Retirement 
No Comments Have You Thought About Debt Consolidation?
Is debt consolidation right for you? If you are like most people you have a substantial amount of credit card debt. You might be paying on two or three different credit cards and paying varying amounts of interest on the accounts.
You no doubt have heard about consolidating your credit card debt into one easy payment that will save you money and reduce your credit card burden. But before you go out and try to consolidate, you need to understand the principle involved. You need to understand how lenders view consolidation as far as risk is concerned.
You see, the lender takes into account the chances of not being paid back. If the loan is unsecured, then the interest rate on the loan will be higher. This is why interest rates on credit card debt is much higher than on mortgage loans.
There is no collateral to sell off on credit card debt. You use your credit card to take a vacation, buy a pair of shoes, buy tickets to the game. If you default on our credit card balance, there is nothing the lender can sell to recoup their loan. So they charge a large interest rate to make up for the money they lose when people default on their loan.
If no one defaulted on their credit cards, the lenders might charge a lower interest rate. But they probably would keep the rates high, because they like making a lot of money on their loans.
But mortgage rates of interest are lower because there is less risk of the lender losing its investment. If the home buyer defaults on the loan, the bank can sell the land and make back its money. Real property for the most part, increases in value, so that the bank will be able to sell the property and recoup their loan.
So when you talk about consolidating, you are talking about taking all of your credit card balances, your unsecured debt, and paying off the debt with the equity you have in your home. Your loan is not covered by your home. The loan is not a secured debt which means there is less risk on the lenders part meaning you will be offered a lower rate of interest. Your loan payments are not also tax deductible whereas your original credit card payments were not. Call today to see if debt consolidation can help you.
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