Debt Consolidation Loans
There are a number of consolidation loans that you can obtain--it's just a matter of which loan offers the best terms. You want a consolidation loan that offers the lowest interest rate along with a flexible repayment schedule. When you search for consolidation loans, try to find ones with no fees or a minimal amount of fees.
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HELOC
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A home equity line of credit (HELOC) pledges your home as security by using the equity to consolidate your debts. This is a revolving line of credit that can be used again after the loan is repaid (see Resources).
Equity Loan
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You can also get a home equity loan, which is a closed-end loan with terms of up to 15 years. This loan cannot be used again once it is paid off (see Resources).
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Credit Card
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If you have a credit card with a large credit limit, you may be able to consolidate some of your debts and receive a promotional rate of zero percent for one year. During that period your payments will go towards principal reduction.
Refinance
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Another type of consolidation loan is acquired by refinancing your first mortgage. You may be able to get a lower rate by consolidating credit cards with high interest rates.
Second Mortgage
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Some lenders will let you take out a second mortgage using the equity in your home. The money can be transferred directly into your checking account, and you pay the creditors directly or the lender can send the checks to the creditors.
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