Debt Consolidation Today – Why Debt Consolidation Is A Good Thing!

08.29.2010 · Posted in Debt

Have you been considering debt consolidation, but you are not sure if it is right for you or not? Do you wonder if you should consolidate your debts into your mortgage or if you should get another form of debt consolidation help? You can avoid ending up in a worse situation than you already are in and you might be surprised.

The first thing you need to understand about debt is that it is not a way of life. The credit card companies and finance companies would love for us all to believe this so that they can continue to make their huge profits from us, but it is not true. Debt free is the only way of life and you need to experience it.

Here are a few situations that would be good for a debt consolidation loan.

Situation #1 – You are a home owner with over $10K in unsecured debts with a very high interest rate. High interest meaning that the interest rate is more than double that of your mortgage interest rate, and you also need to have at least 30% equity in your home for it to be enough.

This situation is perfect for a fixed rate refinance to cover the unsecured debts.

Situation #2 – Your credit card debts exceed $5,000 and have interest rates over 15%. This situation is perfect for a debt consolidation loan against a paid off car or just without collateral.

Situation #3 – You are a new college graduate with a ton of student loan debt. You will find it easier to make just one payment once your student loans are consolidated compared to managing 5 to 10 payments each month.

Here are a few situations where a debt consolidation program will work best.

Situation #1 – If you own your home, have very little equity, and have over $10,000 in unsecured, high interest debt. Without the equity in your home, a loan is out of the question and a debt consolidation program is best. The last thing you want is a mortgage that extends past the value of your home.

Situation #2 – Your debts exceed $20,000 and are unsecured. If this is you, then you need to consult a debt consolidation program right away and get working on this debt.