Many homeowners have more debt than they feel comfortable carrying. This can be a source of financial stress as well as a strain on a marriage or family. One option for lightening the load is a debt consolidation loan. A debt consolidation loan is a loan that is secured by your mortgage that can be used to pay off other bills, like credit card debt and medical bills. This leaves the borrower with one lower payment. Here are some of the benefits of using a debt consolidation loan to reduce your monthly payments.
Reduced Interest Rate
One advantage to using a debt consolidation loan is that you can reduce your interest rates. When you take out a debt consolidation loan, you refinance your existing mortgage. Today’s mortgage rates are so low that you can probably reduce your mortgage interest rate significantly. In addition to refinancing your current mortgage balance, you will receive a sum of money to pay off other debts. You can use these funds to pay off your vehicle loans, credit card debt, medical bills, and more.
The rates on these other types of debts can be quite high; it isn’t unusual to pay 30% interest on a credit card bill. By using debt consolidation, you can pay off those high-interest bills and reduce your interest payments significantly. Your new interest rate on your debt consolidation loan, which covers your mortgage and the other debts that you are paying off, could be as low as 4%.
One Reduced Monthly Payment
A reduced interest rate on your debts translates to significantly lower monthly payments. And by consolidating your debts, you only have to make one payment. Rather than paying $950 per month for your mortgage, $150 per month for one credit card at 30% interest and $500 per month for a car payment and $200 per month for another credit card bill at 27% percent interest, you can make just one payment that will be significantly lower than the total of all those other bills. You only have one payment to worry about, and you save a big chunk of money every month.
Pay Off Your Mortgage Sooner
Even if you are able to make your monthly payments on your debts, you can improve your financial situation with a debt consolidation loan. By reducing your interest rate, you will save hundreds of dollars every month. You can put those hundreds of dollars toward paying extra principal on your mortgage, and you can shave years off the life of your mortgage loan. Debt consolidation is not just for those who are on the brink of bankruptcy. It can help people in all types of financial situations save money on interest fees every month. Even if your current mortgage has prepayment penalties, restructuring your debt can save you money and put you ahead of the game.
A debt consolidation loan can leave you with extra cash in your pocket each month, cut down the number of payments you need to make, and reduce stress in your life. Debt and financial problems can be a significant source of tension that can affect many aspects of your life. When you restructure your debt with a debt consolidation loan, you lighten the load on your shoulders.
If you have more debt than you would like or you think that a debt consolidation loan could help you to reduce your interest rates and save money, call the Mortgage Ladies. We offer a variety of products, including debt consolidation loans. Give us a call at 905-789-8198, and we will work on putting together a refinancing package for you.