Debt Consolidation Loans

Debt consolidation loans are just the merging of all your different loans and major expenses into one single loan with just one monthly payment. It is a common misconception that debt consolidation reduces the total amount of your debt. This is not true. The total amount of your debt will not dramatically reduce overnight. 

However, your interest rate should be greatly reduced. Thereby saving you tons of money each month and over the life of the debt.  

CREDIT SOLUTIONS

Debt consolidation loans are used for a variety of purposes. They can be used:

• To pay off all your bills into one smaller and more manageable monthly payment


• To pay off higher interest rate loans into a lower interest rate loan


• To combine unsecured debt into a home equity loan (possible tax benefit)


• To combine all your debt with a refinance of your home mortgage

UNSECURED LOAN FOR DEBT CONSOLIDATION

Debt consolidation loans comes in two forms: unsecured and secured loans. Unsecured debt consolidation loans are typically reserved for the most credit worthy individuals.  Credit card debt consolidation is the most common form of this type of loan. High credit scores are a must.  If you don't need the loan then you will probably qualify to get the loan.  The primary advantage is to get a lower interest rate. The secondary advantage is it gives you extra cash to spend each month. 

DEBT CONSOLIDATION MORTGAGE

This type of consolidation loan is the most common and the type that will improve your chances of being approved by the bank or lender.  There are two loan types. The first is the home equity loan which can be in a fixed amount or in the form of a line of credit.  The second is a refinance of your primary mortgage into a new mortgage loan which will now include your other debt in its total.

The amount you can borrow will be determined by the amount of equity you have in your home. The bank or lender will get an appraisal. They will then typically take 80% of that appraised value and then subtract the amount of your current mortgage amount.  The difference left from this calculation is your equity.   Some lenders will let you borrow 90% of your appraised home value but these loans will have a higher interest rate.  There are even some aggressive lenders who will lend you 100% or more of your appraised value.  These lenders are offering to give you a sub-prime loan.  

CREDIT REPAIR

Debt consolidation loans are even available to you if you have a bad credit history. In fact, it provides you an excellent opportunity to mend your credit score.  If you are in need of credit repair assistance then it is highly recommended that you go to consumer credit counseling.

Debt consolidation loans can help you get rid of those annoying bill collector calls.