Crushed by Credit Card Debt? Refinance Your Mortgage to Take Control in 2025
Credit card debt in the U.S. just hit a new record - over $1.3 trillion in balances. And for many homeowners in Wisconsin, those sky-high interest rates (often 20% or more) are becoming unsustainable.
The good news? If you own a home, you might be sitting on a powerful financial tool to fight back: cash-out refinancing.
What Is a Cash-Out Refinance?
A cash-out refinance replaces your current mortgage with a new, slightly larger one - and gives you the difference in cash. You can use that money for anything: home improvements, college tuition, or in this case, paying off high-interest debt.
Example: If your home is worth $350,000 and you owe $200,000, you may be able to refinance into a $275,000 loan and pocket $75,000 - tax-free.
Why Use a Cash-Out Refi to Pay Off Credit Cards?
- Lower Interest Rates - Most mortgages have significantly lower rates than credit cards.
- Consolidate Debt - Combine all your payments into one manageable monthly mortgage.
- Reduce Stress - Eliminate 25%+ interest and stop falling further behind.
Real Numbers: Should You Refinance to Pay Off Debt?
Let's compare monthly payments side by side.
| Scenario | Loan/Debt Amount | Interest Rate | Monthly Payment (Est.) |
|---|---|---|---|
| Existing Mortgage Only | $300,000 | 3.00% | $1,265 |
| Credit Cards Only | $40,000 | 25.00% | $1,200+ |
| Total Monthly (Separate) | - | - | $2,465+ |
| New Refi Mortgage (Combined) | $340,000 | 7.00% | $2,262 |
Monthly Savings: $200+
That's over $2,400 a year in cash flow relief just by consolidating into one loan.
The Hidden Cost of Credit Card Interest
If you owe $40,000 and only make minimum payments at 25% interest:
| Credit Card Balance | Interest Rate | Monthly Min. Payment | Time to Pay Off | Total Interest Paid |
|---|---|---|---|---|
| $40,000 | 25% | ~$800 | Over 30 years | $120,000+ |
You'd spend more than $160,000 total to pay off $40,000 in debt.
Compare that to refinancing:
| Loan Type | Loan Amount | Rate | Term | Interest Paid Over 30 Years |
|---|---|---|---|---|
| Refi Mortgage | $340,000 | 7% | 30 Years | ~$417,000 |
| Original Mortgage | $300,000 | 3% | 30 Years | ~$155,000 |
| Extra Interest | +$40,000 | - | - | ~$56,000 |
Total Savings vs. Keeping Credit Cards: ~$64,000+ over time.
Ready to See If It Makes Sense for You?
This isn't about short-term convenience - it's about long-term financial freedom.
Book your refinance review today:
https://calendly.com/adam-zeman/30min
Call/Text: 414-975-2654
Website: www.mkemortgage.com
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Helpful Resources:
Credit Card Debt Report - CNBC
Why Cash-Out Refinance Beats Credit Card Debt - NerdWallet