Consolidating your debt into a lower payment with less interest is a smart way to save both time and money. Because consolidation usually involves securing debt with an asset, typically real estate, it is important to understand the logistics of the new loan, especially if you are doing it online. Many companies offer online debt consolidation.
Speak With A Non-Profit Credit Counselor
Talk with nonprofit consumer credit advisers. They can go over your credit report with you, offer suggestions for lowering your bills, help you create a budget and answer any questions you may have about debt consolidation. If you do not have enough equity in your home to consolidate your debt, they may recommend debt management instead. This is another method in which they work with creditors to lower your rates and payments without securing anything.
Check With Your Mortgage Company
Look up your mortgage company online to see if it offers any discounted debt consolidation loans to help you pay off your other bills. Check its website for promotions or rates being offered for home equity or refinancing. You can usually apply online for these types of loans and because you are already a customer, chances are you can get a debt consolidation loan fairly quickly.
Avoid Unscrupulous Companies
Research debt consolidation by checking with the Better Business Bureau. Some companies offer loans with high rates and hidden fees. Make sure that the website is legitimate, has helpful resources, no application fees, no obligations or hidden charges.
Read The Loan Information Carefully
Read the loan information carefully. Make sure the rate makes sense and that it is fixed. Some rates may start low but rise after two or three years. Also if the payment is low but the rate seems high, find out if the payment is covering interest and principal. You do not want to consolidate your other loans into an interest-only loan. This type of loan requires only the interest amount to be paid each month, so the loan amount stays the same and doesn't get paid down.
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