What is Required to Consolidate Your Debt?
Debt consolidation is one of the quickest and easiest ways to get out of debt. It works by rolling your higher-interest debts into one lower interest debt. Not only does this accelerate how quickly you can pay down the principal, but it also makes paying your debts more convenient since you now only have one creditor to deal with.
Now you may be wondering if you qualify for a debt consolidation loan. This can be challenging particularly if you do not have perfect credit.
If you use an unsecured loan to consolidate your debt, chances are that you will need to have fairly good credit to qualify – especially if you are looking to get a more favorable rate than what you are already paying.
If you are a homeowner, however, the process is much easier. Since you have equity built up in your home, you can get a secured loan – even if your credit has been damaged.
What kind of debt consolidation loans can I get if I am a homeowner?
Typically, homeowners have three options for debt consolidation loans:
- Mortgage refinance
- Second mortgage
- Home equity line of credit
Each of these options has its pros and cons, and the one that is right for you will depend on some factors. That is why it is important to sit down with a qualified mortgage broker before making your decision.
A mortgage refinance has the lowest interest rate of the three options however it requires you to break your first mortgage. When you do this, you will incur and financial penalty, the amount of which will depend on how close you are to your renewal date.
With a second mortgage, there is no financial penalty, however, the interest rate will be a little higher than that of a mortgage refinance.
Finally, there are home equity lines of credit. This is a revolving line of credit and it may be the right solution for you if you know that you are going to have to borrow more money in the future.
Contact 1Onefund Financial today
If you are looking for a way to get out of debt faster and repair your credit, then a debt consolidation loan may be the solution you’ve been looking for. To learn more about your options and what strategy will work best for you, contact one of our agents today.