Refinancing your home loan and cashing out part of your equity can help
you consolidate your debt with lower rates. By starting with a pay off
plan, you can enjoy being debt free in a few years. As with any type of
refinancing, check out loan terms before committing to a lender.
Shopping lenders will save you money in fees and interest charges. But, dont
be afraid to lock in rates when you do find a great deal.
Create an Eliminate Debt Plan
Before you start shopping to refinance your home loan, create a pay off
plan for your debts. Look at current statements on all the accounts you
want to pay off. Total your balances to see your debt amount.
Next, check your home equity balance to see if it will cover your
short-term debt balance. Dont forget to include your homes appreciation.
In some housing markets, a homes value can increase by double digits in
a single year.
Check Out Home Loan Terms from Multiple Lenders
With a cash out equity loan, expect to pay slightly higher rates to
refinance. You can still find low rates by checking out loan terms from a
variety of lenders. Start with a mortgage broker site to get a general
idea of rates. Then expand your search to include individual lender
When requesting quotes, just give basic information about your credit.
You dont want a lot of inquiries into your credit report since that
will lower your score. One option is to get a free copy of your credit
report and submit that information to lenders for a more accurate
Apply Online to Lock in a Low Interest Mortgage Rate
Jump on an offer that you think fits your financial situation. Rates
change daily, so you dont want to wait too long before locking in rates.
This is also the time to let lenders look at your credit report for a
specific mortgage offer.
Dont forget that you havent made any binding commitment by asking for
quotes. You have the option to decline a loan offer up to three days
Once you receive your funds, pay off and close out your short term debt
to start saving on interest charges.
See my recommended Home Mortgage Refinance Lenders for the lowest rates
Carrie Reeder is the owner of ABC