How to Consolidate Your Debt and Save
Financial stress is the worst. It’s a heavy monkey to carry on your back.
Are you looking for a simple way to pay off credit card debt faster? There are solutions. One of the keys to paying off credit card debt is to commit to a fixed monthly payment, targeting one card at a time, and asking the lender to lower the interest rate.
But, did you know that you could use your home equity to help consolidate your debt, giving you the convenience of only needing to pay one monthly or bi-weekly payment? And best of all, you could be saving thousands!
Example of how debt consolidation can work for you:
Let’s say your credit card has an interest rate of 19.75%, which is typical. If you were to attempt to pay off a $30,000 credit card debt with fixed payments of $600 per month, it would take approximately eight years to clear the debt—roughly $34,356.00 in interest charges.
Taking out a fixed loan of 6% and that same debt would be paid off in just under five years, almost four years sooner than the same debt obligation you’ve accumulated with the credit card(s). Your credit interest would be reduced from $34,365.00 to $4,634.00; that’s nearly a $30,000 savings. However, consolidation loans are not always possible.
Of course, in the real world, your debt may not reside on one but multiple credit cards and loans; a consolidation loan may or may not be possible?
However, we may be able to access the equity in your home to pay down the debt and create an emergency fund. With mortgage rates so low, the termination penalty might be lower than the accumulating interest charges on your consumer debts.
By refinancing your mortgage, you can borrow additional funds and combine your debts into one simple payment.
Debt Consolidation Benefits:
- Securing a lower interest rate that encompasses all your debts
- Lower payments allowing for better cash-flow and stability
- The convenience of making one monthly/ bi-weekly payment, we can use the amortization to increase or decrease your mortgage payment and pay the least amount of interest tolerable.
- We can even try to keep your same mortgage-free timeline.
- Improve your credit score by lowering your credit utilization.
- Allow yourself to breathe again.
- We can also take a little extra to create an emergency fund, so the next time trouble strikes, you will not have to use credit. WIN!
- I am on your side.
I will provide a nonjudgemental environment to allow you to regain financial stability. I am here to support you.
Please call or email me for a personal appointment if you are interested in refinancing for a better rate, debt repayment or you would like to use your equity for renovations or investment. Together, we can work out a plan that works for you and your family!
If this blog is as clear as mud, call me. I am here to clarity, educate, and support you throughout the process. You may only apply for a mortgage a few times in a lifetime; I process mortgages several times a day. Lean on me.