Mortgage refinancing on its own can be an excellent way to reduce your monthly bills. But as part of a larger debt consolidation plan, refinancing can make your life not just less expensive, but much much simpler!

Chances are, you have a number of smaller debts with a variety of interest rates. The high interest rates on many credit cards tend to be much higher than the rate you can get with a refinance loan. These debts can all be “bought” by a single creditor and bundled into a single consolidated loan with mortgage features.

Why pay more than you need to pay? Bundling these debts together with your home loan can keep the payments lower than they would be otherwise — both in the short term, and especially in the long run. All of that ‘wasted’ money that you would pay for interest can be put to much better use!

And remember, debt consolidation is not bankruptcy (don’t confuse it with “debt restructuring”). There’s no negative consequences on your credit history (well, as long as you can make the payments!) and you don’t need any legal judgments. Your assets (for example, your home!) will remain yours instead of being liquidated to pay your creditors, and you never have to worry about salary garnishment.

Bankruptcy may indeed be a preferable option for some, but debt consolidation doesn’t mean that you can’t pay your bills — nearly anyone, in any financial circumstances, may see real improvements by consolidating debts.

Sound too good to be true? Well, there are extra considerations to everything. In the case of debt consolidation, the basic rules of loans still apply; you’ll have to balance interest rate, monthly payment, and term length to make it work. You still have to consider upfront costs (including new fees or charges to the lender or broker) versus ‘folding’ them into the loan amount and paying for them over time.

Debt consolidation doesn’t actually remove or reduce any total debt amounts (another reason it is unlike bankruptcy), so everything will still need to be paid for, one way or another. There are many ways to improve your finances, but debt consolidation is certainly one worth considering!