Is consolidating your debt a good idea

Your limit may even be less depending on your other fixed expenses.

At today’s interest rates, school loans have an interest rate about 3 percent above that of a typical mortgage.

Here are the steps you should take to determine the best financial path to take in this situation.

For example, mortgages and car loans generally have rates that are between 2 percent and 4 percent, and less than 7 percent, respectively.

By and large, 15-year loans should only be taken out if (a) you can afford the higher payment; (b) you likely won’t be employed at the end of the 30-year term; and (c) the extra money being tied up isn’t needed for something else.

Adjustable rate mortgages are also known as “5/1 ARMs” or “7/1 ARMs”.

The rates usually adjust once a year by a certain amount tied to a given fixed index rate.

ARMs usually carry a lower initial interest rate and payment than a fixed-rate mortgage, but with considerably higher attendant risk.

Overall, you might wish to consider refinancing some student loan debt into a mortgage so that the student loan doesn’t also have a 20-30 year payoff, but keep a certain, fairly low student loan balance after the refinancing (say, less than ,000) that can be paid off with extra payments within a few years.

On the plus side, the house you bought for 0,000 10 years ago with a 30-year fixed-rate mortgage is now worth 5,000.

You put 20 percent down at the time you bought the house, and now owe approximately ,000 on it.

to pay it off outright, you may see your progress plateau after having children or any other big life change.

In that case, consolidating high-interest debt into a lower-interest loan may be your best option.