Are you carrying debt on several credit cards, a car loan, a student loan, a line of credit, and a mortgage? Combining them into a single payment can help reduce the money being lost to interest payments and may help you lower your overall monthly payment.

Using a home loan as the vehicle to consolidate your debt may give you the opportunity to secure favorable loan terms and save money.

Take John for example – John has a $300,000 mortgage at 3% interest rate, and his home is valued at $710,000. He also has $150,000 student loan at 12% interest.   $55,000 in credit card debt at 21% interest and a $25,000 loan on camper at 14% interest. John’s total debt is $530,000.

To better illustrate John’s debt, let’s calculate his blended rate.

The blended rate is a dollar weighted average:

56% of John’s debt is his mortgage and that balance has an interest rate of 3%.

28% of John’s debt is student loans with a 12% interest rate.

11% of John’s debt is from credit cards with an interest rate of 21%.

5% of John’s debt is from the camper with an 14% interest rate.

John’s blended rate on his debt of $530,000 is 7.9%

Good news for John – he’s able to pull out $230,000 in equity and refinance his home at a 7% interest rate. This eliminates his high interest debt and consolidates it into a new single lower monthly payment and overall monthly savings.

Ready to explore your debt consolidation options? Giving us a call at 1-800-24-RATES or get started at apply.mutualmortgage.com