Being in Debt is bad, no matter how you look at it. Consolidating debt is one way to but all your financial issues in to one pile so it’s easier to manage. It’s a good way to begin clearing up the problems, but there is a few things to consider.
The Good.
The best way to consolidation your debts is with a home refinance. You will get the lowest rate and you will be able to pay off your debts over a longer period of time. Be careful not to go backwards though by taking out a 30 year note when you only have 20 years left to go on your current mortgage. Also make sure you avoid adjustable rates even if the fixed is a bit higher.
The Bad.
The worst type of loan for consolidation is one that does not save you any money. The whole point of rolling all your debts into one payment is to get rid of them quicker and pay less per month doing so. Make sure that any debt consolidation loan that you use is saving you at least 50% of what you are currently paying. Oh, and avoid any 125% home loans or second mortgages because they are horrible for you in any situation.
The Necessary.
There are certain situations where it is absolutely necessary to consolidate your debts and it cannot be done with a loan. Maybe you have bad credit scores or bad ratings or possibly just don’t qualify for a home refinance. That is ok because there are companies that will consolidate all your debts by working with your creditors and getting them to accept a smaller payment. The best companies are those that are not for profit and require credit counseling. They will get you out of debt and teach you how to stay out of debt and manage your credit history properly.
So if you own your home and have a good amount of equity, then a home refinance can be one of the best debt consolidation loans for you. If you don’t own a home, don’t have enough equity, or just don’t qualify for a refinance, then contact a not for profit company and have them work with your creditors to consolidate your debts. Also have a read of the government FTC website, in particular this page about consumer credit debt.
Debt consolidation is a loan used to repay several other loans. It takes the group of debts that you owe, and consolidates them into one. In other words it combines several debt obligations into one debt. If you find you have several monthly payments on a number of different loans you can make things easier for yourself by bringing them all together and taking out one single loan to pay off the total debt.
One Monthly Payment
This would mean that you only have one monthly payment. Paying off one large sum of money rather than lots of smaller debts is easier to manage. You will make one monthly payment where you had been making multiple payments before your debt consolidation loan started. You only have to remember to make one repayment each month, rather than trying to juggle and keep track of several different ones.
The aim of a debt consolidation loan is to lower your monthly payments thus taking away some of the pressure on you. You can usually find a debt consolidation loan with a lower interest by securing it on your home. A lower monthly payment can be obtained by increasing the term of the loan, or if the debt involves scholarship hardship the Federal Direct Loans government site is worth checking out for assistance.
Debt Repayment
A debt consolidation loan enables you to borrow from $10,000 to $150,000. A debt consolidation loan is secured on property can be repaid over a period of between 5 years and 25 years . Interest loan rates are variable, depending on status. Monthly repayments will depend on the amount borrowed and term.
Remember that this debt consolidation loan is to pay of the existing debts and that all the regular bills will continue to appear and will need to be constantly cleared too to avoid a similar situation in future. Hence you need to take complete stock of your financial situation whereby you need to have money to pay off monthly bills, mortgage repayment and other unavoidable expenses.
Should you be unable to make your loan repayments, the lender has security collateral in your home, therefore continuous failure to pay back the loan repayments could result in the lender legally taking possession of your house.
- Consolidate Loans – How and Why
- Consolidate loans, how do i do it and why should i consolidate them? Firstly a few reasons why you should look at debt or loan consolidation as an option to your financial problems. With multiple loans or sources of debt it becomes extremely difficult to manage them, you may have several different lenders you need to
- Debt Consolidation Loan Calculator
- We have developed a Debt Consolidation Loan Calculator on MortgagesDebt.com which is free to use, the reason we implemented the calculator is because we have found many people cannot manage their debt simply because they can’t “visualize” the extent of their problem.. Which makes Debt Consolidation difficult, if you don’t know where the problems are
- Getting a Loan with Bad Credit
- There are any number of reasons that you could end up with poor credit and not all of them come from being lazy or cheap. A bad accident or illness, hospitalization, the loss of a job or bad choices in a your younger years could all be the basis for having bad credit in your
- Refinance Rates
- Home mortgage Refinance rates are constantly changing, so here is the current refinance rates as of 3rd November 2008. Sorry if the table isn’t 100% but it’s a bit hard to format, but it should be readable enough: Loan Type Today +/- This week 30 Yr Fixed Refi
- Are Debt Consolidation Programs the Answer?
- How would you like to have your bad credit records fixed in no time at all? If you’re one of millions of souls facing financial difficulties, then a debt consolidation program may be the easiest alternative for you to get your finances in a sound state. Nevertheless, question like what is the better debt consolidation provider
