Using Debt Consolidation to Eliminate Your Debt!

April 4, 2012 by  Filed under: Debt 

So many people have loans and debt in a variety of places. They have a mortgage on their homes, credit card debt, student loans, car payments and so forth. Many times, the interest rates they are paying on any one of these loans can be enormous. Many credit cards charge upwards of 18%-20% interest rate, while store cards can carry an annual rate up to 30%! If you have a few hundred or even a few thousand dollars in credit card debt, you could be paying a huge amount in interest each month, making it almost impossible to pay off this debt. Debt consolidation using the equity in your home can help to lower these interest rates, and bring all your debt into one manageable payment every month.

Professionals in Debt Consolidation

Having outstanding debt in various sectors can be stressful and be a burden than may weigh heavily on your mind. There are mortgage professionals available to you that can help you reduce your debt using the equity in your home. You can take advantage of low interest rates on secured home loans before your debt goes out of control. Get your credit score back to good standing by refinancing your mortgage or getting a low interest line of credit or home equity loan.

Overview of Debt Consolidation

If you are in extreme debt, or just have a few different outstanding loans that you want to pay off as soon as possible, than debt consolidation is a viable option. A mortgage professional can help you turn many monthly bills into one monthly payment, with much lower interest rates than what you were paying before. Basically, debt consolidation involves taking all your loans and debts, and funneling them into one lump payment. This is advantageous in many ways, including only having to worry about one bill a month rather than multiple bills.

The amount that you would pay per month to service the new debt will generally be less that you are currently paying, helping with cash flow. Your accredited mortgage professional can show you your options to find the refinance solution that best suits your current and future needs. One options is to refinance your mortgage, which means you would enter into a new mortgage for a higher amount. You could lock in today’s near record low interest rates for the term of your mortgage. You can also opt for an equity home loan, which is tied to your home’s value, but is a separate loan – usually at a slightly higher interest rate than a mortgage. A home equity line of credit gives you a maximum amount you can borrow – but you don’t have to take it all at once. This is a flexible option since you just borrow and pay back as needed, only paying interest on the amount you have actually borrowed – not the whole line open to you.

Advantages of Debt Consolidation

The benefits of debt consolidation using the equity in your home are numerous. These include:

* Reduce your monthly payments, helping you with cash flow. If possible, put the extra money you save towards reducing your debt further.
* One payment a month to pay off all your bills means you have a lot less bills to worry about, and a lot less to manage.
* Reduce your interest rate (sometimes drastically) to help you put more money towards principal and less towards interest.

Using Debt Consolidation to Keep Your Credit Score In Good Standing

Lower payments and interest are major advantages to debt consolidation. Another major advantage is the ability to get your credit score back to good standing with creditors. By combining your many bills into one monthly payment, you can establish yourself as someone who is able to pay your bills on time every month, which favors well in the eyes of creditors. Your score will also improve when you have considerable open credit on your credit cards as opposed to them being near the maximum limit.

By using debt consolidation in Alberta or your area to reduce debt and improve your credit score, you will be able to live a more stress-free life without having to worry about creditors or collection agencies calling you, or not being able to meet your monthly payments on time. Use the equity in your home to get you back on track and reduce the interest you pay each month.

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