Seattle economy – Seattle WTO http://seattlewto.org/ Thu, 29 Sep 2022 20:45:28 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://seattlewto.org/wp-content/uploads/2021/10/icon-3-120x120.png Seattle economy – Seattle WTO http://seattlewto.org/ 32 32 Why should you get a debt consolidation loan now https://seattlewto.org/why-should-you-get-a-debt-consolidation-loan-now/ Thu, 29 Sep 2022 20:45:28 +0000 https://seattlewto.org/why-should-you-get-a-debt-consolidation-loan-now/ Debt consolidation loans allow borrowers to combine their debts into one loan with a lower interest rate. Getty Images/iStockphoto No one likes to pay more than their fair share. Whether you have a mortgage, student loan, Personal loan or any type of insuranceit is important not to overpay. For borrowers in debt, this is particularly […]]]>
Debt Consolidation Approved Form Shows Agreed Loan Approval - 3d illustration
Debt consolidation loans allow borrowers to combine their debts into one loan with a lower interest rate.

Getty Images/iStockphoto


No one likes to pay more than their fair share. Whether you have a mortgage, student loan, Personal loan or any type of insuranceit is important not to overpay.

For borrowers in debt, this is particularly important. If you end up with a high interest rate, it will be that much more difficult to pay what you owe and the outstanding balance can quickly become prohibitive.

Fortunately, consumers have debt consolidation loan options. Debt consolidation loans allow borrowers to combine their debts into one simple loan with a lower interest rate. The advantages of this unique financial option are multiple and significant.

If you think you could benefit from a debt consolidation loan, act now and start saving money.

Here are three reasons why you should get a debt consolidation loan now.

You want a lower interest rate

This is arguably the best reason to get a debt consolidation loan. By consolidating your debts into one loan with a lower interest rate, you can start saving money right away. But you will also save significant sums in the long run, as the loan will be adjusted into a more manageable sum.

This is especially useful for those with high interest credit cards. The average interest rate on a 24-month personal loan was 8.73%, according to recent data from the Federal Reserve. Compare that to the average credit card interest rate of 16.65% – almost double!

Check the rates you currently have. Then compare the rates to a debt consolidation loan. Getting started today is easy.

You want to improve your credit score

Your credit score affects so many aspects of your financial life. If you’ve put yourself in a hole with credit cards or other debt, you’ve probably damaged your score, making it harder to get better rates in the future.

A debt consolidation loan helps solve this problem by bringing all your debts together under one roof. After a series of one-time payments on the loan (and assuming you don’t accumulate debt elsewhere), you will begin to improve your credit.

Lenders like to see regular, on-time payments. You may be doing this now with one or two of your debts, but are you doing this with all of them? However, if you combine them into one debt consolidation loan, you will be able to make payments more easily and boost your score In the process.

You want an end date

One of the most frustrating things about being in debt is that you feel like you’ll never get out of it. This is especially true for credit cards where there is no real time limit (except for making a minimum payment). Borrowers can get themselves under water by paying only their minimum monthly card debt – all while the high interest on their cards adds up.

With a debt consolidation loan, however, there is a fixed repayment date so the borrower knows exactly when they can stop paying. So even if the debt you have consolidated is significant, you will at least know when it will be eliminated.

Get a free consultation and see if a debt consolidation loan is right for you.

Other Debt Relief Alternatives

If you are currently in debt, there are options other than debt consolidation loans to consider.

Credit cards with balance transfer work the same way and can also help you save money. Refinancing by collection (and mortgage refinance in general) may also be beneficial. Older homeowners can also get money to pay off their debts with a reverse mortgage.

Do you have other questions about debt consolidation loans? Want to explore all of your debt relief alternatives? Speak with an expert now who can help you.

