What is a debt consolidation loan?
A debt consolidation loan is a single loan (generally from a financial institution) that allows you to repay your debts to several or all of your creditors at once. You are then left with only one outstanding loan — to the financial institution. In addition to streamlining your debts into a single payment, a debt consolidation loan may also offer you an interest rate that is lower than that charged by your creditors saving you money in interest charges. This option can be especially attractive if you have outstanding debts at a relatively high rate of interest (for example, those charged on some retail store cards or credit cards).
We can arrange for a loan equal to the amount of your total outstanding debts that are currently due. In most cases, we will settle all the debts for you and, in return, the only monthly payment you will have to make will be to them.
This option may be suitable for debts such as those relating to credit cards, public utilities or other consumer loans. However, not all debts can be combined into a consolidation loan — a mortgage cannot be included, for example.
In order to qualify for a consolidation loan, a consumer usually needs to have an acceptable credit rating and sufficient income to demonstrate that they will be able to manage the loan (that is to say, to demonstrate they will be able to make the monthly consolidation payment, in addition to paying for their regular monthly bills and expenses)
Refinancing is generally to 80% of the value of the home, so if your house is worth $300,000.00 maximum mortgage of $240,000.00. There are lenders that will go 85-90% of the value-however rates will tend to be higher and fees might be added. This is generally on a case-by-case evaluation, so again using a fully experienced professional mortgage person is very important.
When you are “consolidating debts” into a mortgage it is always a very good move to use the savings in monthly payments to reduce the amortization of the mortgage. I am not a fan of lower your payments then go right back out and incur additional debt. I am here to make sense of your mortgage financing and get the mortgage paid off.