Consolidating business debt

22 Dec

A home equity loan does not replace the existing mortgage as a cash-out refinance does, but it is another loan in addition to the existing mortgage.

HELOCs differ from home equity loans in that, instead of receiving a lump sum of cash, borrowers have an agreed-upon amount that they can take from their equity, and access as needed over time. Cash-out refinancing involves replacing your mortgage loan with a new one for more than you owe, taking part of the difference between your old and new loans in cash. There are two categories: a federal Direct Consolidation Loan and private consolidation or refinancing options.

It is also not a fit if you do not have a consistent source of income that more than covers your monthly payment.

Finally, bad credit can keep you from getting a good interest rate, which negates the main purpose of a consolidation loan.

(We’ll get into the details of those options later on.) No matter what strategy suits you best, the idea is the same: Lump together all or most of your debts into a single payment as a way to save money, simplify your finances … For example, if you have multiple high-interest credit card debts and outstanding medical bills, you may want to take out a personal loan to repay those debts.

There are also a variety of private lenders that will allow you to consolidate either private or federal student loans.This can be a viable solution if you think paying the card off within that promo time frame is doable.With credit card debt rising in America each year, we’ve conducted a study to see the Most Maxed Out Places in America, click here to see where your city ranks.While consolidating debt certainly has merits, it is not the right choice for every individual.Above all, the approach has to match the need and the comfort level of the borrower.