Introduction

Credit card debt is a growing concern in the U.S. According to the Federal Reserve, total credit card debt has surpassed $1 trillion, with the average household carrying a balance of over $5,700. Worse, many credit cards carry interest rates between 25% and 30%, making it nearly impossible for some families to get ahead financially.

If you’re struggling with credit card debt and own a home, refinancing your mortgage could be the solution. Let’s explore how cash-out refinancing works and how it can help you take control of your finances.

Why Credit Card Debt is So Problematic

The high-interest rates on credit cards can trap borrowers in a cycle of minimum payments, with most of the money going toward interest instead of reducing the principal balance. This means it could take decades to pay off a balance if you’re only making minimum payments.

For example, a $40,000 credit card balance at 28% interest would cost $933 per month just in payments—and that’s if you’re not adding any new charges. Over time, that’s tens of thousands of dollars in wasted interest that could be used to achieve financial stability.

How Cash-Out Refinancing Can Help

Cash-out refinancing allows you to replace your existing mortgage with a new one for a higher amount, using the difference to pay off your high-interest debts. Since mortgage rates are typically much lower than credit card rates, this strategy can save you significant money each month.

Additionally, you simplify your finances by consolidating multiple payments into one monthly mortgage payment. This added cash flow can reduce financial stress and provide the flexibility to save, invest, or handle unexpected expenses.

Sample Scenario Comparison

Let’s look at a scenario to see how cash-out refinancing can work:

• Home Value: $300,000
• Current Mortgage Balance: $190,000 (4% interest, $907 monthly payment).
• Credit Card Debt: $40,000 (28% interest, $933 monthly payment).
• Refinanced Mortgage: $230,000 (6.5% interest, $1,453 monthly payment).

The Result: By consolidating their $40,000 of high-interest credit card debt into their mortgage, the homeowner eliminates their $933 credit card payment. While their mortgage payment increases to $1,453, their total monthly obligation drops from $1,840 to $1,453—an impressive $387 in monthly savings. This extra cash flow gives the homeowner the opportunity to rebuild their savings, reduce financial stress, and work toward long-term financial freedom.

Why Choose Ross Mortgage?

At Ross Mortgage, we’ve been helping homeowners take control of their finances for over 75 years. Our team of trusted loan officers specializes in cash-out refinancing and can guide you through the process with personalized advice and expert support. We’re committed to helping you achieve your financial goals while making the journey as simple and stress-free as possible.

Take the Next Step

If credit card 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 to discuss a personalized plan. Together, we’ll help you regain control and create a brighter financial future.