Pros: Another popular strategy is to take out a new, larger mortgage that pays off the old one and leaves you with cash at closing to pay off your other bills.This option, known as a cash-out refinance, requires that you have sufficient equity in the property.
Right now, you could be paying 15 percent interest on a credit card, as the national average is 14.83.
It’s not uncommon to do a home-equity refinance for less than 5 percent, since the average rate on 30-year mortgage loans was 4.5 percent in 2011.
If you have equity in your property, you can use it as collateral to secure another fixed-rate loan and pay off other debts.
Similar to a home equity loan is a Home Equity Line of Credit (HELOC).
So the first step in debt consolidation is simply to consider whether it will actually work for you.