Debt Consolidation

FREE MORTGAGE RATE QUOTE:

Loan:

State:

Property:

Credit:

Debt consolidation is the primary reason people refinance today. Since property has appreciated in value, many clients decide to use the "equity" to reduce their monthly payments. There are many programs to unlock the equity in your home and reduce your payments.

What determines your Credit Score:

Score Credit Grade
720 and up AA
700 to 719 A
680 to 699 A-/B+
660 to 679 B+/B
640 to 659 B
620 to 639 B-/C+/C
600 to 619 C/D
580 to 599 D/F
579 and below F

Once a month with the debt consolidation loan
Many times, the reason that people get into trouble with debt is that they are not able to stay organized enough to make on-time payments for all of their bills. This results in late fees which results in increased debt which is harder to repay. Through the use of a debt consolidation loan, all bills are paid in a single once-monthly payment, making it much easier to keep track of and plan for that payment. This decreases the likelihood that debt will be increased (and therefore unmanageable) as a result of late fees and other penalties.

Lower monthly payments
If you have outstanding debt on multiple credit cards, you probably have different interest rates on each portion of your debt. Many times, credit card interest rates are higher than debt consolidation loan rates. With a debt consolidation loan, you can negotiate a low interest rate which will apply to the entire sum of your debt. The debt consolidation loan usually decreases the overall amount which you will pay in interest. More importantly, the debt consolidation loan decreases the amount which you owe monthly in interest, reducing your monthly costs and making faster repayment of your debt possible.

Bankruptcy Information

IF you find yourself in serious debt and you cannot see a way out then you might eventually begin to consider filing for bankruptcy. Chapter 7 is the most common type of bankruptcy and this is a liquidation process. Each and every one of your non-exempt assets will be taken by the trustee, appraised and sold for profits. These profits will then be given to your creditors to pay them back at least in part for the debt that you woe them. For many people all of their assets are exempt, this is good for them and not so good for the creditors. If you are looking for a fast way to get out from under your debt then Chapter 7 is a good way to go. It is not only individuals that can benefit from filing for Chapter 7 bankruptcy, married couples and even corporations can file for Chapter 7. Do not get the impression that Chapter 7 bankruptcy is all good because it most certainly is not. While you will get rid of the majority of your debt in one fell swoop, you will also have a terrible cloud hanging over your credit report for years to come. You will not get approved for any loans or for any credit for quite some time.

If you don't care about your credit report and you just want to get on with things then you need to know how to go about it. The first thing that you need to do is file the official petition for bankruptcy, along with your schedules and your statement of financial affairs. You will be asked to list both your assets and your debts, this is the part that takes the most time as well. It does not matter how many or what kind of debts you have, they all need to go on that list and they all need to have the proper mailing addresses on there as well. Even the loans that will not be discharged need to be listed. You will be asked to sign the bankruptcy petition and the schedules and other papers. If you lie or mislead with these papers you could find yourself being charged with perjury and that is a very serious offence.

Any debts that you acquire after you file for bankruptcy will not be discharged. And as soon as you file the bankruptcy papers an automatic stay falls into place, this will give you some breathing space because collectors will no longer be able to collect from you.

You need to steel yourself for the first meeting of creditors. You will have to attend this meeting in order to be questioned about all of your assets and your finances. Questions can be asked by the trustee of your bankruptcy claim and by the creditors themselves. Once you have had this meeting the trustee will take the reins. He or she will then take control of any of your assets that are not exempt from the proceedings. The trustee will sell your assets and distribute the money as it is called for.

Once you have filed for bankruptcy, even if you are working the creditors that have dischargeable loans will not be able to garnish your wages. That money is yours. Not all debts are dischargeable. For instance you will not be able to discharge student loans, alimony, child support, taxes and liens.

Debt consolidation does not pay your bills
Many people believe that the debt consolidation loan is a loan taken out through one lending institution in order to pay off all of the other lending institutions. This is not the case with the debt consolidation loan. The way it works is that the lender of the debt consolidation loan will negotiate a repayment plan with the original lending institutions. You will make your monthly payment to the debt consolidation loan program and that agency will make monthly payments to the original debt consolidation agencies. The reason that this is important is that you should be aware that you continue to owe these other institutions until your debt has been repaid. Failure to make on time payments on your debt consolidation loan can reduce in failure of the debt consolidation loan agency to make your payments, resulting in a return to multiple monthly payments with high interest rates.

Your own plan
It is possible to take out a loan which is not specifically a debt consolidation loan but acts as one. In this case, you would take out a private loan and indeed use it to pay off all of your other loans. This effectively makes the loan a debt consolidation loan in the sense that all of your debt has been consolidated in to one monthly payment with a single interest rate. The difference with the do-it-yourself debt consolidation loan is that failure to repay this loan will result in penalties from only the single loan agency as all of the previous lenders have been paid off with the effective debt consolidation loan plan.

Debt Consolidation Refinance

In a debt consolidation refinance, determine the balance of your mortgage, and the amount of cash you are taking out plus any closing costs. The total is your loan amount. An appraiser will determine the value of your property which will be used to determine your Loan to Value (LTV). There are programs which will allow you to borrow 80, 90, or even 100% of the value of the home in this "Debt Consolidation Refinance" transaction.

One way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage -- in effect, tapping your home equity, or "cashing out," . Thanks to favorable rates, you may be able to do so without increasing your monthly payment.

Debt Consolidation Second Trust Loan

A second trust loan can be a very useful tool if you have a low rate first trust but still want to use some equity in your home.

Some useful Second Trust programs include:

1)A traditional second allows you to borrow up to 95% of your appraised value. The program allows a debt to income ratio of up to 45%. If your ratio is too high, some debt can be paid at closing lowering your ratios.

2) An expanded second trust allows you to cash out up to 100% of your appraised value. Please note that your interest rate will increase as the loan to value increases.

3) A 125% second trust allows borrowing up to 125% of the appraised value of your home. Take the value of your property, multiply by 125% and subtract the balance of your first trust. The result is the total you can borrow. With the recent increase in values expected to continue, many homeowners will see enough increase in value to cover the amount borrowed in a very short time. Not available on investment properties at this time.