you want to consolidate, let Priva Mortgage help. Our mortgage professionals will help you determine how much equity you have in your home and which loan options work for your situation.
We offer the most competitive rates and terms, helping homeowners get out of debt and take control of their financial lives again. Contact us today to see how we can help you take care of your high interest debt.
