Refinance/ Debt Consolidation

Is Debt Consolidation Right For You?

Refinancing can be an excellent way to reduce monthly or long term debt.  The equity in your home is one of the most powerful tools you have, and it’s a good idea to utilize it.  By introducing yourself to the benefits of a cash consolidating refinance you may be able to eliminate things like car loans, student loans and credit card debt.

 What Can Debt Consolidation Do For Me?

The majority of our clients who use debt consolidation are combining things like credit card debt, student loans, car loans and personal loans.  These things typically come at a higher rate of interest, and your mortgage is one of the lowest interest rates you have.  Also the ability to stretch these debts over a longer period of time will reduce the payment significantly.  You can calculate your projected debt consolidation payment here.

 Will Debt Consolidation Hurt My Credit Score?

Your credit score is directly affected by your credit utilization.  That is the percentage of available credit you are using in comparison to the amount you have available.  Example:  If your credit card limit is $1,000, and you have spent $500 of this, your credit utilization ratio is 50%.   Likely a debt consolidation loan will not hurt your score because the focus of it is to lower this utilization. If you pay off $10,000 in credit card debt it will lower your utilization, thus raising your credit score.

Here is a good video on how credit utilization works:

 Are The Monthly Payments Lower?

Most people do a debt consolidation loan because it lowers their payment, there would not be a good reason to do it otherwise.  When you factor in the minimum monthly payments on the debt you wish to consolidate, plus your mortgage payment, likely this number will be higher than the refinanced debt consolidation payment.

 Will a Debt Consolidation Loan Help Me Get Out of Debt Quicker?

This depends on the term of the mortgage you refinance.  If you’re 20 years into a mortgage, then proceed with a debt consolidation loan with a new 30 year mortgage, the answer is likely no.  But I can help you determine the proper mortgage term that would result in the best savings.  We are unique because we can issue any duration of mortgage up to 30 years.  This means we can do a 30 year mortgage, a 15 year mortgage, a 10 year mortgage.  But the real advantage comes when we can do odd numbers like 11 year mortgages and 17 year mortgages.  Every year you add or subtract from your consolidation loan with raise or lower your payment (the longer the term the lower the payment)  So if we can anticipate your goals we can structure a mortgage term around those goals and get you out of debt faster.

 Is My Debt Eligible For A Consolidation Loan?

The majority of debt can be accepted into a debt consolidation refinance.  We’ve assisted people with their student loans, credit card debt, car debt, medical debt and many more.  There are very few forms of debt are not considered into this type of loan.



Would you like to know more about debt consolidation? Click HERE

Justin Scott

NMLS 878581