Debt Consolidation and Home Equity

August 21st, 2013 10:07

Everyone faces some financial problems within their lives. It occurs because of various reasons. When this happens there, are a number of solutions to the problem.

One of the many solutions is to consider debt consolidation. When you owe money to various companies it becomes easy to lose track of the payments. Debt consolidation ensures getting a loan to sort out all of these creditors. Through their support you will only make one monthly payment instead of several and you can keep track of your checking account.

However, a debt consolidation does not work for everyone. One way to qualify for it is that you must be an owner of a property. If you are, then a home equity loan can solve your problem. As a homeowner can get your house accessed to a fairly low interest rate. With low interest rate you can certainly benefit in terms of consolidating your debts. For example: if you have a credit card debt, and an auto loans which total $20000.00 than the interest rates on these various debts is an average of 10%. This means that you are paying $2000.00 per year only on the interest.

It is possible to get a home equity loan for lower than 5 percent .In this case the interest payments on the two loans combined, would go down to less than $1,000 per annum. That can make a big difference for anyone. Thus it is evident that a home equity loan can be a great source of debt relief.

It essential to keep in mind interest rates do make a difference, therefore, with proper planning and right direction .you can save money which you are giving to credit card companies as interests which is their profit.