Paying off Holiday Bills

There are a variety of "smart" ways to pay off all of your holiday bills and credit cards which will allow you to save money and provide other financial benefits. One such way is to refinance your home mortgage and combine all of your debt into the new mortgage loan. Most of the time this can save you a lot of money from your monthly expenses, provide you with a bigger interest deduction at tax time, and save you the time and trouble of paying numerous bills each and every month. There are many different types of refinancing programs available so ask a mortgage consultant which program might be right for you.

Another alternative for paying off holiday or other credit card bills would be to refinance into a pay option loan program. The pay option loan program give you the flexibilty to make full, interest only or less than interest due payments. When you elect to make the lower payments, you can use the extra cash flow to pay higher amounts on your other monthly bills. Flexibility is the key, however with the flexibility comes an added dimension of cash management.

A home equity loan or line of credit also allows homeowners who have extensive credit card debt accumulated over the year and holiday season some flexibility in their consolidation approach. These loans are similar to conventional loan products and may benefit a home owner by offering low rates and flexible payment options.

In addition to reducing monthly payments, refinancing is a smart way of managing your debt. Credit cards typically carry very high interest rates, and the interest is not tax deductible. Therefore converting credit card debt to mortgage debt will allow you to use the interest paid as a tax write off, saving you money in more ways than one!

One of the most popular new ways to really take the edge off of holiday spending is to refinance using a minimum payment loan with no payments over the introductory period. That's right, ask your mortgage professional about these programs, which offer no payments and no interest for 90 days or more.

Your mortgage broker can also set up your new loan so you will have no payments for 2 months. This will help put a little extra money in your pocket for the new year!

Remember when consolidating your credit card debt into a home equity loan, you are not only saving money because of a lower interest rate, but also because of the difference between compound and simple interest.

If faced with large amounts of debt, whether from Christmas or previous, you should find a way to restructure your debt into as small of a monthly payment as possible. This increases your monthly cash flow. To take it a step further, you should have a plan in place to quickly eliminate all debt. If you use the monthly savings and apply it towards the new mortgage, you can have all of your debts paid off in 5-7 years. This is the best way to become financially independent. If you simply restructure your debt and don't apply the savings to paying down your debt, all you are doing is extending the amount of time it will take to pay off your debt.

Many people have trouble paying off holiday bills. If you fall behind on your credit card payments it can be detrimental to your credit score. Refinancing to consolidate your credit card debt can help improve your cash flow.

» DISCLAIMER: The information contained in this article on 'Paying off Holiday Bills' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.