It’s possible to add the costs associated with getting a new mortgage into the total refinance amount to avoid paying anything out of pocket at closing.
However, refinancing to get cash out or consolidate your debt may result in a longer loan term or a higher rate, and that might mean paying more in interest overall in the long run.
Before consolidating your credit card debt into your mortgage, consider all the angles, including alternatives, such as low-interest credit card consolidation loans that some banks offer.
For example, If you have ,000 of credit card debt at 12 percent interest, and an offer of a mortgage of 0,000 at 6 percent interest, increasing the mortgage to 5,000 could increase the mortgage interest rate or the mortgage insurance premium enough to wipe out any savings.
Buying a home and consolidating your credit card debt into the mortgage can reduce your monthly expenses.
If you are unable to make your mortgage payments, you risk foreclosure.
Credit card debt is unsecured; if you fail to make payments the bank does not have any property to take back from you.
Regulations aside, it’s very important to make sure that refinancing helps you meet your financial goals.
Deciding if it makes sense to refinance your home depends on a number of factors: Does your current lender have a prepayment penalty? Are interest rates lower now than they were when you first got your home loan? Use our refinance calculator to see if refinancing your home can help you meet your goal.
In addition, unlike interest you pay on credit card debt, the interest you pay on a mortgage is tax deductible.
Owning a home can also give you more space for the same dollar amount that you pay in rent.
Helen Akers specializes in business and technology topics.
She has professional experience in business-to-business sales, technical support, and management.
You do not have to agree to receive such calls or messages as a condition of getting any services from Quicken Loans or its affiliates.