Learn Ways to Consolidate Your Debt

Learn Ways to Consolidate Your Debt




Home Equity Loans
Using a second mortgage or home equity line of credit to consolidate credit card debt is an excellent solution. This is a loan of it’s own that uses the equity in your home. It can be either set amount or a line of credit. The set amount is a predetermined amount that will consolidate all your credit card debt into one loan. This will be amortized out for 10-15 years with a set payment amount. With this loan you give the credit card information to the loaning institution and they will pay off your balance(s).

The line of credit is an amount that you were prequalified for. This loan has special checks that you can use for anything. It is usually set up for a certain amount of time, for example, ten years. At the end of that time frame the balance is due, unless other arrangements are made. Because this is not a fixed loan amount, the interest rate is usually a variable rate. This method that it is set at the time of the loan to be chief plus 2 percentage points as an example. Your payment options are also set up at the time of the loan. Many set payments based on maximum rule and leave the interest up to you to pay. Others bill you based on the variable interest rate monthly.

Both of these options may have a tax advantages. With home equity loans you need to understand they are secured loans. This method you are putting your home up for collateral. A quick approval course of action can tell you if you may qualify. You can find out by researching lending institutions on line or your current mortgage company and filling out the quick application; of course, if approved the time of action will go much further in thoroughness before the final approval. But for now this will let you know if this is an option.

Refinancing With Cash Out
Refinancing with cash out is also an option. This takes you by the same course of action as when you first bought your home and adding an additional amount to cover the consolidate credit card amount. This is a mortgage that will be paid off in the arranged time frame. This option, however, will take your credit card debt that could be paid off in a few years and will spread it out for the duration of the mortgage, 15-30+ years.

Unsecured Consolidation Loan
This kind of loan may be considered if you have a good credit rating and are determined to be a good risk. Since lenders categorize these loans to be fairly risky in character you and your payment history is all the lending institution has to go on to approve this loan. These loans have an interest rate between your credit card rate and refinance or equity loans.

Balance move
To consolidate credit card debt by transferring your balance to another credit card with lower interest is another option. Several times a year you probably receive offers from your credit card companies to move balances to a low interest rate. Or, you have a credit card with the lowest interest that has enough obtainable balance to move other balances. the time of action is easy. You can use the checks included in the offer, call or go on line. They take you step-by-step by the time of action. There is a percentage fee to move balances but it is usually made up with the interest savings.

Beware, if you are late on already one payment your interest rate will revert to a high interest rate. Also, the offer you chose may have a time frame on it. You MUST make sure you can pay off that balance within the time allotted or you will again be charged the higher interest from the beginning of the move.

Conclusion
When you have credit card debt that will take 2-3 years to pay off, you should probably look into these options to consolidate your debt. You can assistance from all these options. You just need to research the pros and cons and see which best fits your circumstance. Good luck with your endeavors to consolidate credit card debt.




leave your comment

Top