My parents recently suggested I refinance my home to help with some of my debt, but how does that help/work?
I bought my house in 2020 for roughly 275,000 its current market value is close to 400,000. From my understanding I can use the difference in value to help pay for the loan, but how exactly does that work? And how do I go about it?
In: Economics
You bought your house for $275k.
You’re going to sign a new mortgage for $400k, while taking the difference (~125K) in cash.
Because you’re borrowing more money this time, your mortgage payment is going to go up. Also, the interest rate is likely much higher, so that’ll increase the payment.
Overall, doesn’t sound like a great idea unless you’ve dealt with the underlying issues that caused you to go into debt in the first place, AND can afford a massive increase in your house payment.
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