Raising Your Mortgage Interest Rate Can Actually Save You Money - & - Here's How!
- Connection Inc17
- Aug 8
- 3 min read
It might seem counterintuitive, but increasing your mortgage interest rate through a cash-out refinance can actually save you significant money each month. If you're like many homeowners who've secured a low-interest mortgage in the past years, the idea of refinancing into a higher rate might feel uncomfortable, downright a Non-Starter! However, when you look at your total monthly debt obligations, the math often tells a different, far more favorable story.
Your Current Low-Interest Mortgage Might Be Costing You More
If you have a notably low mortgage interest rate, chances are you've owned your home for a while, you have been building substantial equity in the process. While that lower-interest rate mortgage may be something to brag about, your total monthly debt obligations, such as credit card balances, a HELOC (Home Equity Line of Credit), car loans, student loans, or other debts might be eating up a significant portion of your income. Leaving very little left over to live or do anything extra every month.
The Math - Understanding Your Total Monthly Debt Obligations
Your monthly financial outflow isn't limited to just your mortgage payment. Credit cards with high-interest rates, expensive car loans, student loan payments, home equity lines of credit (HeLOC), or an Instalment loan for equipment can add up quickly. These total obligations combined create your true "monthly debt outflow," and it's likely higher than you realize. Eating away at your monthly income.
Why Refinancing at a Higher Rate Could Be the Smart Move
By opting for a cash-out debt consolidation refinance even if at a higher interest rate than you currently have you can use the equity in your home to pay off all or significantly reduce these other high-interest payments. (National Interest Rate on Credit Cards is 23.99% June 2025) This can dramatically lower the total amount you spend every month on all debt payments combined.
Here's a real-life example:
Before Refinancing:
Mortgage Interest Rate: 3.25%
Total Monthly Obligations: $3,150 (Mortgage Payment, All Credit Cards, IRS tax bill, and an AC Installment payment.)
16 outgoing payments every month for this client to the various accounts.
After Refinancing:
Mortgage Interest Rate: 6.875%
Total Monthly Obligations: $1,375
1 outgoing payment every month going forward
That's a reduction of approximately 56% of “monthly debt outflow”! Despite this homeowner’s mortgage rate increasing, the homeowner drastically reduced their total monthly debt payments, freeing up significant cash flow and truly changing their life.
Key Benefits of a Cash-Out Debt Consolidation Refinance:
Simplify Your Finances: Consolidate multiple debts into a single, manageable monthly payment.
Increase Monthly Cash Flow: Lower your total monthly debt obligations dramatically.
Potentially Improve Credit: Paying off high-interest debt and reducing your credit utilization may boost your credit score.
Financial Peace of Mind: Reduce financial stress by simplifying your budget.
Is a Debt Consolidation Refinance Right for You?
The key to determining whether Debt Consolidation Refinancing and raising your mortgage interest rate makes sense is evaluating your total monthly financial outflow. It is just Math! At AZ Loan Help: Aaron Kerscher, we carefully assess your specific situation to ensure refinancing provides real, tangible benefits. IF NO - carry on, IF YES, it will Change your family’s or your Life, then it becomes a No Brainer let’s get it done type movement!
Ready to do some math and explore if refinancing can lower your total monthly payments? (PS. I will help with the math part. Remember we Help from A to Z)
➡️ Schedule your free consultation today and discover if raising your mortgage rate could lead to significant monthly savings!
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