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We’ve all been there.
Huge monthly payments on our mortgage, the 3-5 credit card bills, the student loans, the car loans, the store charge card that you use because you get “points”… Where does it all end?

How about some actual, genuine advice that you can use to help yourself get out of debt? Now, everyone’s situation is unique; but in general terms, if you own a home and have been making payments steadily, then you might have more power and leverage than you think. It does require some effort to utilize the leverage in your home (called “equity”), but if you spend some time to learn the basics of home finance, you can learn how to manage your debt as well! When renewing your mortgage for better home loan rates.

First, understand that since your situation will be unique compared to my own, I can only lend my personal experience in guiding you towards a solution. It is always recommended to consult with a professional loan counselor or credit advisor to help in your own situation. I can only speak in simplistic terms based on what helped me get my personal debt to a more manageable level.

Consider first, the different types of loans you might have, outside of your home mortgage. When nationwide averages are taken into account, most credit card holders have 3-5 pieces of “plastic money” in their wallet, right now! Where do you fit in? Now, combine that with the national average interest rate of ~14.75% for fair credit, or up to ~25% for bad credit averages. It does not take too much math to realize that the average credit card consumer is paying through the nose in interest fees alone! Furthermore, when the credit card holder is burdened with so many different bills, they are more apt to pay the minimum requirements, and this is a dangerous situation, especially if you continue to use those same credit cards for regular monthly expenses! When you pay the minimum payments, the majority of your payment goes to the interest only! And if you continue to use the credit card for regular expenses, you will simply NEVER get out of debt!

The question remains: If we are to be smart consumers, help our own personal finances and rid ourselves of bad debt, what can be done?

The answer is in where we live. Most of the lenders I have spoken with call a house “good debt”. That is, it’s not the “worst debt” we can have, but is debt none-the-less. It is often called good debt, because typically the interest rate on the loan will be much, much lower than any traditional non-secure debt (such as a credit card) because it has physical assets attached to it (your house). Also, it is called good debt because you are paying towards actual ownership of something. You can, and WILL eventually own your home! While you are paying it off, you are building value in that ownership, that you use to help with other expenses.

Here’s what some might suggest if your situation allows:

Consider Refinancing your house to try to get the best mortgage rates, or alternatively pursuing a Home Equity Loan or Home Equity Line of Credit. These options are useful for different things depending on your individual situation, so consulting with a financial specialist or home mortgage loan officer should help understand your options better. In any case, home mortgage refinance refinance will allow you to borrow against your home’s equity. If you are in a bad debt situation, do not borrow any more than you need, and only use it to pay off other debts. It is very likely that you will get a dramatically lower interest rate on the entire mortgage bundle, and the best mortgage rates will then help you save SO much more money on your other bills overall.

The strategy that I employed allowed me to combine 2 of my higher rate cards that I carried a lower balance on, and pay them off completely. Those cards were immediately shredded.

When refinancing, I saved approximately 2.1% on my mortgage interest rate, which allowed me to save an extra $300 or so on my regular monthly mortgage payments to begin with! This monthly savings, combined with the monthly payments I no longer had to make on the other 2 cards allowed me to pay off the 3rd card within about 6 months… At the rate I was going, it could have taken 6 years, easily! I have one more to go, and plastic is out of my life forever. And, even with lower monthly payments, I believe I have the best mortgage rate that I’ll be able to get,

This experience has changed how I think about credit, lending, and home finance forever. I have only been in my house about 5 years, and refinancing allowed me to eliminate debt that has been hanging over my head. I got the best mortgage rates I possibly could, and used my hard work and payments to eliminate nearly 12 years of other debts that have slowly built up. Your most important asset is your home; it can work for you when you also look for the best mortgage rate and know how to use the money you’ve put into it to your advantage! Use it wisely!

Call Realtor Agata Grudzinski @ (850) 708-7724 for Property Details.