Business & Finance Debt

How Does A Bad Credit Debt Consolidation Work?

Debt Consolidation The idea of debt consolidation is an easy one to understand.
If you have equity in your property you increase the size of your mortgage and cash out the difference to pay off debts.
The interest rates on mortgages are usually lower than they are on credit cards, department store cars, car loans, and other consumer debts.
Mortgage interest also has the advantage of being tax deductible for many borrowers.
Check with your tax advisor about this.
If it is tax deductible you will save more money.
This can often amount to thousands of dollars every year.
Loan Options Many lenders offer borrowers the opportunity to borrow up to 100% of the appraisal value of a property.
Your appraisal value is what determines how much you can cash out if you can get 100% refinancing.
The appraisal report will determine the value of your property, although the mortgage lender will review the report to make sure it makes sense.
Mortgage lenders can and will lower the appraisal value they will give you a loan on if they think the appraisal report is inflated.
Some lenders allow a borrower to borrow up to 125% of the appraisal value of the property.
This allows you to get out even more money.
This type of loan is usually only granted for full documentation loan where you document fully your income, employment, and assets.
Debts that are paid off during a refinance are usually paid by the escrow agent directly to the creditor.
This means that you may not be able to stop some of your debts to be paid off.
If there are debts you don't want to pay off check with the creditor before the refinance goes through to see if you will be allowed to not pay off a certain old debt.

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