Wouldn’t it be the most relaxing start to your new year to start with a manageable balance sheet? After the holidays, joy and cheer often give way to anxiety at the prospect of higher-than-average credit card bills. Combine those credit payments with mortgages, car payments, and other miscellaneous loans, and January can be stressful. Fortunately, though, there is a glimmer of hope amidst the huge pile of notices and statements littering your desk. Debt consolidation, when done correctly, can save you hundreds of dollars a month.
There are a variety of options for debt consolidation. As you shop for a new loan, keep in mind that there are several types that advertise themselves as perfect for debt consolidation. The most common is to refinance your existing mortgage. If you are a homeowner with only a mortgage on your home, this could be the best loan to save money. After all, the interest you pay on your mortgage is tax deductible, so there’s some benefit to using your home equity to pay off those other high-interest unsecured loans.
Another option is to take out a second mortgage on the house. Interest rates for this type of loan are typically a few percentage points higher than on a second mortgage, but it’s still likely to be tax deductible and may even be lower than some of your credit card interest rates. . Consolidating debt this way means you’ll have two mortgages on your home, but those will be the only payments you’ll have to make each month.
What if, however, you don’t own a home? How can you also take advantage of debt consolidation? Sure, it’s a little harder to wrap all your smaller debts into one larger, lower-interest loan without a home to use as collateral. An unsecured personal loan could possibly have a slightly higher interest rate and not be tax deductible. However, if you’re paying higher interest for anything else, it’s still a better option.
Debt consolidation can be the stress release you need. Imagine receiving a one-time payment that can eliminate all your small bills and potentially save you hundreds of dollars a month in interest and minimum payments. Take control of your finances this year and resolve to be stress-free and relaxed with a debt consolidation program tailored just for you.
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