| Compare the blended interest rate before to the new | | | | In past years the trend has been to refinance to a |
| rate after. | | | | lower interest rate which common sense dictates is a |
| Yes, surprisingly, refinancing a mortgage to a higher | | | | smart financial move. However, refinancing to a higher |
| interest can actually be a wise financial move when | | | | rate can save money in certain situations. Comparing |
| high interest debts are being consolidated into the new | | | | your blended interest rate before to a proposed |
| loan. The key is to step back and look at the overall | | | | interest rate is one essential ingredient to making a |
| interest rate you are paying on your entire debt load, | | | | sound financial decision. |
| not just the mortgage. This is called the blended | | | | Consolidating debt into a single loan can lower interest |
| interest rate. | | | | paid. |
| Understanding blended interest rates. | | | | A debt consolidation calculator comes in handy for this. |
| A blended interest rate is an interest rate that is | | | | When you consolidate your multiple debts into one loan |
| figured on a combination of debts, i.e. auto loans, credit | | | | you can lower monthly payments even if the cost of |
| cards, house, etc. Since it is not averaged but in fact | | | | the mortgage increases. It can also lower the overall |
| figured on each individual debt this gives a truer picture | | | | cost of borrowing money on your entire debt load. This |
| to the cost of borrowing money. The interest rate for | | | | savings can then be applied to reducing the principal |
| numerous debts is compiled into one simple number | | | | balance of the mortgage, in turn paying it off sooner |
| thereby making it easier to understand. Using a debt | | | | and reducing the interest paid even more. |
| consolidation calculator can make it simpler to decide | | | | Credit cards and car loans can be added in order to |
| whether or not to consolidate debts into a new loan. | | | | get out of a financial bind. Consolidating debts can |
| You simply take the total of each loan and divide it by | | | | come in handy especially in times when money is tight |
| the entire balance. Next multiply each of the loans' | | | | and you need to save every dollar you can. |
| interest rates to get an individual weighted interest rate. | | | | It is important to always check your blended interest |
| Then these are added in order to get the blended | | | | rate when refinancing in order to consolidate debts. |
| interest rate to tell you if you should combine these into | | | | The use of a debt consolidation calculator will help to |
| a new loan. | | | | determine whether or not a blended interest rate or |
| How can refinancing to a higher interest rate save you | | | | refinancing at a higher interest rate is more beneficial |
| money? | | | | to you. |