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
Would not refinance a 2020 mortgage interest rate into a 2024 interest. If you have crazy high debt, find another way to pay that down.
ELI5:
You bought a rock in 2020 for $275. The bank loans you $275 at 3% interest. It’s now 2024 and your rock is worth $400, but you still owe $225 on it. You need some money to paint your rock, and it’s going to cost $50. You go to the bank and get a loan for $50 to paint your rock. The bank gives you $50, but also charges you $2 extra to process. Also, the bank now wants 8% interest instead of 3.
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