If you struggle to pay multiple credit card bills each month along with your student loan, your car loan and your mortgage, wrapping all those bills into one monthly payment may seem like a dream come true. But before you apply for a debt consolidation loan, you need to take steps to ensure that your financial plan doesn’t backfire.
Debt consolidation tips
1) Debt consolidation loan vs. home equity loan
If you own a home, you may be considering a home equity loan instead of a debt consolidation loan. While a home equity loan may offer you tax benefits since you can deduct your interest payments and will typically have a lower interest rate than debt consolidation loans, you are putting your home at risk if you are unable to make the payments. Make sure you have at least 20 percent or more in home equity before you tap into it to pay off your bills.
2) Compare interest rates
While debt consolidation loans usually have a lower interest rate than a credit card, the rate could be higher than your car loan or student loan interest rates. Be careful that the interest rate you’re quoted extends for the entire loan period also….. read more »
Many people discover that their credit card debt is out of control when they get their monthly bank statement. Mortgage payment, everyday spending, services and occasionally getaways or dining out can bring your balance over-the-limit fees. It’s time to consider debt consolidation to save your money – credit card balance transfer, home equity loan or mortgage refinancing.
One of the best ways to obtain debt relief is by consolidating your debts with a mortgage refinancing if the timing is right. Refinanced mortgage is a form of debt help for the borrower, who will be able to pay down the old mortgage with the money of a new loan.
The benefit of mortgage refinance is based in not only debt consolidation of other debt, but in getting a lower interest rate, lower pay off, and taking cash out of the home equity. Although every borrower may have their particular reason for applying for a new loan, all of them share the desire for debt relief by reducing their mortgages’ interests’ rates and liquidating cash from their home equity when possible.
Mortgage refinancing usually costs a couple of thousand dollars in closing cost besides the time you spend on research, application etc. Debt advice on home mortgage can easily be obtained through the mortgage lender, mortgage broker, financial institutions and Government Consumer Protection Offices….. read more »