What is Debt Consolidation?
Debt Consolidation is the process of combining all outstanding debts in one loan account. For example, you may have an existing loan with a balance of $2,500, a credit card balance of $1,000 and a store card balance of $500. These could all be consolidated into one loan of $4,000. The purpose is usually to lower monthly repayments, through either lower interest rates on the new loan, or lower repayments from an extended repayment term, or both.
Borrowers with a number of different loans usually which are unsecured (not secured on the property) may find that they can replace these loans with a single loan secured on the property. This can often reduce the borrowers monthly outgoings by paying only one loan which is secured on the property sometimes over a longer term. As the loan is secured, the interest rate may be considerably lower.
Debt Consolidation Tips
1: Ask if the credit report is part of the application fee.
2: Ask what the closing costs run and whether there is a charge for an appraisal fee separately.
3: Find out information about the Mortgage Company. How long have they been in the business. Ask for word of mouth references from family and friends.
4: Some debt consolidation companies let you have access to a debt management program, and financial counceling.
5: With any debt consolidation company that you choose, make sure you read the fine print. You don't want to be tricked into signing anything. Take the time to read, and if you don't understand what you are reading, do more research.
Debt Consolidation is the process of combining all outstanding debts in one loan account. For example, you may have an existing loan with a balance of $2,500, a credit card balance of $1,000 and a store card balance of $500. These could all be consolidated into one loan of $4,000. The purpose is usually to lower monthly repayments, through either lower interest rates on the new loan, or lower repayments from an extended repayment term, or both.
Borrowers with a number of different loans usually which are unsecured (not secured on the property) may find that they can replace these loans with a single loan secured on the property. This can often reduce the borrowers monthly outgoings by paying only one loan which is secured on the property sometimes over a longer term. As the loan is secured, the interest rate may be considerably lower.
Debt Consolidation Tips
1: Ask if the credit report is part of the application fee.
2: Ask what the closing costs run and whether there is a charge for an appraisal fee separately.
3: Find out information about the Mortgage Company. How long have they been in the business. Ask for word of mouth references from family and friends.
4: Some debt consolidation companies let you have access to a debt management program, and financial counceling.
5: With any debt consolidation company that you choose, make sure you read the fine print. You don't want to be tricked into signing anything. Take the time to read, and if you don't understand what you are reading, do more research.