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Pros And Cons Of Borrowing Against Your House


Borrowing against your house has many pros and cons associated with it. So before you embark on any refinance transaction to pay down debt you should take a little time to think about your situation and if refinancing is really the answer.

The main benefit to using equity in your home to pay off debt is that the interest rate will in most cases be much lower then the credit cards or personal loans you are paying off. By rolling those debts into a loan with a longer repayment term like a mortgage you will also more then likely reduce your total monthly expenses. This alone is the major reason why people use their homes to pay off debt.

The major downside to borrowing against your home is that if you will change debt that is unsecured into debt that is secured by your home. If you are already struggling to pay your mortgage and other bills you may be setting yourself up to lose your home. The last thing you want to do is lose your home by doing something without planning.

You Have To Plan Your Budget

The best way to determine if you can afford to safely refinance your home and consolidate debt is to sit down and determine a budget. If you take all of your bills and utilities that you pay out every month and subtract them from your take home income you can see how much money you will have to live on every month. If it is at a comfortable level for you then refinancing maybe the right thing to do. But if the amount of money you have left over seems to be very little you may want to consider not refinancing and instead moving to a more affordable home.

While this may seem drastic it is better to sell and get something more affordable then to struggle and possibly lose your home and your credit as a result. Your home is your most valuable asset so always be sue to plan any action you take that could result in losing your home.


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