Free Debt Consolidation Assistance
Today more than ever people on TV, Radio, and the internet are advertising debt consolidation, but what is it really? Does debt consolidation work? How can I avoid being scammed out of house and home? Will it affect my credit? All these are very important questions that need to be addressed.
Debt consolidation does not get rid of existing debt. Most often it is credit cards, retail credit, student debts and car loans that end up being consolidated. People use debt consolidation to roll their smaller payments into one large payment or they extend the life off the loan to bring their payments down. The most practical type of debt consolidation rolls existing debts into a home mortgage or he-lock loan on your house. In a sense, you are just borrowing money from one lender to pay off another. The main purpose of debt consolidation is to lower your monthly payments. It is important to note that even at a lower interest rate, you may still be paying more interest on the life of the loan if the loan is for a lot longer period of time.
Be ware of people who tell you that you can settle your debts for a fraction of what you owe. If you are not already behind on payments this will often only work by ruining your credit . If you are behind, you can probably settle a lot of this debt yourself with out paying a 3rd party their commission. If you own assets or have an income there is nothing to stop the credit card companies for suing you after the settlement for the amount you originally owed. Another thing to avoid is brokers trying to consolidate your debt into an adjustable rate mortgages with a balloon payment due in 1, 3, or 5 years. Brokers can make a hefty kickback on these loans because the true payment amounts can be masked behind the arm.
Debt consolidation is a serious step.
At best it is only a temporary fix to a bigger problem. You should find out as much as you can about debt consolidation before proceeding.
S. Arnold, MBA has studied finance for several years. For free information on Debt Consolidation Assistance come visit our site!
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