Debt Consolidation Mortgage

Debt Consolidation Mortgage

by John Elton

In today's day, debts of individuals are accumulating. Debt over debt is the general scenario. People have many debts in their kitty like credit card debts, loans, mortgages etc. And to pay off one debt, people borrow money from someone else thus creating one more debt. So is there any way of getting rid of these multiple debts? The answer for this lies in Debt Consolidation Mortgage. Consider that you own a house. So you will moist definitely go for Debt Consolidation Home Equity Loan. But with this type, the one and only important step which need to be taken has to be taken by you and only you. And that step is to consolidate every consumer loan and credit card debt into a cheap and affordable payment at a relatively lower rate of interest. Home Equity loan is a type of loan in which your property is held as security for the loan given to you. The lender thus has a counterclaim on your house till you have paid back every penny of the money borrowed. In this loan situation, you will have a control over your home in the form of Loan Collateral. This is where Debt Consolidation is advantageous to you. Firstly, it keeps the creditors away from you and at the same time prevents you from going bankrupt. Hence there will be a little scope for saving and that is because the total sum you had is much greater than the single monthly payment. After receiving debt consolidation, an important step needs to be taken. Keep away from your credit card! Visualize a danger sign to be present on it. Credit Cards carry very high rate of interest with them and tend to nullify the effect of debt consolidation. Thus, no good purpose of yours will be served by the use of a credit card. Instead you will only land into a bigger trouble. One more advantage of debt consolidation is that the interest paid on it may be tax deductible. If the total of first mortgage and debt consolidation loan doesn't exceed hundred percent of the au courant value of your property, the interest paid will be completely deductible. Hence always discuss with a tax consultant to enjoy this benefit of debt consolidation. Student's credit ratings are always influenced by Student Loan Consolidation. But an important point to keep in mind is that not all federal student loan consolidation companies report their loans to the credit bureaus. Although debt consolidation is an excellent way for any individual to come out of his loans, there have been some concerns pertaining to its use. The main headache is the will of the people to convert unsecured debt into a secured one, usually secured against their home. Also the total amount repaid in debt consolidation is very high as compared to the low monthly payment. This is due to long period of the loan. It is also popularly said- “Debt consolidation only treats the symptoms of the debt and does not address the root cause”. Also many a times, debt consolidation can get very confusing. Hence awareness of all the options along with a proper advisor is a must.