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When consumers first think of refinancing an existing mortgage loan, typically it’s because there’s new out about falling interest rates. In today’s environment however, especially with mortgage rates being as low as they are for such an extended period of time, refinancing to lower a monthly payment is happening with less and less frequency. But it’s not always just about the current rate on a mortgage compared with market rates. A mortgage refinance can still make sense in New Jersey or other areas in this environment for many.

One reason to refinance now would be to consolidate debt. By paying off higher interest debt with a lower rate mortgage loan can save money. The most competitive interest rates are typically those associated with a first lien mortgage. Higher interest rates can be attached to other consumer credit obligations such as credit cards or automobile loans, student loans or home equity lines of credit, or HELOCs.

To see if this strategy works for you, take a few moments and gather your most recent credit card and consumer debt statements. List each account, the current balance, minimum monthly payment and interest rate associated with that account. When finished, take a look at the total monthly payments as well as the total outstanding debt.

Next, add the amount of these debts to your current mortgage balance. Then, contact your loan officer to get an update on where mortgage rates are today and compare what your new mortgage payment would be if you consolidated all your higher interest debt into a new, cash-out home loan. Consumers can lower their monthly payments with a refinance, or they can take that monthly savings and apply it to the outstanding mortgage balance.

For example, you find you can save $500 per month with a debt consolidation loan. You can choose to put that $500 into a retirement account or you can apply it to your mortgage. In the first year alone, that would lower your outstanding mortgage balance by an additional $6,000 in the first year alone. If this sounds like something you’d like to explore, contact your loan officer and run a few numbers to see if a new refinance makes sense for your situation.