Avoid Top 5 Mistakes When Taking Out a Debt Consolidation Loan :- Page 1 | Page 2
3. Learn yourself about debt :-
consolidation loan and a 2nd mortgage or a home equity line of credit :-
A debt consolidation loan is a loan, like a 2nd mortgage or a home improvement loan. A home equity line of credit is a credit line - money that is made available to you to use when you need it.
There's a big difference. Some credit lines have interest rates which are adjustable and which can go as high as 15% or more.
Generally speaking, the purpose of a debt consolidation loan is to pay off your existing debts with a loan which has a lower monthly payment. Therefore, you probably don't want a line of credit (which has a higher rate).
4. Take Appraiser help to
know the appraised value of your home :-
Debt consolidation loans are based on the difference between what you owe on your house and what your house is worth.
Many people go ahead and try to get a debt consolidation loan on their home without knowing the true value. There are many places you can get an estimate of the true value of your home.
Check the recent sales in your neighborhood and try to find a comparable house in a comparable location. Or you can ask the appraiser to do a drive by and give you a verbal estimate of the value of your home.
5. Do the math on
a debt consolidation loan :-
In theory a debt consolidation loan will result in lower payments, but you have to figure in the costs of the loan.
Generally speaking, when you take out a debt consolidation loan the costs of the loan are added in, so that the total amount you owe is actually decreased. In addition, the re-payment time is usually increased (from months to years) and while this lowers the monthly payment, it dramatically increases the amount of interest you eventually pay.
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Read more :-:-
- Top 5 Mistakes People Make When Refinancing Their Home
- Top 5 Mistakes People Make When Buying a Home
- Top 5 Mistakes People Make When Taking Out a Home Equity Loan
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