If high-interest debt is weighing you down, a debt consolidation refinance could be a smart way to regain control of your finances. By using the equity in your home, you can consolidate debts like credit cards, auto loans, and medical bills into one manageable monthly payment—typically at a lower interest rate than what you're currently paying.

This type of loan doesn’t just simplify your payments. It can also reduce the total amount of interest you pay over time and help you get back on track financially, all while leveraging the home equity you’ve already built.

What is a Debt Consolidation Refinance?

  • Involves refinancing your existing mortgage for a higher amount than you currently owe
  • The difference is paid out in cash, which you can use to pay off other debts
  • Your new mortgage may replace your old one entirely or sit alongside it, depending on the product type
  • The new loan is secured by your home, so maintaining timely payments is essential

Benefits of Debt Consolidation Through Refinance

  • Combines multiple payments into one, making monthly budgeting simpler
  • Replaces variable high-interest debt with a fixed, often lower-rate mortgage
  • Frees up cash each month by lowering your overall debt burden
  • Can improve your credit score over time as you reduce revolving balances
  • Eliminates juggling multiple due dates and interest rates across different lenders
  • Offers the option to reinvest monthly savings into emergency funds, retirement, or other goals

Things to Consider

  • Your new mortgage balance will be higher, potentially increasing your monthly payment
  • Closing costs typically range from 2% to 6% of your loan amount
  • You may pay more in mortgage interest over the life of the loan, especially if resetting to a new 30-year term
  • Mortgage interest used to pay off non mortgage debt isn’t tax-deductible
  • You’ll need sufficient home equity—usually at least 20%—and a qualifying credit profile
  • Since your home is collateral, missed payments could result in foreclosure

Is It Right for You?

A debt consolidation refinance makes the most sense when:

  • You have substantial equity in your home
  • Your current debt carries higher interest rates than mortgage rates
  • You plan to stay in your home long enough to benefit from the savings
  • You’re confident in your ability to handle the new mortgage payment

If you’re unsure, we can walk you through the numbers. At JZ Mortgage, our team will help you evaluate whether a debt consolidation refinance aligns with your financial goals—and if it does, we’ll guide you every step of the way.