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4 reasons to take out a personal loan for debt consolidation https://seattlewto.org/4-reasons-to-take-out-a-personal-loan-for-debt-consolidation/ Wed, 21 Sep 2022 12:56:13 +0000 https://seattlewto.org/4-reasons-to-take-out-a-personal-loan-for-debt-consolidation/ Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own. If you’re juggling high-interest credit card debt, […]]]>

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

If you’re juggling high-interest credit card debt, taking out a debt consolidation loan to pay off those balances offers 4 major benefits. (Shutterstock)

You can consolidate high interest credit card debt many ways, including home equity products (if you own a home), balance transfer credit cards, and personal loans.

Here are four reasons why you might consider a debt consolidation loan to settle your high-interest debts.

If you want to consolidate your debt, Credible makes it easy to view your prequalified personal loan rates from various lenders, all in one place.

What is debt consolidation?

Before we dive into why a debt consolidation loan makes sense, let’s define what it is. Debt consolidation consolidates multiple debts into one account with one easy-to-manage payment. It’s a strategy you can use to simplify the debt repayment process and potentially save money on interest. If you are overwhelmed with debt, debt consolidation can be a smart move.

Although you can consolidate your debts in several ways, the personal debt consolidation loan is one of the most popular. With a debt consolidation loan, you take out a new loan to repay one or more unsecured debts that you already have. It gives you a manageable monthly payment so you don’t have to worry about juggling multiple debts, interest rates, and payment due dates.

It’s important to understand that while a debt consolidation loan can treat the symptoms of your financial problems, it won’t treat the root cause. Think of it as a tool to give yourself some breathing room so you can get back on your feet and devise a long-term plan for a better financial future.

ADVANTAGES AND DISADVANTAGES OF DEBT CONSOLIDATION

1. Reduce the overall cost of your debt

A Personal loan can help you reduce the cost of your debt in two ways. If you’re able to lock in a lower interest rate than you currently have on all of your debt, you can save hundreds or even thousands of dollars in interest.

Plus, a personal loan gives you a specific end date for paying off your debt. It can help you stay focused on your goals and pay off your debt faster.

Visit Credible for compare personal loan rates from various lenders, without affecting your credit.

2. Refinance your debt without risking your home or other assets

Although home equity products – such as home equity loans and home equity lines of credit (HELOC) – may have lower interest rates than personal loans, they have some disadvantages you should consider:

  • Deplete your home equity — Since a home equity loan relies on the value you have built up in your home, you could find yourself under water on your mortgage and owing more than your property is worth if the value of your house goes down. This could be a serious problem if you are planning to move soon.
  • Put your home at risk — A home equity loan puts your home as collateral. If you fail to make your payments, you could lose your home through the foreclosure process.
  • May not qualify — Most lenders will not give you home equity loan or HELOC unless you have some equity in your home. Your equity is the difference between what you owe on your mortgage and the current value of your home. Although each lender has their own criteria, most will be looking for at least 15% equity.

A debt consolidation loan, on the other hand, requires no collateral, which means you won’t have to put your house, car or other assets on the line. You can also lock in an interest rate below the one you could get with a credit card.

Your rate will likely be fixed instead of variable (as it would be with many HELOCs), so you can budget your payments in advance. And if you have good or excellent creditit may be easier to qualify for a debt consolidation loan than a home equity product.

3. Reduce your monthly payments

If you have a lot of high-interest credit card debt and take out a personal loan with a lower interest rate, you may be able to lower your monthly payment amount. This can free up your cash flow and give you more money to spend on your emergency fund and other financial goals, such as saving for a home or for retirement.

Choosing a personal loan with a longer term can also result in lower monthly payments. But keep in mind that if you go this route, you will pay more interest over time.

4. Simplify your debt

When juggling multiple loans and credit cards, it’s easy to miss a bill payment. Missing a single payment can impact your credit.

A debt consolidation loan allows you to combine several monthly payments into a single loan with a fixed interest rate. It can make the debt refund much more manageable process and reduce your risk of missed payments. Many personal lenders also offer discounts for setting up automatic payments, which will ensure that your monthly loan payments are made on time.

