Are you feeling overwhelmed by high-interest credit card debt? With credit card balances at an all-time high and interest rates climbing, financial stress can feel like a storm cloud hanging over you.
Why let all that equity in your home sit idle? In today’s unpredictable market, your home’s value could change overnight. Instead of worrying about what the future holds, act now!
Let’s compare the monthly payments for a $50,000 credit card balance at 22% APR and a home equity loan of $50,000 at 9% APR paid over 15 years.
- Credit Card Payment:
Balance: $50,000
APR: 22% (expressed as a monthly rate: 22% / 12 = 1.83%)
Minimum Monthly Payment: Typically, credit card issuers require a minimum payment (usually a percentage of the outstanding balance). Let’s assume it’s 3% of the balance.
Interest Calculation: The interest charged each month is based on the outstanding balance.
Monthly Interest: $50,000 × 1.83% = $915
Minimum Payment: $50,000 × 0.03 = $1,500
Remaining Payment Applied to Principal: $1,500 - $915 = $585
New Balance: $50,000 - $585 = $49,415
- Home Equity Loan:
Loan Amount: $50,000
APR: 9% (expressed as a monthly rate: 9% / 12 = 0.75%)
Loan Term: 15 years (180 months)
Monthly Payment Calculation (using an amortization schedule):
Using an amortization calculator, the monthly payment for a $50,000 loan at 9% APR over 15 years is approximately $389.58.
Now, let’s compare the two:
- Credit Card:
Initial Balance: $50,000
Monthly Payment: $1,500
Interest Paid (First Month): $915
Remaining Balance: $49,415
- Home Equity Loan:
Initial Balance: $50,000
Monthly Payment: $389.58
Interest Paid (First Month): Approximately $375
Remaining Balance: Decreases gradually over the loan term
Summary:
The credit card payment results in a higher initial payment and significantly higher interest charges.
The home equity loan payment is more manageable and steadily reduces the principal balance over time.
Remember that these calculations are simplified, and actual terms may vary based on specific loan terms, compounding frequency, and other factors. Always consult with a financial advisor or use official loan calculators for precise figures. If you’re considering borrowing, explore options like home equity loans or lines of credit (HELOCs) carefully, considering your financial situation and goals
At Jhenesis Mortgage, we can help you refinance your mortgage and tap into your home’s equity to pay off those burdensome credit card balances. Imagine freeing yourself from high-interest payments and having a fully funded rainy-day fund to weather any financial storm!
Don’t wait for the rain to start falling—take control of your finances today. Let Jhenesis Mortgage guide you through the refinancing process and help you secure a brighter financial future.
Don’t wait for the storm to hit—secure your peace of mind today! Call us at 407-630-9766 or visit www.jhenesismortgage.com to discover how refinancing can empower you. Let’s transform your financial future together!