enterance to a homeYour home has a lot of value to you. You can watch the kids grow up in your front yard. It’s the place where family gatherings are held. It’s a roof over your head at night.

What we might not think about is the immediate monetary value a home has. As you make payments on your home, you build equity. You can refinance and turn that equity into cash to help pay for your child’s college education or buy that much needed new car.

Alternatively, if you have credit card debt, you can consolidate that debt and roll it into your mortgage at a much lower interest rate.

Cash-Out Refinance

The beauty of a cash-out refinance is that it can be used for anything you want. Need money for home repairs and improvements? What about college tuition? Maybe you need money for car repairs. A cash-out refinance can help you convert the equity built up in your home to cash.

Unlike a home equity loan, a cash-out refinance isn’t a second mortgage. Because it’s your primary mortgage, the loan is less risky for the lender and you’ll be able to secure a lower rate.

Debt Consolidation

Credit cards are one of the most convenient inventions known to man. They enable things like online shopping and many even offer rewards.

They’re great, just as long as you pay the balance because they also have some of the most punishing interest rates for not paying off your bill in full.

According to the latest information from Bankrate, the average APR interest rate exceeds 15% for a cash-back credit card. If you get behind on that payment, the interest charges on the debt can add up quickly. It can be a scary road to go down.

Fortunately, there’s something you can do to pull yourself up. A cash-out refi can be used to help you consolidate the debt.

While credit card APR is high, mortgage rates are really low, currently in the 4% range. When you refinance, you can pull equity out of your home and roll your credit card debt into your new mortgage payment. This means you would be paying a much lower interest rate on that debt. It also improves your credit rating because you don’t have that outstanding debt on your credit report.

As long as you make your payment on time, you can use the consolidation to get yourself back on track. As a bonus, unlike credit card interest, your mortgage interest is tax deductible.

This is also a great time to refinance. Mortgage rates are still at historically low levels. Learn more about how a cash-out refinance could help you.

Do you have high-interest debit you’d like to pay off? Learn more about how your mortgage can help you consolidate debt and reduce your interest rate.

There you have it, two ways you can use your home equity to your advantage. Have any questions? Drop us a line in the comments.

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This Post Has 22 Comments

  1. Hi,

    What is the full process of a cash-out refinance? I already have a mortgage through Quicken Loans.

    Thanks,
    D.

    1. Hi Dee:

      Unfortunately, we can’t talk about the resolution of issues for other clients. We take the confidentiality of yours and others information very seriously. That being said, I can answer your second question.

      We would evaluate your approval for the mortgage based on income, property type, assets and your credit. You can get a full refinance approval online through Rocket Mortgage. On the other hand, if you would prefer to get started by talking to one of the Home Loan Experts, someone will be more than happy to take your call at (888) 980-6716. Hope this helps! Thanks for choosing us!

      Kevin Graham

  2. Hi,

    I’m in the process of a divorce and I want to buy my EX out of our house.
    Is it possible to convert the equity I have in the house to cash… $500,000.00+?
    And how much interest would I expect to pay on a loan of that amount?

    Thanks

    B

    1. Hi Brad:

      Your ex would have to be refinanced off the loan. We can certainly go over your options if you fill out this form or give us a call at (888) 980-6716. They would be better able to talk to you about rates because it’s very dependent on your financial situation.

      Thanks,
      Kevin Graham

  3. I don’t have a specific question, just comment.
    It’s amazing how I just read through all these Q&As and not one had an answer to the question, just we’ll have someone get in touch with you!

    1. Hi Nicole:

      I can understand how that might be frustrating. When it involves a specific fact-based answer, our team tries to provide the answer for all of our clients. Unfortunately, questions about mortgage qualification often involve delving into people’s very specific financial information which is not something we can get into on the blog or any other public forum. We want to provide as much good info as possible, but there are also privacy concerns and questions that should only be handled by one of our licensed bankers. I hope this helps to at least clarify the reasoning behind this.

