Tuesday, January 26, 2010


The purpose of debt consolidation is to consolidate your bills into a low payment and help you out of debt. Instead of paying multiple payments to various creditors, you make a payment on a loan for all outstanding debts.
Since everything in the consolidation loan, you pay less interest. Instead of a variety of interest payable on a variety of loans or credit lines you will receive an interest rate charged on a loan. It is also convenient to makea payment to a company rather than trying to stay up to date with various payments and payment schedules.
Financial companies such as credit unions, banks and others will help you with debt consolidation. It is for the lender to get together to ask that the loan be secured by certain assets, such as your home or your car.
Debt consolidation is not something that should take lightly. It is a difficult decision to have serious consequences if they can not be ha right. You may lose your house or car, if they to secure your loan and you do not pay themselves.
If your current situation is a result of uncontrolled spending habits, the habit was still a problem. If after obtaining a debt consolidation loan, you will accumulate more debt, you have just your financial situation even worse.
If you feel that you have not learned your expenses, debt consolidation is the checks are not a good decision for you. If the collection Calls and letters can stop this demand does not spend more than a new license or even to take on more debt.


Carefully explained below are the issues to consider to become consistent in home loan repayment: -

When did you begin defaulting?
The first thing that you should work out is the how long it has been since you have been falling behind in your home loan repayments. A lender may only let defaults last for a couple of months before beginning with proceedings to foreclose on your home. The more time you are in default; the more you will have to repay if you want to bring the unpaid money up to date, plus pay any fees which can be applied by the lender.
How Much Does it Cost to Get Out of Default?
The initial cost to return your home loan repayments back to normal will usually require paying all of the repayments that have been previously missed. Some banks or loan companies are willing to work together with you to assist in making the payments; and may offer a large initial payment on the payments you have missed, followed by an increase the monthly payments to make up the difference from what was in arrears, and what was not included in the initial repayment. While in some cases this can be more of a financial burden for a few months, this can be a great way to get out of your home loan default. The only way you can really know the exact dollar value of your home loan default is to ask your lender directly, as there may be account keeping fees, late fees or legal costs and other expenses you will need to add to your default amount. When you know the exact cost you will then be able to create a realistic plan to pay it off.

Do you have enough time to get out of your home loan default?
This always depends on your lenders terms and you will need to contact them to find out exactly. If your default has been extended for over a three month period your lender may need the full debt on your home to be recalled. In this case it means you will need to pay for your entire loan, not just the arrears. Again the only way to know if this is true in your case to discuss your options with your home loan provider.
If your home loan is in default the time is always ticking. The faster you act, the better the chance you can recover negotiate with your lender or find an alternate solution. As a general rule you will have between three and six months before legal action is taken by the lender to take control of your property.
Often the best course of action in these circumstances is to use the services of a home loan broker who specializes in Home Loans in default, as they may be able to negotiate a better solution to regain your home loan. These solutions may include negotiating with the lender on your behalf, or finding alternate finance with a debt consolidation loan or other low interest finance to help reduce your monthly repayments.


Refinance is one of the most convenient ways to repay a loan because refinancing means to apply for another loan to pay back a previous loan on the same mortgage. The most common mortgage is generally one's home.

Refinance advantages -

"Refinance reduces the risk of losing ones property.

"Refinance can lower the interest rates on the mortgage and thus reduce the monthly payment of interest with the principal amount. This way the borrower can save a lot of money and utilize it in other resources. If savings increase it also helps the borrower to pay back the loan before the closing of the loan term.

"If the original loan had an adjustable loan rate Refinance helps the borrower to change the loan rate type to fixed loan rate thus reducing the risk on the part of the borrower. This process also lowers the interest rate because when it's fixed it remains at the same level and does not change with the prime index rate of the market.

"Refinance also allows the borrower to utilize the equity accumulated in the house or any other real property in concern in the term of ownership by turning the equity into cash.

Refinance loan can be opted for at any point of time and there are no special requirements for it. The procedure of taking the loan is the same as taking any other loan in most of the banks. But still the borrower is suggested to take prior information from his bank before applying for the loan.

Refinance loan may have a fixed rate of loan interest and an adjustable rate of loan interest. It is wise enough to select a fixed rate of loan interest as the rate of interest remains static for the life of the loan thus reducing the monthly payments. The adjustable rate keeps on changing and also increases the monthly payments of interest and the borrower's expenditure. The rate of interest may vary from bank to bank and it is profitable to do a thorough research on banks to find out which bank offers the lowest rate of interest with other facilities.

Refinance can be of two types as given below:

1.Cash out 2.No closing cost

In case of cash out refinance the monthly payments are not surely reduced but the borrower gets other advantages. The borrower can pay off credit card debts, can utilize the money for improvement of home and for medical expenses and so on. This can only happen if the equity in ones home qualifies for the applied amount of loan. Cash out Refinance lets you take an amount of money in loan which is higher than your present mortgage and thus you get the left over money from the present loan. This amount is completely the borrowers property.

No closing cost refinance is suggested only for those borrowers who can pay upfront fees i.e. paying a large part of the loan in the beginning of the term. This reduces the rate of interest of the loan for the rest of the period. Generally the upfront fees are termed as points. The more points you pay early the more beneficial it would be for you in future.

Source: http://www.articlealley.com