Orange County Homeowners Can Cushion Retirement with Debt Consolidation

By Joe Taylor Jr.
Local Lender Columnist
Jul 26, 2006
With more Orange County residents living longer, healthier lives, refinancing your mortgage for debt consolidation can position you for a fit and fun retirement.

Once the kids are out of the house, you should survey your overall budget and think about how much cash flow you'll need to enjoy life once you start working less. Simply refinancing your mortgage with an interest rate two points lower than your current rate can significantly reduce your monthly mortgage payment.

Consolidate Your Debt

Opting to consolidate other high-interest rate debts such as credit card debt and car loans into your refinanced mortgage can reduce your total monthly payments even more. If your home's value has appreciated significantly, as many have in Orange County, your equity will allow you to get cash out when you refinance.

Using that cash for debt consolidation allows you to reduce the amount you pay on interest on all of your debts. For example, paying off a credit card with your tax-deductible, fixed-rate mortgage cuts your debt service in half. With mortgage rates still at historic lows, debt consolidation can put money back in your wallet every month.

Keep Credit Card Spending in Check after Debt Consolidation

While consolidating your debt by refinancing your mortgage can be a smart move financially, there are some cautions. If you can't make your new consolidated payment, you'll risk losing your house because it is now collateral for all of your loans.

Successfully eliminating debt requires disciplined spending so that you don't create new high-interest debt while paying off the old. If you're serious about reducing your debt, this year could be an excellent time to refinance your mortgage, consolidate your debts into a manageable payment, and start saving for a great retirement in Orange County.

Sources:
Boston.com
BusinessWeek

About the Author
Joe Taylor Jr. has covered business and finance news for Financial Times Television and CNBC. He coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.