Millions of people in the U.S. are in debt up to their ears. They have to work hard every month just to make the minimum payment, which keeps them in debt for longer. There are a lot of fees for using a credit card. Because of this, it is hard to pay down balances. Most of the time, the minimum payment isn't enough to cover the interest charges. This makes it hard to pay down the balance on the credit card.
Getting a debt consolidation loan is one way to get rid of or cut down on debts. Even though debt consolidation loans won't magically get rid of your debts, they will help you pay them off faster.
In 2005, home equity in the United States was worth $11.3 trillion. In 2005, 69 percent of people owned their own home, which was a little less than the record 69.2 percent in 2004. Nearly 124 million people in the U.S. own their own home. There is a lot of money that can be lent out.
If you get a debt consolidation loan, all of your credit card balances are rolled into one loan. Also, the interest rates on debt consolidation loans are reasonable. This lets you pay off your debts in a few years.
A debt consolidation loan can be gotten in a number of ways. A personal debt consolidation loan might be possible for people with good credit. If you own a home, you might be able to get a loan against the value of your home. The best thing about home equity loans is that the rates are low and the terms are set. Most of the time, homeowners can pay back the money in five to seven years, or even less.
Just be aware that the value of your home doesn't go up automatically every month, as some people would have you believe. The value of your home is based on a number of things that you have no control over. In about the last six months, the value of homes in some parts of the country dropped by 10 percent in one month.
Before you get a loan against the value of your home, you should know these things.
- A second deed of trust on your house backs them up.
If your finances change, your home could be at risk of being taken away.
Having to make two mortgage payments can put a lot of stress on your finances.
- A lot of unscrupulous lenders could care less.
- Keep an eye on what's going on in the local housing market. Recently, the value of homes in many areas dropped by 10 percent in just one month. This caused many people to owe more on their homes than they were worth.
It's important to use the money wisely and only borrow what you can pay back. Most Americans who use their home equity to pay off their credit card debt don't want to change their habits or way of life. In fact, they see their credit cards with a zero balance as an invitation to go shopping, which keeps the cycle going.
Before you take out a second mortgage and put your home at risk, you should know what the risks are. Check out all the options. Just because it seems easy to get a home equity loan to pay off debt doesn't mean it's the best choice for you. Don't push the EASY button.
