Know The Facts About Debt ConsolidationIf you re like many Americans, you are looking for ways to manage your debt and save money in a way that fits your lifestyle and debt consolidation may be the answer. Whether you re paying off credit card debt, working on home improvements or simply need some extra cash in your pocket for the ultimate vacation, there s no better time to learn all you can about debt consolidation through mortgage refinancing and home equity loans and lines of credit. Debt Consolidation If you re worried about being denied a loan due to less than perfect credit, debt consolidation might be the way to go. By combining multiple loans into one single loan, you not only have a limited amount to pay each month, but the repayment period is longer. Debt consolidation improves your overall credit score by rolling all your unsecured debt into one easy secured loan, eliminating those credit "blemishes" you have accrued in the past. This makes it much easier to get approved for a home equity loan or line, mortgage refinancing or cash-out refinancing. Home Equity Loans and Lines Home equity loans and lines are often referred to as second mortgages, but can be in either 1st or 2nd mortgage position. By tapping into your home s equity, you can get the extra cash you need. As a bonus, the interest rate on these types of loans is usually lower and tax deductible. When you re choosing a home equity loan or line of credit to help with debt consolidation, you should understand that standard home equity loans offer a fixed dollar amount, paid out at the beginning of the loan, while home equity lines of credit offer flexible funds you can access as needed. The three facets of a home loan are: 1) How much money you need to borrow or the size of the loan 2) The percentage rate you pay on the particular loan which is called the "interest rate" 3) How long it will take you to pay it off known as the "term" of the loan Still trying to understand the basics and don t know where to start? A home equity loan calculator can be very helpful in finding out how much you can afford to borrow by helping you assess your income, current debt situation and loan information. Companies like Bank of America offer online resources such calculators and dedicated staff you can talk to immediately about home equity loans. Mortgage Refinance Simply put, a mortgage is a loan with a fixed or adjustable interest rate which you pay back to the bank or financial institution on a monthly basis. As the need for cash or debt consolidation arises, it is it is possible to do a mortgage refinance at a lower rate. This can also reduce your monthly payments. Use a mortgage refinance calculator to determine how much you can afford and whether you will be able to pay the lender back. At bankofamerica.com, you ll find plenty of information about getting more cash out of your home, lowering payments through mortgage refinance and how this relates to debt consolidation. Cash-out Refinance Similar to a home equity loan or line, cash-out refinance is an option which allows you to borrow your equity and gain extra cash so you can pay off your bills and make just one simple payment each month. Thus, you can replace your current mortgage with a new mortgage for a higher balance, borrowing against the value of your home. The main difference between this and a home equity loan or line is that with cash-out refinancing, you only repay one loan your new mortgage. With the right information, tools and advice, you can take control of your debt. So pack up the bag with text books, call the interior decorator or start planning that trip to Hawaii, because you re well on your way to financial peace of mind. Article Directory: http://www.articledashboard.com
Brit Hall is a freelance writer and Bank of America customer who writes articles for young adults about managing expenses, eliminating debt, and other personal finance issues. |