July 8, 2009
-
News: Trade Credit Cards Bills For Mortgage
If you are one those lucking homeowners that have lived in your home for years and have a great deal of equity built up, here's an idea. Do you have credit card and auto loans that are dragging you down with monthly payments and you just can't seem to get ahead of it all? In case you haven't noticed, home mortgage interest rates are at an all time low while credit card interest rates are at an all time high. Have you considered refinancing your home and taking the equity to pay off your credit cards and auto or other personal loans? There are some benefits to do both as well as downfalls.
The biggest benefit is that you will most likely have a new mortgage payment that will be lower than the one you currently have. However, it's important to note that instead of paying off your house in ten or so years, you will now be extending the payment. Depending on what offer you accept, it could be as many as ten more years. On the flip side, you will no longer have the credit card and loan payments. Therefore, you'll be able to take that long awaited for vacation or just plain sock some extra money in the bank. Another valuable benefit is unlike credit card and auto loan interest, mortgage interest paid is tax deductible.
Here's another positive, not only will you be paying a lower interest rate on your mortgage, but the house is sure to increase in value once the housing crunch improves. Auto's decrease in value, therefore, you will be paying a higher interest rate for a lower value vehicle. Another important consideration is that with the new credit card reform act soon to come into effect, banks are moving interest rates and fees even higher in the near future. Some have indeed already begun the process. So, while it's a decision you'll need to make on your own, there are several perks to refinancing the home mortgage.