      Thanks,
      Kevin Graham

  4. This article is great and it gives hope if you want to Cash out-refinance and consolidate debt by using the equity of your second home. However, after every requirement has been completed, Quicken Loans is asking for proof of assets to cover mortgage for six months. My question is: If I have no savings and I am trying to cash-out/consolidate my debt with the equity by refinancing, how am I going to show proof of $12,000 in savings if I have no savings?
    You give hope but then you ask for proof of available assets. If I had available assets, I would not try to refinance in the first place.

    1. Hi Silvia:

      I’m sorry you’ve had this experience. I’m going to get this to someone who can take a second look and see if we have any options for you. Look for an email.

      Thanks,
      Kevin Graham

    2. Hi.

      Did this work out for you? I’m thinking of doing the same thing, but fear I may run into the same issue.

      Thanks,
      D.

  5. I have over 100K in equity in my home but 30K in debt with a very low credit score. Why can’t my good paying of my mortgage help me refinance to get rid of the debt that I can not pay. My score is approx 580 because of a very bad debt decision I made and now I am having to sell my house and I don’t want to. Is there any help with a low credit score?
    Staci

    1. Staci-

      That’s a difficult situation, but you may have some options. I’m going to have a Home Loan Expert reach out to you to look into your situation. You may be able to consolidate some of that debt. Thanks!

      Kevin Graham

  6. I was seduced into a refi cashback by USAA on my VA loan. I had the appraisal and other required data. Once I was approved, the loan officer called stating that my near total equity $15K would be taken in fees, points, etc. and only a “few hundred” would be available to me.

    I am trying to take care of large credit card debt left from my divorce in August 2015. I have a positive cash flow and am paying everything on time. I’m focused on the highest limit / rate card with large payments. I’m a retired CPA and it kills me to be paying nearly $500 monthly in CC interest.

    Can Quicken help. I currently have a 4% VA loan with equity?

    Thank you.

    1. Hi Glenn:

      Every situation is different, but we’d be happy to look into your options and see if there’s something we can do that makes sense for you. A Home Loan Expert will be reaching out to get some more information from you.

      Thanks,
      Kevin Graham

    2. Check out balance transfer deals.It should also be noted that some Credit Unions have NO TRANSFER FEE 1.99%INTEREST CHARGE CARDS.That is as cheap as you can get.CHASE SLATE CARD.They have zero %for 15 months.I also took out a 3.49%loan on my car which was free and clearGOOD LUCK

      1. Hi KD:

        We can’t comment on the resolution of questions posed by our other clients for privacy reasons. However, if you have a question or problem you would like us to look into, we would be happy to help!

        Thanks,
        Kevin Graham

  7. I’m seeking a loan of approximately $110.000 on my primary residence (which is less than 50% LTV) in order to pay off a private mortgage balance of approximately $60,000 and generate enough cash to take care of some major improvements to my home (such as a new roof and new windows, etc. My annual net income from retirement is approximately $25,000 which is a fixed amount. I have no other loans or outstanding balances and I have been paying $500 per month on my private mortgage for the last 15 months. My main obstacle is that I had to file bankruptcy under Chapter 7, which was fully discharged on 8/04/14. Is there any type of loan I can apply for through Quicken Loans?

    1. Good afternoon, Joan. I’m going to have a home loan expert send you an email about your options. They’ll be sure to point you in the right direction.

  8. If I have a home equity loan with another inancial institution and an 8-year mortgage-payoff plan with Quicken Loans, how can I consolidate my loans with Quicken Loans without impacting my 8-year payoff plan?

    1. Hey Hollis,

      Every situation is different. I’m going to have one of our Home Loan Experts reach out to you to discuss whether consolidation makes sense for you.

      Thanks,
      Kevin Graham

  9. Cash – out or investment property ….???? I own the home I live in and rent a home that is investment property with a mortgage…. I have a property in mind that is for sale …I am retired and have $22600.00 yearly coming in can you help to get money on the property that I now have….so I can pay cash for other property….

    1. Thanks for your comment, Diane. I’m going to put you in touch with one of our home loan experts so we can get some more details. They’ll send you an email.

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