There are several interlocking reasons to consider when refinancing your mortgage. When rates are low, you can lower your monthly repayment and/or the total amount of interest you will pay over the life of the loan, you may also want to take out some equity to finance home improvement projects or pay off other debts, but as a method of adjusting or lowering debt it has some drawbacks that should be considered before making that big step.

The pros and cons of mortgage refinancing as a solution to debt consolidation.

One drawback is what was just alluded to in the opening paragraph, it is a big step, refinancing your current mortgage loan involves most of the steps required to take out the loan in the first place. You will need information such as current income / wages statements, past tax filings and an array of other documentation along with the extra filling out of a lot of paperwork, and sometimes paying additional fees.

All that takes time and can cost you a substantial sum of money before the process is complete, you will want to be sure to run some realistic calculations before making a final decision, there are many online calculators that are readily available to help you perform this assessment.

One reason some consider making the effort, though, is almost always a poor one, to use the drawn down funds to pay off credit card and other high interest debt. There are a number of ways to dispose of that debt without going through the difficulties of refinancing your primary mortgage loan. If you have reasonable credit and some equity, you can get a second mortgage or a homeowner's equity line of credit (HELOC). The interest rates may be slightly higher, but you will find the effort in applying for the loan is considerably less, it will also help protect you in the event of any financial reverses in your circumstances, provided you continue to make the primary payments, if you slide for a while on the secondary you are unlikely to be at risk of losing your home.

Another secondary reason is more fundamental, rather than continuing to seek a way out of debt by borrowing yet more money, you should first make serious efforts to reduce your dependence on borrowing. Whilst some re-adjustment of your current debt may be a good plan, if you can achieve a lower total outstanding debt, or a lower interest rate or negotiate relief from some of the payments, however borrowing more will only add to your long term debt problems, this action should be a last resort, not the first action you think of as a way out of your debt problems.

Debt consolidation solutions often lead to merely reshuffling your debt, sometimes adding more interest and making your situation worse, however if it is coupled with a manageable payment plan that does in fact gradually reduce the burden, while making it possible to meet your obligations, it can be a very good debt consolidation plan.

In the end, the only way for you to know for sure is to objectively examine all your outstanding obligations and research the different plans available maybe some combination of debt forgiveness, lowered monthly payment(s) and reduced interest payments is the ideal debt consolidation solution you should shoot for, do not surrender your home in order to deal with a short term problem that can be fixed by other methods.