Debt consolidation involves taking out one loan to cover all your individual debts.  Then, instead of many monthly payments, you make only one payment each month to the new loan.  When you are in debt, the most likely place this loan will come from is the equity of your home.  There are a few ways to get cash from your home’s equity to cover your debt.  First, you can refinance your home loan and take a cash-out amount along with the mortgage.  This is extra money, specified by you, that is added on to the remaining amount of your mortgage and becomes part of your new loan.  Another way to pay your debt with your equity is a home equity loan.  This is a fixed interest rate loan, based on the value of your home, and usually lasts for about 15 years.  You receive a lump of money when you take out the loan, which you must pay back over the specified time period.  A third option is a home equity line of credit, or HELOC.  This is similar to a standard credit card, except that the amount you can access is based on the value of your home.  During the first part of the contract, the draw period, you can borrow money against your home up to the specified amount without paying anything more than interest.  This time period usually lasts from 5-10 years.  After this point, you can no longer access the credit and the balance comes due.  The repayment period usually lasts 10-20 years.  HELOCS do have adjustable interest rates so they may change during the period of the credit.  These types of loans are usually for those who plan on living in a home short-term.  

There are pros and cons to this type of borrowing to pay off debt.  First, it is convenient because you can consolidate all your monthly bills into one easy payment and second, there are possible tax advantages to these loans since the interest is often deductible.  This however, can be a risky affair, and needs to be done with caution.  With any of these options, you receive the money you need to pay off your debts; in doing this, however, you have traded unsecured debt for secured debt since your home is now collateral on your debts.  If you find yourself falling behind or unable to make payments, you could lose your home.  This option is obviously not open to you if you do not own a home to use as collateral.  If you are being overwhelmed by debt, click here for a free consultation and get on the road to financial freedom today!

Dynamic reciprocal link trades, triangle link trades and parallel link trades. See the future of link trading now.

Tahitian Noni now has new energy drinks. Check out Noni Energy, Mobility and Vitality Sports Drinks.

Improve your earning potential with adult education, online degrees and online schools at ClassesAndCareers.com.

Cleveland Ohio Mortgage is a local mortgage broker that has been doing home purchase loans and mortgage refinances for the greater Cleveland / Ohio area for over 8 years now.Cleveland Mortgages - Ohio Mortgage Broker