Even though some economic indicators point to a gradual improvement in economic activity, there are still thousands of Canadians who are finding it difficult to manage their financial obligations. If you feel you need financial help in Red Deer, you are not alone.
Your Internet searches for information on the kinds of financial help available have probably already uncovered debt consolidation as the option that least affects your credit rating. If you have a high level of total debt, refinancing your mortgage may be your best debt consolidation solution.
As you know, there is no guarantee you will be able to borrow the total amount of equity you now have in your home, if you need the full amount. First, you need good credit to get a loan at an interest rate low enough to make refinancing your mortgage cost effective.
Credit requirements should tell you to look into refinancing your mortgage as an option at the first sign of financial difficulty, before you start going late on any of your credit monthly repayments.
Refinancing also depends on a stable source of income. Lenders want to be as sure as they can be that you will have the ability to repay what you borrow. If you fear your income might be reduced substantially at some point in the future for whatever reason, should you think about running out right now and refinancing while your income still justifies the loan?
Absolutely not. We have dealt with people who refinanced their mortgages only to find themselves staring at the prospect of a bankruptcy filing a few years after the refinance because they forgot one simple fact about debt consolidation. It doesn’t lower your debt at all. The advantage of debt consolidation comes from the lowered monthly payments.
If you owed $50,000 in other debt and refinanced your existing $100,000 mortgage to pay off the 50k, you still owe $150,000. If your income falls as you fear it might, will you be able to handle the mortgage payment?
The second and perhaps more dangerous disadvantage of refinancing your mortgage to get the financial help in Red Deer you need is credit card use. Refinancing to pay off credit card debt leaves you with zero balances on your credit cards. You need to take a hard look in the mirror and ask yourself if you can learn to control your credit card spending.
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