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? The answers might surprise you and the last thing you want to do is get stuck in a worse situation than you already are in.
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. You do not need to live with debt and you should live debt free.
Here are a few situations that would be good for a debt consolidation loan.
Situation #1 - If you own your home, there is plenty of equity in it, and you have over $10,000 in unsecured, high interest debt. High interest meaning that the interest rate is more than double that of your mortgage interest rate, and plenty of equity meaning that you have at least 30% of your homes’ value available.
This situation is perfect for a fixed rate refinance to cover the unsecured debts.
Situation #2 - If you have over $5,000 in unsecured debt that has an interest rate of over 15%. This situation is perfect for a debt consolidation loan against a paid off car or just without collateral.
Situation #3 - If you have just graduated college and you have student loans. It is much easier to manage your student loans once you consolidate them and you can usually get a lower interest rate anyway.
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 - If you have over $20,000 in unsecured debt. If this is you, then you need to consult a debt consolidation program right away and get working on this debt.
Now you should have a good idea of what type of debt consolidation options are out there and what is right for you. Make sure to make a good decision and if necessary consult your accountant or lawyer first.
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