Refinancing a USDA Home Loan to Pay Off Debt
BRIAN BIRK | 3-MINUTE READ
4/1/2023
Yes, it is possible to refinance your USDA loan and use the proceeds to pay off debt. This is known as a cash-out refinance. With a cash-out refinance, you can refinance your existing mortgage for more than what you currently owe and receive the difference in cash. You can then use this cash to pay off high-interest debt, such as credit cards, personal loans, or car loans.
However, it’s important to note that a cash-out refinance will increase your mortgage balance and monthly payments. You will also be required to pay closing costs and other fees associated with refinancing. Before deciding to do a cash-out refinance, you should carefully consider the costs and benefits and determine whether it is the right option for your financial situation.
It’s also important to make sure that you use the cash-out refinance funds to pay off your debt, rather than taking on new debt or increasing your existing debt. If you don’t make changes to your spending habits and financial management, you may end up in a worse financial situation than before.
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