Lower Monthly Payments, Pay-Off Debt, & Save.

One of the more common reasons to refinance is to consolidate debt and pay off any form of credit or debt that is being charged a high rate of interest. The best example of this is credit cards as they have the highest rate of interest associated with them, usually 18-20%. With interest rates this high it is hard to ever pay off the credit card if you are carrying a balance as it is accumulating interest at such a high interest rate (i.e. if you are just making the minimum payment each month it can take a very long time to pay of the credit card). Not as high as credit cards but car loans and lines of credit can also be charged a higher rate of interest than one’s mortgage,  making them also good candidates to be paid off in a mortgage refinance.

An additional benefit to paying off credit cards, car loans, lines of credit, or any other form of debt in a mortgage refinance is that it can simplify your life. Likely you already have a number of bills each month that need to be paid (i.e. heat, electric, phone, cell phone, cable, internet, property tax, strata fee, etc.) and if you are able to reduce the number it can help and greatly reduce the risk of ever forgetting to pay one. You NEVER want to miss a bill payment date as a missed payment will severely, negatively impact your credit score (i.e. credit score is a major component in determining if one can be approved for any new credit or a credit increase).

For more information on your credit scrore and credit report, conatct Maury today for a free credit report consultation and review.

Below is an example of a mortgage refinance situation where a client used the equity in their home to pay off two debts and will have a significant savings each month. You will notice also that the mortgage rate was the same before and after. However, if the mortgage rate was lower for the refinance than it previously was, as would likely be the case today, the savings each month would be even greater.