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Refinance Line of Credit

Line of credit refinancing is an excellent means of lowering credit costs and making debts easier to pay off.

A refinance line of credit is a line of credit that a person can use to pay off existing debts. Using a low interest refinance line of credit such as a home equity line of credit to pay off interest consumer credit like credit cards can save an individual hundreds of dollars in interest charges.

Those who have a lot of high interest debts and can qualify for a lower interest refinance line of credit should look into one. Even though the person will still have to pay the money back they can reduce the cost of paying the money back substantially by refinancing.

Advantages to a Refinance Line of Credit 

The biggest advantage to a refinance line of credit is that it can substantially lower credit costs by cutting interest rates. Using a refinance line of credit to pay off high interest credit card balances and car loans eliminates those consumer debts. That eliminates the high interest payments and saves money.

Another advantage to paying off these debts is that it can improve your credit rating. Paying off debts can increase your credit rating which will make it easier to get new credit in the future. Eliminating the high interest debts also decreases the chances of default which can hurt your credit rating in the future.

Another advantage to refinancing is that it can make more credit available by paying off other lines of credit. Using refinancing to pay off credit balances makes more credit available.

Sources of Refinance Lines of Credit 

The best source of refinance lines of credit available to most people is real estate they own. Most home owners should be able to get a home equity line of credit on their home.

A home equity line of credit is secured by the equity in your home. Equity is the difference between the value of your home and what you owe on your home. If the value of your home exceeds your mortgage and other money borrowed against it you have equity.

Home equity lines of credit usually come with lower rates of interest so they are cheaper. Home equity lines of credit can be set up so they will take several years to pay off. This can enable a person to eliminate their credit card debt and get a better interest rate.

It is possible to get these benefits from a line of credit on any other piece of property. A business property or second home for example. Using a piece of property other than your home to get an equity line of credit helps protect your home from foreclosure while increasing the credit available to you.

Disadvantages to Refinance Lines of Credit

You will still have to repay a refinance line of credit so you’ll still owe the money. A refinance line of credit will not help a person who doesn’t have the income to pay off debts. It’ll simply shift the debts from one lender to another.

If you don’t know how you’ll repay a refinance line of credit you shouldn’t take one out. Simply paying off smaller debts could be cheaper and easier than getting a refinance line of credit.