Is Debt Consolidation Worth It? How to Use Our Consolidation Calculator

 

• Interest Rate: Shop loan rates with lenders you trust and try them here
  • Texas Bay Home Equity Loan: as low as 5.34% APR¹
  • Texas Bay Personal Loan: as low as 9.99% APR²

Note: We’re using a home equity loan with 7.00% APR in our example

• Term in Months: Enter the shortest timeframe you can comfortably afford to minimize interest

Note: We’re using the minimum five-year term for a home equity loan 

• Up-Front Costs: Combine all up-front loan fees from your lender for this entry
  • If you’ve chosen a personal loan from Texas Bay, enter “0”

Note: We’re using a placeholder amount of $5,000; these costs vary

Quick Tip: Ask a Texas Bay representative about these fees for an accurate calculation 

• Savings Rate: This depends on how you plan to pay closing costs
  • Most users would enter “0”
  • Only enter a higher value if you have the cash to pay up front, but want to earn interest by keeping it in savings throughout your loan
    • Explore high-yield savings rates if you’re considering growing available cash instead of paying up front, and enter your preferred option here

Quick Tip: Start with “0” for a straightforward breakdown of your debt consolidation 

• Points: Enter “0” here
  
  
• Income Tax Rate: This depends on whether you itemize deductions on your tax return
  • If you do, calculate your Marginal Tax Rate here and enter the result
  • If you don’t, or you’re unsure, put “0”
  • For a personal loan, enter “0”

Note: For our example, we’re using “0” 

• Loan Type: Choose the option that best suits you
  • Home equity loans offer lower rates by using your home as collateral
  • Personal loans don’t require collateral, but have higher rates
    
    
• Closing Costs: Choose the option that best suits your finances
  • Check the box for a smaller up-front cost but higher monthly payment
  • Leave it unchecked to pay more up front, but less on monthly payments

Note: Most Texas Bay personal loans don’t involve closing costs

Step 3: Calculate and view your loan report

Click “Calculate” and “View Report” for your personalized breakdown, including Monthly Payment Changes. You will also find your total payment changes here. 

For different results, adjust calculator entries like term, loan type, and interest rate. 

Step 4: Understanding your calculated results

As you review your results, here is some key information that will help you understand how your consolidation loan would work and what repayment will look like: 

• Results Summary
  • Balance: This only increases if you don’t pay any potential fees up front
  • Total Interest: You can adjust this by changing the following entries in the calculator:
    • Loan type, and therefore interest rate
    • Interest rates, for the same loan from other lenders
    • Term, which affects how long interest can compound
    • Closing costs, paying up front versus throughout your loan
  • Tax Savings: Only applicable if you itemize deductions on your tax return
  • Closing Costs: If you pay fees up front rather than with your loan balance
  • Total Payments: The bottom-dollar difference consolidating will make

 

• New Loan Payment Schedule
  • Break down how much interest and principal you will now pay each month
  • Scroll past your new and old loan summaries to find this

 

Your report should show you what you can save each month or how to get out of debt years ahead of schedule. If not, contact one of our experts for a free consultation. 

Schedule an appointment at one of our nine locations in Greater Houston, and we’ll help you set a plan to get out of debt. 

 

FAQ: Consolidating Debt

What is debt consolidation?

Debt consolidation is a process that lets you convert multiple, typically high-interest debts—like credit cards or medical bills—into a single loan with one monthly payment.

The two highly recommended ways to do this are:

1. Home Equity Loan: A secured loan that uses the equity in your house as collateral
2. Personal Loan: An unsecured loan based on your creditworthiness and income

How does debt consolidation work?

Debt consolidation involves taking out one new loan with a low interest rate to pay off your existing high-interest balances. This is commonly done with either a home equity loan or a personal loan. Instead of managing multiple bills and high interest, you now have one predictable monthly payment and a clear end date for your debt.

Why should I consolidate debt?

By rolling high-interest debts—like credit cards or medical bills—into one low-interest loan, you can dramatically improve your financial future:

• Simple Billing: Replace multiple due dates and payments per month with one
• Lower Rates: Trade credit card debt, averaging over 20.00% APR, for a lower rate and pay your balance down faster
• Fixed Terms: Stop the “endless” minimum payments with a guaranteed payoff date
• Financial Control: Set a predictable monthly budget with a single, fixed payment

Will consolidating my debt hurt my credit score?

Credit utilization makes up 30% of your credit score, and your history of on-time payments makes up 35%. While consolidating debt affects your credit at first due to a "hard pull," paying off multiple balances can often improve your score by lowering credit utilization and demonstrating a good payment history.

What if I don't want to use my home as collateral?

You can consolidate your debt with a personal loan. While the rates are slightly higher than home equity loan rates, they don't require collateral and still offer significant savings compared with most credit cards.

 

Your Next Step to Financial Freedom

The numbers don’t lie. If our debt consolidation calculator showed you a path to a debt-free life, you know what to do next. Whether you’re ready to apply or want to discuss your results with a local expert, we’re here to help.

 CONSOLIDATE WITH A HOME EQUITY LOAN                   CONSOLIDATE WITH A PERSONAL LOAN

 

Want help consolidating your debt with a home equity loan? Use our guide to make your application process as simple and quick as possible.

HOME EQUITY APPLICATION GUIDE

 

 

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¹APR=Annual Percentage Rate. Standard variable rate APR of 5.34% to 18.00% based on creditworthiness. Rates current as of February 1, 2026. As low as rate is based on credit worthiness, shortest term available, and maximum relationship product discount. Payment periods range from 5-30 years. Example payment: $30,000 for 20 years at 6.00% APR will have a monthly payment of $214.93. Loan amount cannot exceed 80% of the collateral value, less outstanding liens. Minimum Home Equity Line of Credit amount is $10,000. Loan amount cannot exceed 80% of the collateral value, less outstanding liens. Interest paid on a Texas Bay Home Equity Loan or Line of Credit might be tax deductible; please consult your tax advisor. Credit criteria applies. 

²APR = Annual Percentage Rate. Standard variable rate APR of 9.99% to 18.00% based on creditworthiness. Rates current as of February 1, 2026. As low as rate is based on credit worthiness, shortest term available, and maximum relationship product discount. Payment periods range from 6 to 72 months. Example Payment: $5,000 for 24 months at 12.00% APR will have a monthly payment of $235.37.