Most people have the feeling that they are probably the only ones who are drowning in debt. However, this is not true at all. Numerous people have huge amounts of debt due to a number of reasons. Also, you cannot ignore the fact that the interest rates have risen currently, and this is one of the most important reasons as to why people find it difficult to make their way out of excess debt. This is exactly where a debt consolidation loan is going to be of huge help. Also, if you are the owner of a home, taking out the home equity loans for consolidating your debt is going to be the smartest choice. According to www.forbes.com, Americans took out almost $35.2 billion in the home equity lines.
When there is enough equity, debt consolidation loans can be considered as the best alternative of credit cards or personal loans. It is crucial that you educate yourself even more about the entire process and decide whether it is going to be ideal for you.
Benefits associated with consolidating your debts with the help of a home equity
Home equity loans or the home equity lines of credit can help in tapping into the home equity for borrowing money. Unlike the home equity loans, the HELOC is basically the revolving credit line as opposed to a total sum of money. This means that you have the opportunity of using the fund on basis of the requirements that you have. Whether you have decided to use the home loans or the HELOC, consolidating the debts with the help of home equity loans is known to offer numerous benefits.
You are going to have a single payment: Most people carry credit card debt, car loans, personal loans or medical debt. They already have a sound knowledge about the confusion that can arise when trying to handle numerous payments, which have different due dates. When you consolidate the debt, you are going to have only one payment as opposed to keeping track of the numerous payments and payment dates.
You will know as to when the debts are going to be cleared: You should know that a credit card is basically the revolving debt form, which means that you have the freedom of using them and adding to the balance. In this case, it can be more than just a little tricky to come up with an appropriate date. However, if you opt for the debt consolidation loans, you can be assured that the loan will be streamlined. When you are taking a loan out, you are going to have a particular repayment term, which can be either three or five years. You can easily circle the due date on the calendar and that is when you will be free from all the withstanding debts, officially.
You are going to get a low rate of interest: The average rate of interest on the variable-rate of credit cards was almost 17.32 percent. When you consolidate the debt, you have the opportunity of locking an even lower rate of interest. For instance, you have the option of consolidating the debt with the home equity loans and the average interest rate is 6 percent. In this manner, most of the payment is going towards the principal amount as opposed to the huge interest charges.
You will be able to save money: If you have almost $10,000 in the debt of your credit card along with the interest rate of 15.54%, and you are making the minimum payments, you are going to end up clearing $14,445. However, if you consolidate the debt with the help of the home equity loans for five years, your interest rate is going to be much lower. Consolidating loans can help you to save a lot of money.
Consolidating your debts with the home equity loans
Taking a loan is definitely a common manner of consolidating business debts. However, if you are the owner of your home, a consolidation loan is definitely going to offer a new wrinkle. You have the option of tapping into the home equity so that you can manage the debt in a much better manner. The home equity is basically the current value of your home versus the money that you owe. When you are thinking of a home equity loan, you will be able to borrow a total of 80% of the entire equity. However, it also depends on the lender sometimes, and you can borrow 85% as well.
The HELOCs and a home equity loan are secured, which, in turn, means that the home secures your loan in the form of collateral. This difference will assist you to get a low-interest rate than what you were going to get with the various other loan forms. If you have already decided to pursue the HELOC or home equity loans for consolidating your debts, you have the option of applying with the bank of the credit union. To know more, you can go through nationaldebtrelief.com.
Other plans to consider
It is understandable that each and everyone do not have their own home or even the ideal credit for getting personal loans at a favorable rate of interest. People with credit problems and debt can consider other relief programs as well.
Debt management plans: If you agree to the debt management plans, your credit score is not going to be hurt in any manner. However, you have to close all the accounts, which are included in the plan. A debt management plan will help you to stay away from the confusion of numerous bills as well as due dates of the different payments.
Debt settlement plans: The most important benefit of the debt settlement plan is settling with either one creditor or more than just a single creditor. However, you need to understand that the credit score is going to suffer to a great extent.
It is obviously going to be smart if you decide to shop around with the different home equity lenders so that you come across the ideal terms as well as rates. If you choose a home equity loan, you are going to make your future financially secure as well.