Tag Archives: lower interest rate
Why Debt Consolidation?
One of the bad credit situations in terms of interest and credibility is to have many loans on you and they are all unpaid. Debt consolidation is considered to be a solution to such a problem. Some people refer that it is not anymore profitable and may get any person into loss but I recommend consolidating this debt buy having a larger loan with provision of some collaterals and for a fix and lower interest rate. I have following points in favor of debt consolidation that will prove you the beneficence of such an act.
Lower Interest Rate
Yes, instead of paying so many smaller loans with relatively different interest rate, it is much easies and convenient to pay a single and lower interest rate. They will decrease this for you due to many reasons; for example; by providing collateral and asking for a mortgage for that is some kind of a secured loan. The creditor s money is not in mush danger as you are allowing him to sale your house or any worthy thing to pay back the loan so interest rate will be lessened.
Then if the debtor is in some kind of bankruptcy or is highly likely to get into one, you can request and negotiate on a lower interest rate and that will make it easier for you to pay your income to the loan and not in the interest only.
Less Monthly Payment
This seems to be attractive to a debt-struck person but this is not an easy task. You have to think about the details and calculate the profit and total amount of payment to be made.
Less monthly payment is logically possible but not up to 50% or more. It is lessened for sure, but only because of lower interest rate or by having a bigger amount your duration of payment is lengthened. Before making any deal, do calculate the wholesome money in all payments in the required period of time.
Fixed Interest Rate
As you are a debtor to various companies with a wide range of interest rate you are paying depending upon your money and duration of debt. So to make it less complicated and incorporated into one lesser interest rate, it is more feasible to have a larger loan with a smaller interest rate, pay the rest of them and then handle only one debt.
So many may be the benefits of debt consolidation but the best way is to pay the monthly payments and other debts regularly so as not to get yourself trapped into such a thing.
Why people refinance mortgage loans
First, you have to think about the refinancing plans and ideas/work arounds that mortgage lenders will throw at you in case you want to lower your rates. Lending companies wont give you something “good” without certain qualifications.
So, with that said the next thing you might want to do is really decided if you “need” to refinance your mortgage. A good number people think that refinancing is an easy task simply because they have a built up history with a company. They think hey I’ve spend x amount if years with you so you owe me this in return. Refinancing doesn’t always mean lower rates and people need to get this through their heads before putting all their eggs into one basket (it’s not for everyone)
Now, I’m not saying refinancing isn’t a good option it’s a great idea but it just depends on what type of mortgage you have. That alone will be the main factor that discerns whether or not refinancing is a good option for your personal situation.
There was a time when lending companies needed to do conduct a detailed background check on your properties before lowering your rates but now with the economy the way it is most companies are willing to work with you so they can have your business (take advantage of it).
So ask yourself something (or your spouse). Is it really time to refinance is this something we really need to do? What is your strategy what are you trying to do here?
Perfect example, do you want lower rates so that you can still cash out and pay off other debt or do you need just a basic refinancing plan?
Most common reasons why people want to refinance
1. Better Credit Rating
Most people can’t obtain low interest mortgage so they bear to suffer with elevated rates. There are those that are lucky and get lower rates even with bad credit
Traditionally people try to pay their loans back/on time in hopes of building their credit and this does work but sadly it doesn’t work fast enough for most. Not to mention most can’t afford but to pay the minimum amount due each month.
2. Lower Interest Rate (Pocket Money)
Some people want a better deal in the end they want to cash out in the end and use the access money for other things like paying off other debt, buying a new car…. Etc.
Experts say that getting home equity is the better option (in our current economy) because the rates are cheaper.
For instance, have a loan of $40,000 on a $75,000 home. You consult with your spouse or financial advisor and you come to a conclusion that a lower interest rate is the way to go. Which will allow you to allocate $7,000 to pay off your car loan (7k is just an example figure)
Now that you have a little understanding about the benefits of refinancing loans its time to sit and see where you stand financially and path a way for your future.