MBS Highway Strategy Sessions: High Debt Household

 

Tools Used: Blended Rate Calculator, Debt Consolidation

The following video roleplay demonstrates a discussion with a client who has some high rate debt but is concerned about disturbing a lower rate mortgage.  


 

Prepare for Questions

Borrowers will have questions when considering a debt consolidation refinance. Here are three questions and some potential responses you can prepare for when using the Debt Consolidation Tool :

 

My mortgage rate is low and I know current mortgage rates are higher – wouldn’t it be a bad idea to lose that low rate by refinancing now?

If your other debts are at higher interest rates than the new mortgage interest rate you would be refinancing into, it may make sense. 

You could refinance your mortgage, use your equity to pay off those higher rate debts, and see a net savings each month. 

Some of my borrowers even choose to take all or a part of that monthly savings and apply it to their mortgage principal balance. I know you were looking to reduce your overall monthly expenses but it can be a great way to rebuild equity, save a lot of money over the course of your loan, or possibly pay off your loan earlier.  Let’s take a look at the numbers.  We can also make sure to touch base next year when rates move lower and help save you even more. 

 

Are there upfront costs to refinance and consolidate debts? 

There are fees that we can refinance into the new mortgage loan. You can see a full breakdown of the loan and fees under Loan Details

 

Can I use the money that is left over after I pay off the debts for other things, like home improvements?

Yes, if you have money left over under Cash In-Hand.

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