If you’re ready to apply for a debt consolidation loan, Credible makes it quick and easy compare personal loan ratess to find the one that best suits your needs.

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Debt consolidation loan: what you need to know https://seattlewto.org/debt-consolidation-loan-what-you-need-to-know/ Mon, 19 Sep 2022 16:14:00 +0000 https://seattlewto.org/debt-consolidation-loan-what-you-need-to-know/ Debt consolidation loans combine multiple debts into one loan, which can potentially save you money. Getty Images If you’re struggling to manage your debts on multiple credit cards, a debt consolidation loan could simplify your monthly finances and help you regain control. When you take out a debt consolidation loan, you pay off multiple debts […]]]>
Debt consolidation loan application form with pen, calculator
Debt consolidation loans combine multiple debts into one loan, which can potentially save you money.

Getty Images


If you’re struggling to manage your debts on multiple credit cards, a debt consolidation loan could simplify your monthly finances and help you regain control. When you take out a debt consolidation loan, you pay off multiple debts and replace them with a single loan with a fixed monthly payment. You might even be able to lower your interest charges and monthly payments.

If this sounds like something you could benefit from, consider talking to a lender. You can get a debt consolidation loan offer today.

What is a debt consolidation loan?

A debt consolidation loan can be used to pay off multiple debts, including credit cards, medical bills, and personal loans. Debt consolidation loans are a type of personal loan that you can use to combine multiple high-interest credit cards with one low-interest loan.

You may qualify for a debt consolidation loan of up to $100,000 with flexible repayment terms typically ranging from two to five years.

Why would anyone want a debt consolidation loan?

Taking out a debt consolidation loan may make sense if any of the following circumstances apply to you:

  • You want to pay less interest. If you have multiple high interest credit cards, you might consider debt consolidation into a personal loan with a lower interest rate. According to recent data from the Federal Reservethe average interest rate on a 24 month personal loan is 8.73%, which is well below the average credit card interest rate of 16.65%.
  • You want a specific repayment date. Credit cards offer a convenient way to borrow and pay off debt as you go, but if you only make minimal payments, you could stay in debt indefinitely. For this reason, you may want a debt consolidation loan to follow a repayment plan for a specific duration, with a specific end date when your final payment will bring your balance down to zero.
  • Your credit score is sufficient to qualify. Whereas personal loans are available to borrowers with below average credit, a higher credit score may qualify you for lower rates. Generally, the higher your credit score, the lower the interest rate you can receive. As a rule, you can benefit from advantageous conditions with a good credit scorethat begins with a FICO score of at least 670 or a VantageScore of 661 or higher.
  • You can pay off your consolidation loan in five years or less. Debt consolidation loans are installment loans that usually have a repayment term of two to five years. Of course, the longer you pay off the loan, the more interest you will pay. A debt consolidation loan may be a suitable option if you can minimize interest costs by paying off your loan in less than five years.

The advantages of a debt consolidation loan are manifold. Start saving money and getting out of debt by exploring your loan options now.

How to qualify for a debt consolidation loan?

Qualifications for debt consolidation loans vary by lender, but most lenders strongly consider the following eligibility factors.

  • Proof of income: Almost all lenders require you to meet a minimum income requirement to prove that you have the financial stability to repay your loan. Minimum income amounts vary by lender, and you’ll likely need to prove your income with pay stubs, bank statements, or tax returns.
  • Credit file and credit score: When a lender reviews your debt consolidation loan application, they typically extract your credit report and credit score to assess your credit management history. If your credit is below average, you might be better off taking steps to improve your credit before applying for a new loan.
  • Low debt-to-income ratio (DTI): Your debt-to-income ratio (DTI) is another important criterion used by lenders to assess your ability to repay your loan. The ratio compares the total amount of your monthly debt repayments with your gross monthly income. For example, if your gross monthly debt payments total $1,000 and your gross monthly income is $5,000, your DTI ratio is 20% (1,000/5,000 = 0.200). Aim for a DTI of 36% or less for your best chance of loan approval.
  • Collateral: Some lenders require collateral for larger debt consolidation loans, often in the form of home equity.

