Consolidating debt to mortgage
If you have a property worth 0,000, and the outstanding loan balance is 0,000, you have a loan-to-value ratio of 50 percent.Most lenders are fairly comfortable loaning as much is 80 percent, and some will go even higher.So don’t use home equity unless you are very, very disciplined and did not acquire debt through financial mismanagement.If you have any doubt at all about your ability to pay off your debt and stay out of trouble, get professional help.
Consider cash-out refinancing only if you can significantly improve on the terms of your current mortgage.That’s a lot more than it used to be, in part because home values in most areas have been rising.According to the National Association of Realtors, in October, existing home prices nationwide rose for the 68th straight month of year-over-year gains.The interest rate, however, is generally the lowest of the three choices.It might be the best option if you plan to take out a lot of cash, but probably makes little sense to get just a few thousand. Its interest rate is higher than that of a first mortgage, but you only pay fees on the cash you need, not to replace your current mortgage as well.
If you’re repaying a mortgage at 4 percent and a credit card at 16 percent, the rate difference is obvious.