Consolidating Your Debt
High interest debt can come in the form of large unpaid credit card balances, auto loans, and personal lines of credit.
Debt consolidation is the process of combining two or more high interest debts into one payment with a single, lower interest rate.
If you’re a homeowner, the process of debt consolidation is simple, because it allows you to lump other forms of high interest debt into a low rate mortgage loan. Homeowners can use their property to obtain a larger loan. Since the lender usually agrees to provide a loan at a lower interest rate, they need some sort of collateral to protect their investment.
There are many reasons why an individual may choose to consolidate their debts.
Reduce your monthly payments
Once you have consolidated your debt, you’re usually left with a lower interest rate and a more manageable payment.
Simplify your payments
Debt consolidation is perfect for individuals who find it difficult to juggle various payments and interest rates, while trying to budget out the rest of your finances.
Improve your credit score
Over time, debt consolidation can lead to manageable payments, and in turn, an improved credit score.
Debt consolidation may not be the right solution for everyone, but under the appropriate circumstances, it can lead to major savings and an ungraded financial status.