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Introduction

High-interest debt isn’t limited to credit cards. Many homeowners are also burdened with personal loans, payday loans, and auto loans that come with steep interest rates. If you’re struggling to keep up with these payments, there’s good news: your home equity could help you break free from the cycle of debt and gain financial freedom.

At Ross Mortgage, we specialize in helping homeowners consolidate their high-interest debts through cash-out refinancing. Here’s how it works and how it can save you money every month.

Common Types of High-Interest Debt

  1. Personal Loans: These loans often have interest rates between 10% and 15%, making monthly payments expensive.
  2. Auto Loans: With interest rates that can vary widely, auto loans are often structured with long repayment periods, resulting in higher total interest costs over time.
  3. Payday Loans: These loans can carry outrageous rates—sometimes as high as 400% APR—trapping borrowers in an endless cycle of payments.

How Cash-Out Refinancing Helps

By tapping into the equity you’ve built in your home, you can consolidate multiple high-interest debts into one manageable, lower-rate mortgage payment. This allows you to simplify your finances, free up cash flow, and reduce the overall amount of interest you pay over time. It’s a smart strategy to alleviate the burden of high monthly payments and focus on building financial stability.

Sample Scenario Comparison

Let’s look at a scenario to see how this works:

  • Home Value: $400,000
  • Current Mortgage Balance: $250,000 (4% interest, $1,194 monthly payment)
  • High-Interest Debt:
    • $35,000 personal loan (12% interest, $734 monthly payment)
    • $25,000 auto loan (9% interest, $521 monthly payment)
  • Refinanced Mortgage: $310,000 (6.5% interest, $1,957 monthly payment)

The Result: By consolidating $60,000 of high-interest debt into their mortgage, the homeowner eliminates their $734 personal loan and $521 auto loan payments. While the mortgage payment increases to $1,957, their total monthly obligation drops from $2,449 to $1,957, resulting in $492 in monthly savings. This additional cash flow can be used to build an emergency fund, reduce remaining debt, or invest in long-term financial goals.

More Cash, Less Stress

With this significant monthly savings, homeowners have the opportunity to breathe easier and regain control of their finances. The extra $492 per month can go toward paying off other debts, creating a financial cushion, or even making home improvements without the stress of juggling multiple high-interest loans.

Why Choose Ross Mortgage?

Ross Mortgage has been a trusted partner for homeowners for over 75 years. Our team of experienced loan officers understands that every financial situation is unique, which is why we provide personalized guidance and solutions tailored to your needs. We make the refinancing process smooth and efficient, ensuring you save as much money as possible while working toward financial freedom.

Take Action Now

If high interest debt is weighing you down, it’s time to explore your options. Use our Debt Eliminator Calculator to get started and a trusted Ross Mortgage loan officer will reach out to discuss a personalized plan. Together, we’ll help you regain control and create a brighter financial future.

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