Is Mortgage Refinancing a good way to Consolidate Debt? |
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Answer:
Refinancing your mortgage can be an excellent way to consolidate debt, Depending on the type of debt you currently have, consolidating your debt with a mortgage loan can help you get out of debt faster. If you are carrying debt on revolving credit card accounts, and making only the minimum required monthly payments, you are making little or no forward progress toward reducing your actual debt. Those who make minimum payments on credit card debt, and continue to use the cards, can literally remain in debt forever. However, when this type of debt is consolidated with a home loan refinance, part of every payment goes toward reducing the principal balance of the loan, which will be paid in full after a specific number of on-time monthly installments. Additionally, in most cases, the interest paid on a refinanced mortgage is fully tax deductible. This means that the money you spend on interest expense on this type of loan can reduce your taxable income, resulting in potential savings on your end of the year tax bill. Trackback(0)
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