Are you having trouble meeting your expenses each month? Are you using
credit cards to pay for day to day and not paying the balance off each month?
If you own Real Estate, you should consider the merits of a consolidation loan refinance. This would lump all your bills into one monthly payment that will be less than you're paying now, and you will almost certainly save on interest charges, over-limit fees, as well as late charges .
A consolidation loan refinance will assist in helping you get your head above water and give you the opportunity to improve your credit score. But there are things you need to be aware of so you don't put yourself in a worse state than you already are.
You have three choices when it comes to a a loan consolidation scheme.
First, you can refinance your existing first mortgage. If mortgage rates are attractive, and you have sufficient equity after paying off your debt, this may be the preferred way to go.
If the current interest rate is at or less than the interest rate on your current loan, this is likely the best approach. However, if the interest rate is more than than your current mortgage rate, be very careful. That's because you're not only paying interest on the debt you're you are cleaning up, you will be subject to the increased interest on your basic mortgage, and that's probably not a desirable thing.
Your second option is to consider to take out a second mortgage - This option is preferred if you don't want to take 30 years to pay off as you would be by refinancing your first mortgage. With this option you borrow for a specific amount of money and repay over a term of 5-15 years.
The benefit of this loan is you pay off your bills and you can resist the temptation you would have with a Home Equity Line of Credit to spend the extra funds that may be available on other purchases that ultimately increase rather than decrease your debt load. Another benefit is that you can find fixed rate seconds which, in my opinion, are preferable to variable rate mortgages.
Your third option is to take out a Home Equity Line of Credit or HELOC. With this option, you commit to revolving line of credit that that you can fall back on when you want to pay bills and expenses.
The benefit of a HELOC is that you just pay interest on the money you actually use. If your line of credit is for $10,000, if you only use $5,000 you only pay interest on the $5,000 which should save you money.
If you choose a loan secured by your home’s equity to consolidate your debts, proceed it carefully. Often, the lender will set up the line of credit to maximize their leverage against your equity in your home. Your challenge is in resisting the impulse to spend the extra money. For example, let's say you have an additional $10,000 available in your equity loan after you've paid off all your bills. For many folks that's an invitation to spend that additional $10,000, so they descend deeper in debt than when they started the process. It can be vicious cycle.
Using a home refinancing to consolidate your debts is a smart option to clean up your bills, but use it with caution. Don't put yourself in worse shape than where you started. And after you pay them off, get rid of your
credit cards! You'll sleep much better when they’re gone.
Nick Hurd is the developer of consolidationsecrets.com and has written many articles assisting people to get out from mountains of debt. You will find lots of additional information at
You can colsolidate your debt even with bad credit Consolidate your bills and get over the turmoil.
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