Why You Should Avoid a Debt Consolidation Loan
A debt consolidation loan used to be how many people dealt with their consumer debt.
You roll your debt into your mortgage, lower your payment, make single payment and have credit cards with no balance.
Sounds great, doesn't it.
And it can be, if that is the end of it.
But many times that is not where it ends and the ending is not always good.
Many people trying to sell you on a debt consolidation loan will tell you how your interest rates will be reduced, your payments will be lowered, you will only have to make one payment and your interest will be tax deductible.
These statements are all true in most cases and you are probably wondering what makes these loans so problematic.
They have to major drawbacks and for most people these drawbacks should be deal breakers.
For me, they would not be risks I would want to take.
The first problem is these loans are secured with your home and with today's real estate market and insecure employment situation, I would not want to have the capability to keep a roof over my head dependent on being able to pay credit card debt and that is essentially what you are doing when you roll your credit card debt into your home mortgage.
Bottom line is if you cannot make the payments, you could have your home foreclosed on.
The second problem comes with the available credit on consumer accounts that were just paid off.
Most people do not stop using their credit cards.
Statistics show that most people that pay off their credit cards with a home equity loan and have credit cards with available credit will have credit debt again within a year.
In most cases, this is disastrous.
You will now have a loan payment and credit card debt.
This is nothing but trouble and severely limits your options.
If you have debt and are looking for a no risk solution, a nonprofit credit counseling company can have you out of debt in 3 to 5 years without a loan.
Your unsecured debts are consolidated, your interest rates are reduced and your fees eliminated and if you follow the program the way it is designed, you can be out of debt in 3 to 5 years.
You can relieve the stress of debt and begin heading towards debt freedom.
Get a quote for getting out of debt today!
You roll your debt into your mortgage, lower your payment, make single payment and have credit cards with no balance.
Sounds great, doesn't it.
And it can be, if that is the end of it.
But many times that is not where it ends and the ending is not always good.
Many people trying to sell you on a debt consolidation loan will tell you how your interest rates will be reduced, your payments will be lowered, you will only have to make one payment and your interest will be tax deductible.
These statements are all true in most cases and you are probably wondering what makes these loans so problematic.
They have to major drawbacks and for most people these drawbacks should be deal breakers.
For me, they would not be risks I would want to take.
The first problem is these loans are secured with your home and with today's real estate market and insecure employment situation, I would not want to have the capability to keep a roof over my head dependent on being able to pay credit card debt and that is essentially what you are doing when you roll your credit card debt into your home mortgage.
Bottom line is if you cannot make the payments, you could have your home foreclosed on.
The second problem comes with the available credit on consumer accounts that were just paid off.
Most people do not stop using their credit cards.
Statistics show that most people that pay off their credit cards with a home equity loan and have credit cards with available credit will have credit debt again within a year.
In most cases, this is disastrous.
You will now have a loan payment and credit card debt.
This is nothing but trouble and severely limits your options.
If you have debt and are looking for a no risk solution, a nonprofit credit counseling company can have you out of debt in 3 to 5 years without a loan.
Your unsecured debts are consolidated, your interest rates are reduced and your fees eliminated and if you follow the program the way it is designed, you can be out of debt in 3 to 5 years.
You can relieve the stress of debt and begin heading towards debt freedom.
Get a quote for getting out of debt today!