Refinancing your house to consolidate debt or take out cash can seem like a drastic way to cut debt, but it can be a good option for many people. Today, a lot of households have more loans than they could possible hope to pay off in a reasonable period of time. For many people in this situation, looking at options beyond cutting back expenses or making extra loan payments makes sense.

There are a lot of second mortgages, otherwise known as "cash-out refinancing loans", on the market today. A mortgage refinancing usually starts with an appraiser coming out to a house and assesses how much it is worth. Of course, in many cases, an estimate of the home's value can be made without a site visit as long as the borrower is willing to give some information to the loan officer. Then a loan offer can be made for the total value of your home, or less if desired. After agreeing to the loan, a family or individual first uses the money recieved from this new loan to pay off the first mortgage they have on the property. Any funds that are left over can then be used to pay off other debts or the money can be used for another major purchase. The borrower is then left with only one payment to pay every month.

With current mortgage rates at record low levels, it is very possible to save a lot of money each month in interest and fees by using a cash-out mortgage or refinancing their current mortgage. When compared to the high interest rates charged by many credit card companies or payday loan lenders, the rates on a second mortgage are often a fraction of what many borrowers used to pay. Even people who have little or no debt to pay off are often surprised to learn that they can take cash out and have a similar or even lower payment than they have on their current mortgage.

In addition to saving money, many people are also really happy when they realize that they are dealing with a lot less paperwork every month. Rather than keeping track of multiple loan payments and dealing with several different banks, consolidating with a second mortgage means that a borrower only has to keep track of a single loan.

Determining if refinancing your current home loan to pay off your debts or take out cash can be a difficult decision. Consider your options carefully before making a decision.