Be aware that some lenders charge processing fees (also known as origination fees) ranging from 1% to 8% of the amount borrowed.

How to apply for a debt consolidation loan?

Taking out debt consolidation is quick and easy, and you can apply by following these five steps.

  • Shop around and compare lenders. Comparing several loan offers can help you find the best debt consolidation loan to meet your needs. Many online lenders allow you to prequalify for a loan to assess your chances of approval and the interest rate you may receive. When you prequalify, the lender usually does a soft credit check that doesn’t affect your credit score.
  • Choose your loan offer and your lender. Consider loans that offer the best balance of low interest rates and fees, flexible repayment terms, and achievable eligibility requirements. After reviewing several personal loan offers, select the one that best suits your needs.
  • Complete a loan application. Once you have chosen a lender, submit a formal application. You will need to provide information about your job, your income and the amount you want to borrow. Your lender may ask you to provide supporting documentation, including government-issued ID, pay stubs, account statements, and proof of residency.
  • Pay your debt. Once your lender has approved your loan application, you must sign the loan to release the funds. Your lender can disburse your loan funds directly to your competitors to pay off debts on your behalf. Alternatively, your lender deposits the money into your account and uses the funds to pay off each of your debts.
  • Keep making payments. Upon loan approval, you are responsible for making payments on your new loan. However, it may take some time for your old creditors to close your accounts. To avoid damaging your credit, continue to make payments on your old accounts until they are officially closed.

Debt Consolidation Loan Alternatives

If you don’t want to take out a debt consolidation loan, there are other options to consider, such as:

  • 0% APR Balance Transfer Credit Card: These credit cards offer an interest-free period of up to 21 months. You can pay off as much debt as you can during the promotional period at 0% interest, but understand that these cards generally require good credit to qualify.
  • Home Equity Loan: You may be able to tap into the equity in your home to pay off your outstanding debts. Typically, lenders allow you to borrow up to 80% of the value of your home, minus your mortgage balance. Home equity loans involve considerable risk since you have to offer your house as collateral.
  • Credit advice: Instead of borrowing money to pay off your debt, you might consider getting credit counseling from a nonprofit agency. An advisor can help you budget and design a repayment plan. Some agencies will even contact your creditors to lower your interest rates. Online financial advisors can also help point you in the right direction.

Whether you take out a debt consolidation loan or use another method, eliminate credit card debt can dramatically improve your financial health, but only if you can avoid accumulating new debt and repeating the cycle. As a general rule, never charge more than you can afford.

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Debt Consolidation Loan vs Balance Transfer: Which is Right for You? https://seattlewto.org/debt-consolidation-loan-vs-balance-transfer-which-is-right-for-you/ Wed, 14 Sep 2022 16:03:59 +0000 https://seattlewto.org/debt-consolidation-loan-vs-balance-transfer-which-is-right-for-you/ Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own. A debt consolidation loan and balance transfer […]]]>

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

A debt consolidation loan and balance transfer can help you consolidate high-interest debt. Learn how they compare. (Shutterstock)

Debt consolidation consolidates several debts into a single account. It can help you save money, lower your monthly payments, and streamline your payment process. Although you can consolidate your debt in several ways, debt consolidation loans and balance transfers are the most common.

Here’s what you need to know about each of them in order to determine the ideal debt consolidation strategy for your particular situation.

If you need a loan to consolidate high-interest debt, Credible lets you view your prequalified personal loan rates from various lenders, all in one place.

Debt Consolidation Loan vs Balance Transfer: What’s the Difference?

Debt consolidation loans and balance transfer credit cards are credit products you can use to consolidate other, higher-interest debt. Here’s an overview of how each works.

What is a debt consolidation loan?

