Homeowners who have credit card debt have often turned to their mortgage as a way to erase these debts through refinancing. Cash-out refinancing has been a way that many homeowners have gained access to capital with which they can quickly erase credit card debts, which could cause financial strain in their life.
However, there are those who feel that using one’s mortgage to erase unsecured debt, like that from credit cards, is simply a bad idea since there could be problems down the road.
Some financial advisers point to the fact that when homeowners let credit card debts get out of control it may be due to bad planning practices. While there are some homeowners who are struggling with credit card debt simply because they have suddenly had a difficult financial time for reasons like unemployment, homeowners who wish to refinance their mortgage to get cash are often cautioned before doing so.
Homeowners who may have simply allowed credit card debt get out of hand and are turning to their mortgage as a way to erase these debts may have difficulty down the road if they acquire more debt and are also required to meet a higher monthly mortgage payment obligation from cash-out refinancing.
Homeowners who cannot meet their mortgage payments will, obviously, lose their home, and it’s for this reason that financial advisors often tell homeowners who are considering cash-out refinancing as a way to erase their credit card debt to look at their financial practices.
Despite the fact that interest rates on mortgages are lower than those on credit cards, which some use as an excuse in favor of cash-out refinancing, homeowners who may not be responsible enough or can’t meet the costs that come with cash-out refinancing are often advised to seek alternative credit card debt repayment solutions.
Cash-out refinancing, while it has helped numerous homeowners rid themselves of credit card debt, could put a homeowner in a worse situation if more debt is acquired or a higher monthly mortgage obligation cannot be met. Homeowners who have successfully used cash-out refinancing are often those who pay off their credit card debts and then focus as much money as they can on their home, until their financial situation improves or they have improved their financial practices.