Taking the First Steps in Credit Debt Consolidation

Debt consolidation is the process of transforming your short-term, high-interest loans into a single loan with one monthly payment. As a rule, debt consolidation programs are debt repayment plans that can consolidate most types of unsecured loans. For example, you can combine your various credit card debts, car loan and school loans into a home equity loan, thus giving you only one payment to make each month. What a great idea!

You might also decide that, with today’s low interest rates, the time is right to refinance your mortgage loan from one with a high interest rate to one with a lower rate. Even ½ to 1 percent drop in the rate may save you thousands of dollars over the lifetime of your mortgage loan. You may also, at this time, be able to renegotiate your unpredictable adjustable rate (ARM) mortgage into a far more stable 15 or 30-yearfixed mortgage. That could save you both money and aggravation over the life of your mortgage loan.

Applying for a Credit Debt Consolidation Loan
It is a fairly easy procedure to apply for a home consolidation loan:

• When you apply for a home consolidation loan, your home will be appraised to determine its current value; your credit score will also be evaluated
• Your lender will order a title report on your property to see if there are any encumbrances against the property
• When your loan is approved, the new loan will be used to pay off your original mortgage and other liens against the property. You will then receive any proceeds to disburse as you choose.

Before You Apply for a Credit Debt Consolidation Loan
Before you make the decision to refinance through a home consolidation loan, you should:

• Check your credit report. That will identify financial problems that may need your attention. All consumers are entitled to one free annual credit check. However, be wary of companies that state they offer free credit checks, many of them are NOT free and may charge high fees. The only authorized government site for truly free credit reports is www.annualcreditreport.com
• Know what your budget is; you are the only person who knows what you can or cannot afford to pay. You also need to know that by offering your home as collateral, you risk foreclosure should you default on this new loan
• Insure that your debt consolidation plan isn't counter-productive. Consolidating debts, especially loans with fairly low interest rates, is not always the correct decision.
• Choose a reputable loan or credit card consolidation company. Get referrals from trusted friends or family members who have used the company. Experience, service and application fees are important factors to consider when choosing a loan-consolidation company.

If you are considering a credit debt consolidation loan, we hope that the above information was helpful. Click here for the credit consolidation definition. For more help, please take a moment to fill out the form on the bottom of this page to speak with a member of our professional debt consolidation staff. You will be happy that you took the time to secure your financial future.