A debt consolidation loan is a type of unsecured personal loan. If you subscribe to one, you will receive a lump sum upfront. Then you will repay what you borrow in fixed monthly payments over a set period of time. Although loan amounts vary, they can range from $1,000 to $100,000.

If you have different types of debt that can take years to pay off, a debt consolidation loan is worth considering.

UNSECURED LOANS: KNOW ALL

What is a balance transfer credit card?

Balance transfer credit cards allow you to transfer balances from your current maps to a new card, usually with a 0% APR introductory period of six to 18 months. If you pay off all your debts before the end of this introductory period, you can save a lot on interest. But keep in mind that once the period is over, you’ll start earning interest on the remaining balance on the card, and credit cards can have high interest rates.

If you have a lot of high interest credit card debt and you can pay it off during the introductory period, a balance transfer credit card might make sense.

Advantages and disadvantages of a debt consolidation loan

Before choosing a debt consolidation loan, consider these pros and cons:

Advantages

Visit Credible for compare personal loan rates from various lenders, without affecting your credit score.

The inconvenients

  • If you don’t have the best credit, you may find it difficult to get an interest rate lower than what you are currently paying.
  • Some lenders charge origination fees, prepayment penalties, and other fees when you take out a debt consolidation loan.
  • There is no 0% APR introductory period like some credit card offers.
  • If you don’t make your payments on time, every time, your credit can take a hit.

WHERE TO GET A $5,000 LOAN

Advantages and disadvantages of a balance transfer

Here are some pros and cons to think about before deciding on a balance transfer:

Advantages

  • You can benefit from a 0% APR introductory period, which can save you hundreds or even thousands of dollars in interest.
  • Some cards offer rewards, such as cash back and travel points.
  • Opening a new card can lower your credit utilization ratio (the amount of credit you use compared to the amount of available credit you have) and, therefore, improve your credit score.

The inconvenients

  • If you don’t pay off your debt before the end of the 0% APR period, you could face high interest charges.
  • Some cards charge a balance transfer fee of 3% to 5% of the amount you transfer.
  • You may not qualify for a balance transfer credit card unless you have good credit.

What to consider when consolidating debt

When comparing a debt consolidation loan and a balance transfer, consider the following factors:

Where to get a debt consolidation loan

You can get a debt consolidation loan from a bank, credit union, or online lender. While banks and credit unions tend to offer competitive rates, they generally have stricter requirements than online lenders. Also, you must join a credit union before taking out a loan from it.

If your credit score is preventing you from getting approved for a debt consolidation loan, you may want to apply with a co-signer who has good credit or take the time to improve your credit before to make your request.

If you’re ready to apply for a debt consolidation loan, Credible makes it quick and easy compare personal loan rates to find the one that suits your needs.

Where to get a balance transfer card

Many banks and credit card companies offer balance transfer credit cards. If you’re having trouble qualifying, check your credit reports and dispute any errors. Also focus on making your payments on time and do your best to pay off some of your credit card debt to improve your credit utilization.

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Debt consolidation halves among RIO borrowers: Hodge https://seattlewto.org/debt-consolidation-halves-among-rio-borrowers-hodge/ Tue, 06 Sep 2022 15:22:35 +0000 https://seattlewto.org/debt-consolidation-halves-among-rio-borrowers-hodge/ According to Hodge Bank, the number of homeowners taking out retirement interest-only mortgages to consolidate debt has nearly halved in the past year despite the looming cost-of-living crisis. The percentage of customers who applied for RIO loans who wanted to reduce their debts has fallen to 7% so far this year, from 13% in the […]]]>

According to Hodge Bank, the number of homeowners taking out retirement interest-only mortgages to consolidate debt has nearly halved in the past year despite the looming cost-of-living crisis.

The percentage of customers who applied for RIO loans who wanted to reduce their debts has fallen to 7% so far this year, from 13% in the same period a year ago, the lender says after analyzing its own sales data. .

However, the survey showed signs of belt tightening, with the number of homeowners applying for RIO loans for home renovations dropping from 27% to 18% over the same period.

