Debt happens. Sometimes through no fault of our own. Sometimes because we made poor choices. Regardless, the pressure can be suffocating and humiliating.
But did you know you can use equity in your home to consolidate multiple debts into a single payment at a lower interest rate? This means:
- more money can go to toward paying down principle faster
- total monthly payment can be reduced
- convenience of a single payment
- improved credit score as you can now make payments on time
Example before consolidation refinance
| BEFORE | |||
|---|---|---|---|
| Debt | Amount | Interest | Monthly Payment |
| Mortgage | $215,000 | 4% | $1,300 |
| Credit Card(s) | $25,000 | 19% | $750 |
| Car Loan | $33,000 | 7% | $500 |
| TOTAL | $273,000 | $2,550 |
In the examples below, an additional $5,000 is added to the total loan amount to account for prepayment penalties associated with breaking the original mortgage.
Debt Consolidation Example using same 20 year amortization
| AFTER | |||
|---|---|---|---|
| Debt | Amount | Interest | Monthly Payment |
| Mortgage | $278,000 | 3.49% | $1,607 |
| Monthly Savings: | $943 |
Debt Consolidation Example using 30 year amortization
| AFTER | |||
|---|---|---|---|
| Debt | Amount | Interest | Monthly Payment |
| Mortgage | $278,000 | 3.49% | $1,243 |
| Monthly Savings: | $1,307 |
Imagine the relief. Imagine the ability to refocus on the important things in life.
Food for thought…
Debt consolidation deals with the immediate symptom, not the cause. It should be done as part of a careful budget review and honest assessment of needs vs wants in order to avoid a repeat situation.
Let’s get started today! Give me (Tim) a call at 250-550-8272 or use the contact form on this page.