Housesumo.com — Do you own a home? Are you burdened by debt? If so, there may be a quick solution for eliminating money worries and regaining control of your finances.
Due to the rising cost of living and moderate wages, more and more middle-income Americans are acquiring excessive debts. Some out-of-control debts are the result of spending habits and living beyond one’s means. On the flip side, millions of people acquire too much debt from simply trying to make a basic living. This might include using a credit card to pay for groceries, gas, and so forth.
Even though quickly boosting one’s income is not easy, there is a quick and practical way to alleviate unnecessary debts and relieve stress caused by finances.
Takeaways
- Home equity loans are useful for debt consolidation.
- A home equity loan can be received with less than perfect credit.
- Home equity is the difference between a home’s market value and mortgage owed.
Debt consolidation is a simple solution for gaining control of finances and offers a better method of debt management. Persons choosing to consolidate their debts acquire a loan, and the funds are used to pay off creditors. In turn, the borrower begins making monthly payments to the lender issuing the debt consolidation loan. This way, the borrower reduces their number of creditors.
A debt consolidation will not remove a borrower’s debt. Instead, the borrower is able to manage their debts, and repay the balance in a shorter time frame. Credit cards have several tactics for keeping consumers trapped in the vicious cycle. Even though many recognize the danger of credit cards, few are able to get ahead. Debt consolidations provide the means for getting on the road to living debt-free.
There are several different ways to consolidate debts. For the most part, it is easier for homeowners to consolidate debts because their home’s equity can act as collateral. On the other hand, non-homeowners may have to consolidate with a non-profit debt consolidation company. Another tactic involves applying for an unsecured or secured personal debt consolidation loan. However, these types of loans require excellent credit.
Home equity loan debt consolidations offer easy approvals, and good credit is not a requirement. If your home has gained equity, you may qualify. Yet, the amount a homeowner can borrow will depend on their income and credit rating. In other words, persons with a low credit rating and several credit mishaps will likely get approved for less.
Determining a home’s equity involves simple math. In a nutshell, equity is the difference between the home’s market value and the amount owed to the mortgage lender. For example, if the home is worth $250,000, and the mortgage balance is $125,000, the equity equals $125,000. Thus, the owners may receive a loan up to $125,000. However, homeowners are rarely approved for the full equity amount.
Home equity loans may be used to consolidate many different types of debts. For example:
Aside from debt consolidation, home equity loans may also be used to pay for college expenses, wedding expenses, home improvement projects, and overdue vacations.
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Well written tips on personal finance. Debt as always been a big problem to many people but if they apply this tips, they can overcome debt problems.
Thank you, John