Managing Debt and Financial Stress
Financial strain is one of the biggest stressors in a household. Inflation has affected everyone, with the cost of gas, groceries, and everyday essentials increasing. As a result, many households are turning to credit cards to cover expenses, leading to rising debt burdens.
Mounting bills and credit card balances can create financial anxiety, especially when it feels like there is little left in the checking account after paying for necessities. If you find yourself working overtime just to keep up, it may be time to consider a strategy to relieve that pressure.
Refinancing: A Tool for Debt Relief
Many homeowners have built significant equity in their homes, yet they continue to struggle with high-interest debt. The average home in the U.S. has between $200,000 and $400,000 in tappable equity, meaning that refinancing could be a solution to eliminate or reduce financial burdens.
Debt is not always a result of poor financial habits. Many people with credit card debt are simply trying to keep up with rising costs. Some of the most common financial strains include:
- Student loans
- Personal lines of credit
- Buy-now-pay-later programs
- High-interest credit card balances
How Refinancing Can Help
- Consolidating high-interest debt into a mortgage with a lower rate
- Reducing monthly expenses to free up cash flow
- Avoiding high-interest payments that drain financial resources
Example:
One client recently refinanced, consolidated debt, and is now saving $2,280 per month—that’s $27,360 a year. With refinancing, they also won’t have a mortgage payment for several months, offering much-needed financial relief.
For many, refinancing is not just about the numbers—it’s about peace of mind and financial security.
Building Wealth Through Homeownership
Owning a home remains one of the most effective ways to build wealth. Homeowners with mortgages have seen equity growth, and those who own their homes outright have even greater financial security.
Why Homeownership is a Strong Financial Decision
- Home values continue to appreciate, even if at a slower pace than previous years.
- The average home with a mortgage has around $250,000 in equity.
- Homes owned free and clear have over $400,000 in equity on average.
Affordability and Mortgage Insurance (MI)
One misconception is that buying a home requires a 20% down payment, but that is not the case. Many loan programs allow for lower down payments, including:
- 0% down (VA loans for Veterans)
- 3% down (First-time homebuyers)
- 3.5% down (FHA loans)
- 5-15% down (Conventional loans)
Many buyers hesitate due to mortgage insurance (MI) concerns, but MI costs have decreased significantly.
Example:
A client purchasing a $600,000 home considered putting 20% down ($120,000). Instead, they put 10% down, kept $60,000 in savings, and the MI cost was only $127 per month.
For most buyers, paying an extra $127 per month is easier than finding an additional $60,000 in cash.
Market Outlook and Next Steps
As housing inventory remains low and demand continues, home prices are expected to rise over time. Factors such as new home construction, interest rate movements, and buyer demand will continue to shape the market.
If you are considering refinancing to relieve financial stress or purchasing a home to build wealth, now may be the right time to explore your options.
Call today for a consultation. The conversation is free—the results may be priceless.
