What is debt consolidation with cash-out refinance?
Answer:In fact, in essence debt consolidation is a cash-out refinance. You are taking some more cash against equity in order to pay for already existing debt. If you have exhausted your credit cards and are tired of accounting for all loans you have like car loans, education loans, etc., and you want to do something about it, you may consider debt consolidation refinance.
A popular and most preferable debt consolidation cash-out refinance option is to skip payments for 3 or 4 months without deferring interest and with no penalty. This gives you the chance to further eliminate debt. Another advantage of rolling auto loans and credit card interest into a mortgage is that mortgage interest is tax-deductible while credit card interest is not.
Just make sure once your credit card debt has cleared, not to get the credit cards run off again - this time you have secured debt with your house and the lender may take advantage of his right to collect your property.
A debt consolidation cash-out refinance does not pay off your debt.
Bear in mind, it only restructures your debts and you still owe what you owe, and your house is the collateral.
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