CONSOLIDATING YOUR LOANS

When you refinance, you often seek to replace your current mortgage loan with a new loan that has a lower interest rate. The new lender pays off the current lender and becomes the lien holder on your home.

If you have other debts and want to combine loan payments, you may decide to use a consolidation loan to refinance your mortgage. Advantages of a loan consolidation include:

• Lowering monthly payments. You may choose to refinance for reasons that have nothing to do with getting a lower interest rate. For example, you may decide to refinance to lower your payments. Some consolidation lenders will make you a loan with a lower payment but that stretches out your loan-repayment period. The net effect is that your total interest payments usually increase as a result of the longer loan term.
  
  
• Paying off consumer debt. Refinancing may allow you to borrow additional money (a "cash-out" refinancing) to pay off credit cards or other debt or even to use the money for another purpose. A benefit of using your home to refinance is that mortgage interest is generally tax-deductible (unlike the interest on auto or credit card debt). However, keep in mind that home equity debt cannot be discharged as easily as consumer debt if you should ever be forced to file for personal bankruptcy.
  
  
• Combing monthly payments. Refinancing lets you combine two mortgage payments into one payment, hopefully at a lower rate than the average rate of the two payments. If for nothing else at all, combining your payments cuts the time you spend paying bills.
  
  

The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should Contact us or Call us at (714) 657-7585 and our representative will help you fulfilling your real estate needs.