Why Should You Consider Debt Consolidation Using Home Equity?
Debt consolidation is the process of combining several debts into one, usually with a lower interest rate.
This lets you pay off the high-interest debt so more of your payment goes toward paying down the principal. For the last decade, mortgage rates have been historically low, with Banks offering rates below 2% in through the Pandemic; Compare that to credit cards which typically range anywhere from 19% to 29%.
It’s clear consolidating into a mortgage can save you money.
You could also lower your total monthly payment by making a single payment on the mortgage rather than one for each debt. This can free up cashflow for paying expenses, monthly savings, or investing.
Consolidating your debt is that it can help improve your credit score.
Mortgage balances are weighted differently in your credit score calculation; so moving balances from credit cards and other high-interest debts can offset and jumpstart/protect your credit score.
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