Did you know that you were able to use a cash-out refinance to pay off debt? If you did not before, you do now! This reasoning is the most common reason that people decide to consolidate their debt. Within the last year, equity rose to just about thirty percent! Not only that, but mortgage rates are still low as well. This would be the time to do this. You would be decreasing your monthly payments but increasing your cash flow. If this sounds like something you would benefit from, we would highly suggest you take a look into it further.
When you apply for a cash-out refinance, it is similar to when you applied for your original mortgage. You will have to have an appraisal of your house done, provide your credit score, credit reports, bank statements, tax documents, etc. If you remember back to when you first applied for your mortgage, there is a whole number of documents that will be requested! And just like when you applied for the original mortgage, you will have to have a closing done and pay for closing costs. If you decide to do a debt consolidation cash-out refinance, the debts you wanted to be paid, will be paid. If you have money remaining after this, you will receive a wire transfer or a check for you to deposit into your bank. Escrow is who would provide the wire transfer or check.
Before you go through all of this, make sure it makes sense for you. Figure out exactly how much debt you are in and how much of it you want to be paid. Then figure out how much money you will be earning throughout the refinance option. If you will be making just a small dent to your debt, is this option the best idea for you? We do not want to discourage you from doing this, but we want to make sure it makes sense and will be worth it in the long run.