While helping clients with Wills, applications for government assistance, business formations or business succession planning, I sometimes have occasion to review their assets, liabilities and credit status. As a result, I am often surprised to discover that even the most business savvy client may not fully appreciate the potential benefit of consolidating and refinancing current debt.
While reducing your home mortgage interest rate from 6 percent to 4 percent may not seem like much of a benefit, it could save hundreds of dollars per month.
Perhaps of much greater benefit, however, would be paying off credit card balances as part of a refinance. By doing so, interest can be reduced by more than 20 percent for many individuals. Better yet, the interest that you do pay after such a refinance can be used as a tax deduction, whereas interest paid on credit card debt is not tax deductible.