Paying off multiple debts can sometimes feel like an uphill battle. It’s hard to juggle various due dates, interest rates and payments. That’s where debt consolidation comes in. By pooling all your debts into one new, easy-to-manage loan (usually with a more favorable interest rate), you can greatly reduce the stress of debt repayment.

There are several ways to consolidate debt, but one method that people often overlook is utilizing your home. That’s right, you can tap into your mortgage to consolidate debt with a debt consolidation refinance. This method leverages the home equity you’ve built and bundles your debt into one monthly payment with your mortgage. That way, all your debt is under one roof, making it much easier to wrangle.

You’ve worked hard for your home — why not let your home work hard for you?

What are the benefits of a debt consolidation refinance?

1. Lower monthly payments: By consolidating high-interest debt into a single loan with a lower interest rate, you can typically reduce your monthly payments.
2. Simplified finances: Instead of managing several payments to different lenders, you can make one payment to one lender, which might help reduce stress and make it easier to keep track of your finances.
3. Potential to save money: By consolidating your debt at a lower interest rate, you can potentially save money on interest charges over the life of the loan and pay off your debt faster.
4. Improved credit score: Making on-time payments and reducing the total amount you owe can have a positive impact on your credit score over time.

Is a debt consolidation refinance right for you?

Carol Nelson, our Real Estate Regional Sales Manager, regularly helps members weigh the pros and cons of debt consolidation refinances so they can make the right choice for their unique circumstances. When debating whether it’s a smart move, Nelson encourages you to:

• Look at the big picture of your finances. Take into consideration personal priorities and spending behaviors before making any decisions — everyone is different.
• Crunch the numbers. By calculating the total amount of interest you’d pay with a refinance and comparing it to the total amount you would pay with your existing high-interest debts, you can get a sense of whether it might be worth it.
• Be ready for a commitment. Making progress on debt repayment requires a disciplined approach to managing credit, especially with revolving accounts like credit cards. If you’re not confident in your spending habits, it might not be best to tie your debts to your mortgage.

Nelson reminds us: “Merging your debts under one payment can offer clarity and ease, but success comes when you’re prepared to make lasting changes and keep future borrowing under control.”

Want to talk to someone about a debt consolidation refinance? Get in touch!

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