Consolidate my Debt

Payoff other high interest debt » Improve your total monthly costs

How Much Debt Do You Want To Consolidate?

Tell us a about your current mortgage and other debts
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Your Current Mortgage:
(How much do you still owe on your mortgage?)
Other Debts:
(How much other debt do you owe? credit cards, auto loans, etc)
Value of Your Home:
(How much is your home worth?)
Your Credit Score:
(What is your credit score?)
Your Current Mortgage Type:
(What type of mortgage do you currently have?)
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Consolidate debt into one monthly payment

Payoff high-interest credit card and other debt

If you have high-interest credit card debt or other high-interest loans such as an auto loan or student loan, one strategy to lowering the interest rate and monthly cost, is to do a cash-out refinance mortgage and use the extra cash to pay off the high interest loans. You do this by taking out a new mortgage equal to the amount you owe on your old mortgage plus some of your home equity. This extra amount is then used to pay off the other debt. The new refinanced mortgage usually has a much lower interest rate than the credit cards and other loans.
How a debt consolidation refinance works

  • You take out a new mortgage for more than the amount you owe on your current mortgage. Usually it's a "cash-out" refinance transaction.
  • The difference between the two amounts is used to pay off other debts
  • You make a single monthly mortgage payment instead of multiple payments on other debts

How to calculate how much debt you can payoff

Determine how much cash-out you can get to payoff your other debts

When doing a debt-consolidation through a cash-out refinance transaction, you will want to determine the maximum cash you can get to pay off your other debt.
Here's how to calculate the maximum cash-out you can get to consolidate other debts:

  1. Determine your home's current value. Example: $500,000
  2. Determine the lender's maximum LTV (loan to value) allowed for cash-out refis. Example: 80%
  3. Calculate the maximum loan amount. Example: $500,000 x 0.80 = $400,000
  4. Determine your current morgage balance. Example: $300,000
  5. Subtract your current mortgage balance from the maximum loan amount. Example: $400,000 - $300,000 = $100,000
In the example above, you could get up to $100,000 cash out to pay off your other debts assuming your home value was $500,000 with an existing mortgage of $300,000 and a lender that allows for 80% LTV (which is fairly common).