By [http://ezinearticles.com/?expert=Darin_Sewell]Darin Sewell
Today many homeowners a large amount unsecured credit card debt that they struggle to pay every month. This debt usually has an interest rate in the high teens making paying off the debt quickly a difficult task to accomplish. Reducing your monthly debt load by refinancing is a great option to eliminate your high interest credit card debt and roll it into a tax deductible loan. With todays low rates this is almost a sure fire way to lower you monthly payments and improve your quality of life!
But what can you do if you have no equity in your home for a debt consolidation refinance? If you have good credit one option is to transfer balances over to low rate credit cards. By transferring your balances to lower rate cards you will take a larger bite out of your debt every month. However there are drawbacks to using low interest credit cards. If you miss even one payment your interest rate will in most cases default to the normal 18-20% interest rate. Another drawback is many of these cards only offer periods of 6 months to 1 year for the introductory interest rate so when the introductory rate expires you are back up to higher interest rates again. However if you look hard enough you should be able to find cards that offer 3.9-9.99% fixed for life on balance transfers. Use caution though because the same rules about late payments apply to these cards as well.
Another option if you have no equity is the 125% home equity loan. With these home equity loans you are allowed to borrow up to 125% of your homes equity. Even though they say 125% most of these programs are capped at a maximum loan amount of $50,000. A over equity loan will have a much higher interest rate then a normal home equity loan. The interest rate of a 125% equity loan is normally around 14% and is not tax deductible in most cases. However a 14% interest rate may be lower then your credit cards interest rate and could possibly save you money every month. The major drawback to this loan is that you will not be able to sell your home for many years because you now owe more then it is worth and it will take years for your home to appreciate to a level where you will once again have equity.
Read More about debt consolidation at http://www.mkemortgage.net/content/sitemap.htm
Darin Sewell is a seasoned mortgage professional. learn more at http://www.wisconsin-mortgage-refinance.net/content/sitemap.htm
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