RIO Loans are for homeowners aged 55 and over and allow them to take out a new mortgage or replace their current interest-only mortgage with one that allows them to continue making interest-only payments for as long as they they live in their house. .

These borrowers can also choose to take out a larger mortgage than they currently have to use for other purposes. These types of loans were first regulated by the Financial Conduct Authority in March 2018.

The lender says the other two main reasons for taking out an RIO this year were to buy another property, at 31%, up from 27% a year ago. He adds that 27% of borrowers have not raised any additional money, compared to 30% a year ago.

Hodge’s business development director Emma Graham said: ‘It’s a big drop for debt consolidation in particular, especially given the cost of living crisis and inflation which continues to rise. . You’d expect more people to use products like RIO to make their debt more manageable and have everything in one place – but according to our data, the opposite seems to be true.

“The decline in use for home renovations is understandable, however, as many homeowners are no doubt tightening their belts and giving up any DIY or home extensions for a few years until the cost of building materials and the workforce is down.

“But it’s encouraging to see that the RIO product is still proving useful to so many people to finance other improvements in their lives, such as a new home or helping loved ones, during these difficult economic times.”

The lender adds that it also saw a 41% increase in the value of its RIO mortgage portfolio from January to August this year, compared to the same period in 2021.

]]> Using a Home Equity Loan for Debt Consolidation Isn’t Worth the Risk https://seattlewto.org/using-a-home-equity-loan-for-debt-consolidation-isnt-worth-the-risk/ Tue, 06 Sep 2022 07:00:00 +0000 https://seattlewto.org/using-a-home-equity-loan-for-debt-consolidation-isnt-worth-the-risk/ Editorial independence We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information, see How we make money. While high home prices aren’t good news for buyers, many existing homeowners […]]]>

We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information, see How we make money.

While high home prices aren’t good news for buyers, many existing homeowners are sitting on a gold mine of equity.

At the end of the second half of 2022, the average American homeowner had $216,900 in “workable equity” while retaining 20%, according to the latest data provided by mortgage technology and data provider Black Knight.

With record equity and relatively low rates on HELOCs and home equity loans, it can be tempting to dip into your capital to consolidate and pay off other debts that have higher interest, like credit cards. . Taking out a home equity loan or HELOC for debt repayment has its benefits, but it also comes with risks. Experts also suggest exploring alternatives before using your home equity to consolidate debt.

Advantages and Disadvantages of Using Your Home Equity for Debt Consolidation

If you have significant high-interest debt, using the equity in your home to pay it off will likely cause the interest rate to drop. The average rate for a $30,000 10-year home loan is currently 7.05%. average credit card interest rate is 15%, but often consumers end up with even higher interest rates on their credit cards, exceeding 20% ​​or 25%. Reducing the interest rate you pay on your debts will help you pay down your balances faster because more of your payments will go toward principal rather than interest.

Another benefit is having one monthly payment, which could make managing your debt easier, especially if you have multiple loan payments. Home equity loans can have terms of up to 30 years, which could lower monthly payments.

Despite these advantages, this strategy can be dangerous. While credit card debt is unsecured, meaning it doesn’t require collateral, home equity loans and HELOCs use your home as collateral.

In addition to putting your home at risk, you also won’t be able to deduct interest from your HELOC or home equity loan on your taxes. When you borrow against your home and use the money to make improvements, the interest is usually tax deductible. But if you use it for other purposes, it is not.

Additionally, you may have to pay closing costs when tapping into the equity in your home, which can amount to 2-5% of the loan amount. It can also take between two and six weeks for the loan funds to be disbursed to you.

Advantages

  • Your interest rate will likely be lower

  • A monthly payment is easier to manage

  • Your monthly payments could decrease

The inconvenients

  • Your home is in danger

  • Interest will likely not be tax deductible

  • You will probably pay high fees

  • Funding time will be longer than some alternatives.

