If you own a house and its value is substantially above the current mortgage balance, you can free up the equity by simply refinancing. This is especially true when interest rates are low, but no matter where the interest rates happen to be, if you have equity in your house you can refinance your mortgage.

Here's an example: You have an existing mortage with a balance of $75,000. If your house has appreciated to a market value of $150,000, you can refinance it with a conventional 10% owner-occupied mortgage and free up $50,000-$60,000. A common sense scenario for banks is making a mortgage for 90% of the house's value. The new mortgage will be $135,000, and from these funds the balance of the old mortgage is paid off. The length of your new mortgage can be increased from your current remaining years to a new 30 year to keep down the size of the payments.

Refinancing is a common way of purchasing real estate property and helping out with paying off debt, which in return will help your credit rating. For more information on credit rating, click here.

< BACK