Should You Refinance Into a Higher Rate to Consolidate Debt?

When a Cash-Out Refinance *Still* Makes Sense

If you're a homeowner sitting on a low-rate mortgage, you may think refinancing is off the table—especially with today’s higher interest rates. But what if you could use your home equity to eliminate high-interest credit card debt, improve your monthly cash flow, and gain some financial breathing room?

Let’s explore how a cash-out refinance can still be a smart move, even in a rising rate environment.

What Is a Cash-Out Refinance?

A cash-out refinance replaces your existing mortgage with a new, larger loan. You “cash out” the difference between your current loan balance and your home’s current value—and you can use those funds for virtually anything. Many homeowners use them to pay off high-interest debt, fund home improvements, or build an emergency savings cushion.

Scenario 1: From a Low Mortgage Rate to Monthly Relief

Meet Sarah and James:

• Current mortgage: $250,000 at 3.25%
• Monthly payment (P&I only): $1,088
• Credit card debt: $40,000 at an average interest rate of 22%
• Monthly credit card payments: $1,200

They’re paying nearly $2,288 per month between their mortgage and minimum credit payments.

New loan scenario:

• New loan: $290,000 (includes $40,000 cash out)
• New mortgage rate: 6.5%
• New mortgage payment (P&I): $1,834

By refinancing, Sarah and James consolidate their high-interest debts into their mortgage. Their new single payment is $1,834/month—a monthly savings of $454.

Scenario 2: Strategic Debt Payoff With a Refinance

David and Elena owe:

• $200,000 on their mortgage at 3.75%
• $20,000 in a personal loan at 11%
• $15,000 in credit cards at 24%

They decide to take $40,000 cash out through a refinance at 6.25%, creating a new loan of $240,000.

Even though their interest rate increases, they eliminate $35,000 in debt averaging over 17% interest. Their new monthly mortgage payment rises by $450—but they’ve eliminated $900/month in personal loan and credit card payments. That’s a net savings of $450/month.

Key Questions to Ask Before You Refinance:

• How much equity do you have in your home?
• What are the interest rates on your existing debts?
• Will your monthly savings offset the higher mortgage rate?
• How long do you plan to stay in your home?

CPF Mortgage Can Help You Run the Numbers

At CPF Mortgage, we help homeowners across Florida, Tennessee, Colorado, and Georgia analyze whether a cash-out refinance makes financial sense. We don’t believe in cookie-cutter answers—just honest advice, fast answers, and the lowest rates and closing costs we can offer.

Ready to See If It Makes Sense for You?

Let’s look at your mortgage, your debts, and your goals—together.

Call CPF Mortgage today or Apply online at www.cpfloans.com to explore your cash-out refinance options.

Legal Disclaimer CPF Mortgage is a licensed mortgage lender in:- Florida: NMLS #222883 Georgia: Licensed Georgia Residential Mortgage Lender- Tennessee: Mortgage License #222883- Colorado: Mortgage Company Registration – Regulated by the Division of Real EstateDisclaimers: All loan examples, payments, and savings figures provided are for illustrative purposes only. Actual loan terms, rates, and payments will vary depending on the borrower’s credit profile, property type, loan amount, location, and other factors. Scenarios assume a 30-year fixed-rate loan and do not include taxes, insurance, or HOA dues. Not all applicants will qualify. All loans are subject to credit approval, property appraisal, and underwriting guidelines. Interest rates and loan programs are subject to change without notice. Cash-out refinancing may increase the total amount of interest paid over the life of the loan and may extend the loan term. CPF Mortgage does not offer legal or tax advice. Please consult with a licensed attorney or tax advisor to understand how any mortgage strategy may affect your situation. This advertisement is not a loan approval or commitment to lend. Equal Housing Lender. NMLS #222883