Many homeowners feel trapped by high-interest debt from credit cards, personal loans, and lines of credit. Keeping up with multiple payments can be overwhelming, and the high interest rates make it hard to get ahead.
But did you know that if you own a home, you may be able to roll your debts into your mortgage to lower your monthly payments and simplify your finances? This strategy is called debt consolidation, and it can save you thousands over time.
What Is Debt Consolidation and How Does It Work?
Debt consolidation is the process of combining multiple debts into a single loan with a lower interest rate—often your mortgage. Since mortgage rates are typically much lower than credit card and personal loan rates, this can reduce your overall payments and free up cash flow.
By consolidating debt into your mortgage, you can:
Lower your monthly payments – Reduce financial stress by replacing multiple high-interest payments with a single, more manageable one.
Save on interest costs – Mortgage rates are generally much lower than credit card and personal loan rates.
Simplify your finances – One easy payment instead of juggling multiple due dates.
Improve your credit score – Paying off high-interest debt can lower your debt utilization ratio and improve your credit over time.
Real-Life Example: How a Client Saved $606 Per Month
A recent client was struggling with multiple debts. Here’s what their situation looked like before debt consolidation:
Mortgage Balance: $208,000
Loan #1 Balance: $19,000
Loan #2 Balance: $15,000
Total Monthly Payments (Before Consolidation): $2,131
We consolidated these debts into a new mortgage of $250,000, and here’s how their payments changed:
New Monthly Mortgage Payment: $1,525
Previous Total Payments: $2,131
Monthly Savings: $606
That’s an extra $7,272 per year they can now use for savings, investments, or simply reducing financial stress.
Is Debt Consolidation Right for You?
While debt consolidation can be a great strategy, it’s not for everyone. Here are a few factors to consider:
Your Home Equity – The more equity you have, the more you can borrow against it.
Your Current Mortgage Rate – If your rate is already low, we’ll need to assess if refinancing makes sense.
Penalty Fees – Some lenders charge fees to break an existing mortgage, but the long-term savings may outweigh these costs.
Next Steps
If you’re wondering whether debt consolidation could help you, let’s run the numbers. Every situation is different, and I’d be happy to walk you through your options.
Book a Free Consultation Below!