Consolidate High-Interest Debt By Refinancing
Credit card debt can be expensive and can end up taking a lot of time to pay off. Many credit card holders struggle with paying down their credit card balances, making only the minimum monthly payments until they get caught up or finally resolve the balances through debt consolidation.
Often, borrowers feel like they will never get caught up on their high interest credit cards and barely make any progress towards paying them off.
One way to help pay down credit card debt is by refinancing high interest rates into new loans with lower interest rates. It’s common for borrowers who carry high rate credit cards or other types of loans, like student loan debt, to refinance their debts. Mortgage rates are usually lower than other types of borrowing costs, and refinancing can help pay down higher rate balances, like credit cards.
When you refinance any type of loan, whether it’s a mortgage loan or credit card debt, you are most likely going to extend the term of your loan. This means that instead of making interest-only payments for 5 years on a high interest credit card, you make interest-only payments for 30 years on your new mortgage loan.
While it might sound like refinancing any type of debt will only make the burden worse, with lower mortgage rates, borrowers can actually pay off their debts faster by paying more principal than interest towards their loans. For example, if you had $10,000 worth of credit card debt at 19.99% interest, compounded daily, you would end up paying over $20,000 in interest alone if you only paid your credit card off during the five-year loan term.
It is possible to pay down this same amount of high interest credit card debt by making monthly mortgage payments with less than 20 years left on the term. Consolidating high interest credit cards into one low mortgage payment can be a great way to save money and pay down debt more quickly.
Often, borrowers feel like they will never get caught up on their high interest credit cards and barely make any progress towards paying them off.
One way to help pay down credit card debt is by refinancing high interest rates into new loans with lower interest rates. It’s common for borrowers who carry high rate credit cards or other types of loans, like student loan debt, to refinance their debts. Mortgage rates are usually lower than other types of borrowing costs, and refinancing can help pay down higher rate balances, like credit cards.
When you refinance any type of loan, whether it’s a mortgage loan or credit card debt, you are most likely going to extend the term of your loan. This means that instead of making interest-only payments for 5 years on a high interest credit card, you make interest-only payments for 30 years on your new mortgage loan.
While it might sound like refinancing any type of debt will only make the burden worse, with lower mortgage rates, borrowers can actually pay off their debts faster by paying more principal than interest towards their loans. For example, if you had $10,000 worth of credit card debt at 19.99% interest, compounded daily, you would end up paying over $20,000 in interest alone if you only paid your credit card off during the five-year loan term.
It is possible to pay down this same amount of high interest credit card debt by making monthly mortgage payments with less than 20 years left on the term. Consolidating high interest credit cards into one low mortgage payment can be a great way to save money and pay down debt more quickly.
