Like a lot of us, you probably have a car payment, some credit cards, retails cards, and maybe some personal loans. The monthly cost of all these debts combined can make it very difficult to get ahead because all you end up doing is paying the interest or “minimum balances” of the loans.
Using the money in your home to consolidate all of your debt is a winning solution. Combining all of your debts and adding them onto your mortgage, also known as refinancing, has several advantages.
For one, the interest rate and amount of interest you pay is lower overall. Interest paid on credit cards can range from 10% to as high as 29% interest! This rate is compounded monthly as opposed to the semi-annual compounding period you get with a mortgage.
Perhaps the biggest advantage though is the monthly payment. By adding your debts to you mortgage, you can capitalize on a low monthly payment. This can sometimes give you the breathing room needed to put a plan in action and then really start paying off your debt.
By consolidating your debts you can save thousands each year in interest alone. Your credit rating will be kept in good shape by not missing any payments and eliminating late fees and penalties.
With interest rates still near an all-time low, it just makes sense to consolidate all of your debt.