How to Get a Guaranteed Consolidation Loan for Unpaid Bills
Getting any type of loan in a difficult economy can be challenging, even for the most credit-worthy borrower. However, if you have unpaid bills and you need to consolidate in order to keep your head above water, there is a strategy for getting a guaranteed consolidation loan for those bills.
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Instructions
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The first step in getting a debt consolidation loan that is guaranteed is to leverage something of value you have with the bank. The most common way to do this is to apply for a home equity loan or line of credit. This allows you to borrow against your home's value in order to pay off bills.
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To qualify for a home equity loan or line of credit, the first thing you need to do is establish how much home equity you have. You can do this by comparing your loan balance against the assessed value of your home. To find the assessed value, look up your county tax records online. This will give you an estimate of the current market value of your home. If you have at least a 10 percent or more difference, you can move forward.
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As a homeowner, you will still need to prove your creditworthiness, or ability to pay back the amount that you are borrowing. It's advisable to visit a site that allows you to look up your credit score. Most banks require a minimum 620 FICO score to approve you for a home equity loan or line of credit. Some sites will charge you a fee to get your credit score, while others will allow you to pull your FICO score for free.
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Once you have verified your equity and your credit score, it's time to begin the application process. It's easiest if you visit the website of your current mortgage lender to apply for your home equity loan or line of credit. For example, if your mortgage is held by Wells Fargo, it's easier to apply for a home equity loan through that bank.
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You can apply online and have an answer in just a few minutes. Sometimes processing can take as long as 48 hours, but, if you are approved you can have access to that money in just a few short days. You will then be able to pay off the bills that you need to pay and have an interest rate that is much lower than credit card or personal loan fees, saving you thousands in interest.
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Tips & Warnings
Remember, you are borrowing against your equity, so it's important to pay off that home equity loan quickly to gain maximum value for your home if you choose to sell it in the future.
Don't use the money you receive from your equity loan as "free money." Allocate it where it needs to go to pay off high-interest-rate loans.
