At extremely low mortgage interest rates many homeowners would benefit from a refinance. If you have equity in your home, this may be a great time to consider consolidating debt. The following illustration is based on an actual case:
| Current debts: | Monthly payment: | Years left to pay off: |
| | | |
| $68,000 mortgage | $924 | 23 |
| | | |
| $13,000 credit card | $274 | 15 at least |
| | | |
| $33,000 student loans | $309 | 20+ (once deferment ends) |
| | | |
| $12,000 tuition | $100 est. | 20+ (if loan was taken) |
| | | |
| $126,000 in debt | $1607 per month | Over 20 years left on avg. |
Refinance to 3.875% 15-year fixed: $1,260 monthly payment (includes taxes and insurance)
o Pay off debt in 15 years, about $112,000 in savings over those 5 years compared to current debt terms
o Save $347 month for 15 years for about $62,460 in savings
o Over $184,000 in debt savings on a $130,000 loan!
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