Why now might be the time to consider debt consolidation using equity.

Are you confident you have the lowest interest rate on your home, or is it time to consider debt consolidation?

One common situation many homeowners face is having a seemingly fantastic interest rate of 3% or 3.25%. While this might sound great, there’s another important factor to consider. Whether you’re planning to buy, sell, or invest in real estate, assessing whether your current financial situation aligns with your goals is vital. 

However, here’s something different from what we’ve seen before: There has been a significant increase in debt over the last 12 to 21 months. Credit card debt now ranges from 14% to 22%, while car loans are 6% to 10%. Even home equity lines of credit (HELOC) are in the 6% to 12% range, whereas they used to be around 4% to 5%.

“You can use your equity to pay off your debts.”

If you’re dealing with credit card debt and other financial obligations, the interest rate on your home might not be the most critical factor to consider. Debt consolidation could be a smart move to manage your blended interest rate effectively. This means considering the 3% interest rate on your house alongside the higher interest rates on your credit cards and car loans.

Imagine selling your home, using the equity you’ve built up to pay off your debts. Even with today’s interest rates, you could potentially be in a better financial position. To help you explore this further, I encourage you to take a look at our blended rate calculator. This tool takes into account your home’s low interest rate, your other debts, and whether making a move makes financial sense.

I’m not suggesting you should rush into buying a new home, but I am an advocate for evaluating if your current financial structure aligns with your goals. If you’d like us to run some scenarios or assess your situation with the blended rate calculator, please call or email me or my team. We’d love to assist you with debt consolidation or any other real estate goals.