The reason being is that many people get involved in having to pay off every debt that they often stretch so far past their means they end up facing things like foreclosure. By settling larger interest debts and netting them under a smaller interest single payment, you do two things. The first is that you reduce the number of bills you have. You are still going to be making the same monthly payment no matter how you use the cash from your refinance so why not use it to eliminate some of the debt that could or is causing you issues. The second is that each debt individually has its own interest rate.
For example, say you have five credit cards, each one of them has an interest rate so you are paying five times the interest on the total balance of all your cards. By consolidating your debt, you drop that to a single interest rate that is lower in many cases than the interest rate on your lowest card. This means that you have the interest you would be paying the other four times ultimately lowering the bill.
It also helps you repair your credit even if you did a short refinance option by settling your other debts you dramatically improve your credit score, rating and history and help to show that you are serious about getting back on your feet financially. Dealing with debt can be difficult but it does not have to cost you your home. Refinance options can be one way out whether you take it as soon as you think trouble is coming, as soon as you get into trouble or when you are faced with foreclosure. You can also use this option to consolidate other debts and get your financial situation looking brighter than ever no matter what issues may have put you in the situation of needing a refinance to begin with; you do not have to let debt take your home.
http://www.MinnesotaDebt.net reviews options for home owners in distress. John Mazzara is involved with financial services in the Twin Cities, MN. Officing out of Edina, Minnesota-John is centrally located within the 7 county MN metropolitan area. John owns three separate businesses-a licensed real estate broker associate selling Minnesota real estate since 1986-affiliated with RE/MAX Associates Plus http://www.MinneapolisStPaulHomes.com