When people think about refinancing, they often focus on lowering their mortgage interest rate. But what if the opportunity to lower your interest rate applied to your consumer debt rather than your mortgage?

While it’s natural to be hesitant about altering a low mortgage rate you currently enjoy, consider this: credit card rates have surged, averaging 22.76% as of May 2024.* This increase in rates can make managing consumer debt a financial burden, even if your mortgage rate remains low.

Here’s where refinancing can offer significant benefits. If you have substantial consumer debt and sufficient home equity, refinancing your mortgage to a higher, yet still lower-than-credit-card rate, might be a smart move. By consolidating your consumer debt into your mortgage, you can shift from high double-digit interest rates to a more manageable single-digit mortgage rate.

Why Consider Refinancing for Debt Consolidation?

1. Lower Interest Rates: Even if the new mortgage rate is higher than your current rate, it will likely be much lower than the rates on credit cards and other consumer debts. This can lead to substantial savings on interest payments.

2. Monthly Savings: Consolidating high-interest debt into a mortgage with a lower rate can reduce your monthly payments significantly. This can translate into hundreds of dollars saved each month and thousands saved annually.

3. Tax Benefits: Mortgage interest may be tax-deductible, potentially enhancing your savings. Always consult with a tax professional to understand how this might apply to your specific situation.

4. Increased Financial Flexibility: With lower monthly payments, you can free up cash to allocate towards other financial goals, such as paying down your mortgage faster, investing in your retirement, contributing to a college savings plan, or other important expenses.

Is This Right for You?

Debt consolidation through refinancing isn’t a one-size-fits-all solution. It’s important to assess your overall financial situation, including the amount of debt you have, your home equity, and your long-term financial goals. While this strategy can offer significant savings, it’s crucial to weigh the pros and cons and consider how it fits into your broader financial plan.

Ready to Explore Your Options?

If you’re curious about whether debt consolidation could benefit you, don’t hesitate to reach out. The team at Greenway Mortgage is here to help you understand your options and guide you through the refinancing process to ensure it aligns with your financial goals.

888-616-9885

*Federal Reserve Board