How to Get a Home Equity Loan or HELOC for Debt Consolidation

Many banks, credit unions, and online lenders offer home equity loans and HELOCs. Here’s how to get one:

  1. Decide if a home equity loan or HELOC is better for you. For example, if you know the exact amount you want to consolidate, a home equity loan might be a good idea.
  2. Compare the options of different lenders. Taking the time to shop around can help you find the best rates and terms possible.
  3. Submit an application. Just like you did with your mortgage, you will need to provide proof of income and identity, proof of address, and documentation of your assets.
  4. Wait for an evaluation. Your lender will order an appraisal before approving you for a home equity loan or HELOC.
  5. Close the loan. It usually takes between two and six weeks to complete a home equity loan or HELOC.

Expert Opinion: Is Using Home Equity a Good or Bad Idea for Debt Consolidation?

Experts tend to agree that taking on new secured debt – with a house as collateral – to eliminate high-interest debt is not the best decision. “It’s extremely rare that I tell you to borrow from your house to pay off your credit card debt,” says Leslie Taynefounder and principal attorney of Tayne Law Group.

“I wouldn’t necessarily recommend turning unsecured debt or credit card debt into secured debt,” Tayne says. “You wouldn’t lose your home to credit card debt, but you could lose your home if you default on a HELOC.”

“Ideally, you want to look at your budget and consider different alternatives. If you don’t budget properly after taking out a HELOC or home equity loan, you could easily be under water again. And while you can get a lower interest rate than credit cards, the upfront costs of tapping into your home equity are often high.

Alternatives to Using Home Equity to Consolidate Debt

For those struggling with high interest rates and juggling multiple monthly payments, an unsecured credit card or personal loan might be a better option for debt consolidation.

Credit cards with balance transfer

Balance transfer credit cards often come with a promotional interest rate for a set period, such as 12 or 18 months. During this period, you will benefit from a low or 0% interest rate. This interest-free period could give you the time you need to pay off your existing debt without incurring high interest charges. Just be sure to pay off your balance before the end of the promotional period, as the card’s regular rate, which may be high, will apply thereafter.

Unsecured personal loan

Another alternative is an unsecured personal loan. Personal loans usually have low fixed rates and terms usually range from 12 to 60 months. Depending on your lender, you may be able to borrow up to $50,000, and funds are often disbursed within one or two business days.

Refinancing by withdrawal

As mortgage rates have risen, a cash refinance might still make sense if you’re looking to consolidate your debt. The suitability of this option depends on several factors, including the amount of equity in your home, your credit, and the amount you wish to borrow.

With a cash refinance, you replace your existing mortgage with a larger mortgage, and the difference is paid to you in a lump sum. You could then use these funds to consolidate your debt.

Experts generally don’t advise refinancing a new mortgage with a higher interest rate than the one you already have. For example, if your current mortgage rate is 4%, a cash refinance rate today would be higher than 5.5% and not worth it in the long run.

Negotiate with your creditors

Your creditors may also be willing to work with you to create a more manageable debt repayment plan. “It is possible to renegotiate the terms of outstanding credit card debt,” says Guillaume Bevins, CFP and Fiduciary Financial Advisor in Tennessee. “Reducing the current interest rate, requesting a temporary reduction in payments, and moving the due dates for monthly payments are some possibilities.”

Frequently Asked Questions (FAQ)

Can I get approved for a HELOC or home equity loan if I already have a lot of debt?

It is possible to get a HELOC loan or a home equity loan if you have a lot of credit card debt. However, whether or not you approve will likely depend on your home equity, credit score, income, and other factors.

Does it make sense to use equity to consolidate debt?

Using the equity in your home to consolidate your debt can be a risky decision. If you don’t meet your monthly payments, your lender could foreclose on your home. A balance transfer credit card, personal loan, or other unsecured form of financing might be a less risky choice.

