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Cash-out refinancing growing in popularity, report finds
09/22/2010
The average U.S. consumer has nearly $7,694 in credit card debt on top of other money they owe in loans. As Americans work on paying down their debt, rebuilding savings can be difficult. More individuals drowning in bills are turning to cash-out refinancing as an easy way to make payments, according to Basic Story, an independent news site.
Cash-out refinancing allows homeowners with equity to refinance their mortgages at large amounts, typically for more than what they actually need. With the extra cash, individuals pay down off their loans. However, financial experts say cash-out refinancing does not eliminate bills, according to Red, White and Blue Press.
Using this method to attempt to wipe out debt is merely transferring the owed money from one area to another, analysts say. Mortgage rates are low, enticing more homeowners to cash-out refinance in order to avoid dealing with high credit card interest rates. However, choosing this option may result in higher mortgage payments in the future.
Debt counseling is an efficient way to manage your bills, Basic Story says. Speaking to an expert can help individuals avoid borrowing more money than they can handle.
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