Many people are in need of a strategy for paying back their loans. Some people just need a point in the right direction in order to get on the right track. Sure, if we had piles of money lying around our living rooms, paying off our debts wouldn’t be an issue. Since that is not the case, unfortunately, we must weigh all of our available options in order to find the one that best caters to your financial needs. In the case of debt consolidation mortgage refinance, many pros and cons can be taken as legitimate selling points.
Reduced monthly payments – The most attractive aspect of this type of program is that the amount you pay to creditors each month is reduced. With this option, you have the ability to save some extra money to pay off future debts.
Reduced interest rates – You will assuredly get a lower interest rate due to the inclusion of your current home equity as collateral, essentially making your debt consolidation mortgage refinance loan secured. This may be a safer gamble for the lender, considering if you fall late on your payments a few times, your property may be seized. But if you keep up on your payments, this is definitely a great deal.
Tax deductions – Since double taxation simply is illogical, your loan would be eligible for tax deductions with the inclusion of your home equity as collateral.
Dealing with a single creditor – When you have your debts spread across a variety of creditors, you must deal with each one individually. Once your debts are consolidated, you only need to be concerned with one creditor. This makes keeping track of your payments significantly easier.
Could lose your home – Debt consolidation organizations typically give loans against collateral in order to solidify their investment in you. They will often request that you risk your home, your car, or something else of significant monetary value. If you default on their loan, then they have the right to seize your collateral, and sell it to recover a portion of their losses.
Overall cost may increase – Though the interest rates and monthly installments are lowered, you may end up paying more back in debt than you would have before due to the payment period extension. When you increase the amount of time until you have your debt paid off from 10 years to 30, that decreased interest rate has the potential to really add up.
High percentage of scams – There is an ever increasing majority of con artists in the debt consolidation business. You may end up signing on with one of these scams if you don’t do your homework properly.
Should you consider debt consolidation mortgage refinance?
The answer to this question is heavily dependent on the individual and each unique situation that the individual has. Your decision is crucial, though. If you are unsure, contact a local financial office and ask for guidance in order to understand the best possible solution for you. The professionals in these offices have advanced legal advice that can help you on your quest towards eliminating your debt.
(Author: Daniel Major – Published: September 2009)