If you have a number of debts you are in the process of slowly repaying, you might be wondering whether it would be a good idea to consolidate them, perhaps as part of a refinance of your mortgage.
To help you figure that out, let’s go over some indications that this might be the right time for debt consolidation.
When is The Right Time To Consolidate Your Debts?
- You have a competitive borrower profile. While consolidating debts offers a number of benefits, lowering your interest rate is probably the number one reason you want to do it. Whether that is possible is going to depend on your borrower profile, as is how much that reduction might be. For any type of debt consolidation, having a high credit score will give you access to the lowest interest rates. If you are consolidating your high interest debts into a mortgage refinance, other factors that can help you qualify for an affordable rate include your debt-to-income (DTI) ratio and your income. If you are not sure whether your current financial scenario will help you qualify for a lower interest rate or not, we can help you to assess the possibilities during your consultation.
- Your finances are complicated and you want to streamline them. Another indication that this may be the right time to refinance your home loan is if you are struggling to manage your finances because of their sheer complexity each month. In such a case, consolidation could remove the complexity entirely. You will have just one payment each month, not a handful or more of debts to keep track of. It is pretty hard to forget to make just one collective payment, whereas you could easily think you paid all of your individual debts separately but actually missed one. Consolidating your debts saves you time and money, cuts back on your stress, and lets you focus on other things in your life.
- Your savings will exceed your fees. To know whether this is the right time for consolidation, you also need to calculate whether it makes financial sense. Debt consolidation is not free. Let’s say you are doing it as part of a mortgage refinance. You will need to pay the application fee, attorney’s fee, appraisal fee, and sometimes additional costs. You need to calculate how much money you would be able to save with the lower interest rate if you go through with the refinance. Assuming those savings add up to more than the fees, it makes sense to move forward.
- You do not have deeper financial problems. Finally, we should point out that consolidating your debts is only a viable solution in situations where you can ultimately afford to finish paying them off. If you are in a scenario where you will continue to fall more and more behind even with the lower interest rate, you will need to look into other solutions for getting out of debt.
PLC Can Assist With Your Next Steps!
Whether you are thinking about consolidating while refinancing or choosing a different option for debt consolidation, Premier Lending Corp can help you figure out whether consolidating can help you to save money. We can go over the possible impact on your mortgage and offer personalized recommendations. To schedule a consultation, please call 954-840-8811.