Debt Consolidation

Debt consolidation involves taking several individual loans and rolling them into one loan. Many times this is done by using the equity in your home.

Your primary residence is generally the best source for low cost financing.

This is because your home is a more secure form of collateral than virtually anything else. The lenders know that real estate generally appreciates over time, and they also know it is generally a high priority for the borrower to pay the mortgage.

The higher the risk the lender takes the more interest they will charge. This is why unsecured credit cards with a history of late payments will charge 29.99%. It will take you a very long time to make any progress paying off debt at that rate because so much of your money is going to interest.

An added bonus to consolidating debt into your home is that the interest portion of the payment on your home is tax deductable.

You may be able to save hundreds of dollars each month by refinancing your home to pay off credit cards or car loans.

Another bonus is that by putting more debt on your home you are getting higher leveraged appreciation. This is because real estate generally appreciates in value.

It is always better to have debt on things that grow in value after you acquire them. Unlike a car which will lose money the moment you drive it off the lot, your home historically will gain value.

Click here for a free credit report to see if a debt consolidation loan can help you.