Home Loan Consolidation

Home loan consolidation may be the answer to those who are pressed on every side with mounting credit card bills and finding that it is becoming more and more difficult to pay all the bills each month. It is not surprising if the reader is in that situation for seventy percent of all Americans are estimated to live paycheck to paycheck, meaning there is little appreciable savings available. As purchases made by charge cards increase, the monthly available cash for food, gas, utilities and other necessities shrinks and then the squeeze is really on. If the debtor is fortunate to own a house even partially, there may be some hope for unhinging the squeeze but the solutions won't be without some pain. Here is advice from financial experts on home loan consolidation options.

The first and foremost is don't get one more loan because borrowing new money to cover old borrowed money is never a good thing to do, even if the money for covering old debt is better than the bad money being covered. So lie down on the doctor's table while he gives some very ouchy directions. Go out and get a second job before getting a home loan consolidation. That's right, go deliver pizzas, walk dogs, do consulting, jump through hoops, do something to make money to put on one's existing debt. Yikes, it's starting to hurt. Second painful needle is sell stuff. That riding lawnmower, some furniture, jewelry, the second car, silver service, bass boat, whatever, is all fair game and ought to be considered for the ultimate garage sale or auction block before chasing a home loan consolidation.

So there are no dogs that can be walked and selling that silver service is not going to happen. The next step is to get a home loan consolidation which can either be an okay move or a really bad one. Since the work two jobs and sell stuff is the best choice, the okay choice is a home equity line of credit. These are okay loans because they are secured lending agreements that are lower in interest rates. These loans are offered by banks, credit unions and loan companies. These lending agreements usually happen by the lender getting a person's house appraised and then offering a lending agreement based on a percentage of the equity someone has in his property. It is never one hundred percent and usually no more than seventy percent of the established equity.

The home equity home loan consolidation that comes from a bank or credit union will have a comfortable interest rate that is perhaps a dozen points below credit card interest. The lending agreement is okay because over time the person will be savings a lot of money on interest payment and it is an installment loan. An installment lending agreement can help instill a sense of discipline with the consumer because the amount due each month will remain the same, unless the APR goes up because of economic factors. Ready for some more painful truth? A bank and credit union only take the lowest risk borrowers.

To get those really low interest rates a consumer must have a credit score of at least six-eighty to seven hundred. Those are pretty high scores and will eliminate a large number of people wanting a bank issued home consolidation loan. While credit scores have a number of factors that go into their crafting, the two most important are payment integrity and debt to income ratio. If a consumer has more than a couple of thirty day late payments on their record over a two year period, his score will suffer a major deficit. Additionally, if a consumer's total debt payments each month is more than forty percent of his income, this is also a major debt score reducer. Heavy debt is nothing compared to dying without Jesus. "For the wages of sin are death, but the gift of God is eternal life in Jesus Christ our Lord." (Romans 6:23)

If the banks and the credit unions say no to a home loan consolidation through the home equity route, the final option is through a loan company which is a not so okay lending option. Major lending companies which cater to the higher risk borrower are funded not by depositors' money but through investors who are looking for high returns on their money and are willing to take the gamble on high risk borrowers. If the smell of high interest loans is in the air, it's not those sneakers but that lending agreement. Consider that a home equity loan from a lending company could be as much as fifteen percent or more. Consider that the loan may be for a longer period than the bank issued lending agreement. How much is a person really saving?

If it is difficult to figure out the savings, it would be a very wise move to consider talking to a financial counselor before asking for any home loan consolidation. If one cannot be found, call local colleges and see if there are any MBA students willing to talk and advise on this issue. Before considering bankruptcy or defaulting on any loans, look into the possibility of seeking the help of credit counseling services to at least bring down the cost of unsecured debts such a credit card accounts. These services can make a big difference in providing more money each month for a client's necessity expenses. But using these services can have a detrimental effect one a person's credit. Make sure the credit counseling service gives clear answers on that issue.

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