The rate on your home loan is not the only one to consider when you’re refinancing for debt consolidation.
Managing consumer debt efficiently is challenging these days. Interest rates on everything from cars to credit cards are higher than they’ve been for some time. Average rates on existing credit card debt have risen from the mid-teens to over 21% in 2024.
With rates this high, it can take almost 30 years to pay off your balance when you make the minimum payments.
Depending on how much debt you have, consolidating credit card and other consumer debt using equity in your home can be smart. This is true even if current mortgage rates are higher than what you’re paying now.
HOW IS THAT POSSIBLE? HERE ARE THREE WAYS:
- The blended or total real rate of interest for your mortgage plus other debt may be higher than for your current mortgage alone.
- With a lower total rate of interest, you can pay more toward your balance and less for interest.
- If you used your debt for home improvements, it’s possible equity financing will be tax deductible (always check with your tax pro).
Want to learn more or see if consolidating debt may work for you? Please reach out to a trusted financial or mortgage professional.