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The 6 advantages and disadvantages of debt consolidation https://seattlewto.org/the-6-advantages-and-disadvantages-of-debt-consolidation/ Tue, 06 Sep 2022 07:00:00 +0000 https://seattlewto.org/the-6-advantages-and-disadvantages-of-debt-consolidation/ Debt consolidation explained Many people have several debts, but they cannot afford to pay them all at once. This is where debt consolidation comes in – it allows you to combine your various loans into one monthly payment with the intention that soon it will be just a good memory! There are two types: personal […]]]>

Debt consolidation explained

Many people have several debts, but they cannot afford to pay them all at once. This is where debt consolidation comes in – it allows you to combine your various loans into one monthly payment with the intention that soon it will be just a good memory!

There are two types: personal and professional. For example, if I had an unsecured bank loan worth $30,000 that was running with an interest rate above 5%, while having another PHPBS student loan that cost me somewhere between 150 and 200 000, then personally we would go ahead and take out either a personal loan or a home equity loan and then pay off the other two debts.

Debt consolidation can be a great way to get your finances in order, but you need to be careful about the interest rate you get and how it will affect your monthly payments. Be sure to shop around for the best deal, and if you’re not comfortable with the idea of ​​debt consolidation, there are always other options available.

So what is debt consolidation?

It’s basically a way to combine all of your debts into one monthly payment, which makes it easier to keep track of and can save you money on interest rates. It’s a great option for people struggling to keep up with multiple payments, and it can be a lifesaver for businesses struggling to make ends meet. Just be sure to do your research first and find the best deal possible!

If you’re one of the many Americans drowning in credit card debt, you know how difficult it can be to keep track of your current credit card payments and balances. And if things are looking really tough financially, the last thing you want to do is go deeper into debt with a new loan. But there is hope: Consolidating your debt into one loan can streamline your finances by giving you just one payment per month instead of several from each card company.

It could also help with underlying financial issues such as overspending or paying too much interest, but before committing to this strategy, take the time to understand the pros and cons so you can take a decision. informed decision as to what is appropriate for your situation.

The advantages of debt consolidation are:

-You will only have to make one payment each month, which may be easier to manage than multiple payments.

-If you have multiple types of debt (eg, credit card, student loan, car loan), consolidating them into one loan can help you save money on interest payments.

-The overall interest rate on your consolidated loan can be lower than the rates on your individual loans, which could save you a lot of money in the long run.

There are also a few potential downsides to consider:

-You could end up paying more overall interest if you consolidate your debt into a longer-term loan.

-You might be tempted to overspend once you have a single loan with a lower interest rate, which could lead to more debt and other financial problems.

-If you are having trouble making your current monthly payments, consolidate your debts taking out a new loan may not be the best solution — you may need to consider other options such as debt management or bankruptcy.

Before making a decision, it’s important to weigh the pros and cons of debt consolidation to see if it’s the best strategy for you. If you decide this approach is right for you, be sure to research the best interest rates and terms to save as much money as possible.


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Advice from the Better Business Bureau: Beware of debt consolidation offers https://seattlewto.org/advice-from-the-better-business-bureau-beware-of-debt-consolidation-offers/ Sun, 04 Sep 2022 09:28:26 +0000 https://seattlewto.org/advice-from-the-better-business-bureau-beware-of-debt-consolidation-offers/ With the impact of COVID-19 on daily life greatly reduced, student borrowers whose repayments have been suspended due to the pandemic may be considering their options for resuming payments on this life-changing debt. This may lead some borrowers to look into debt consolidation, but it’s important to research these options carefully and not give in […]]]>

With the impact of COVID-19 on daily life greatly reduced, student borrowers whose repayments have been suspended due to the pandemic may be considering their options for resuming payments on this life-changing debt.

This may lead some borrowers to look into debt consolidation, but it’s important to research these options carefully and not give in to the temptation to look for a quick fix that could turn out to be a scam.

After a recent action by the Biden administration, federal student loan repayments remain suspended without interest until Dec. 31. receive up to $20,000 in pardons. Consumers should beware of scammers who take advantage of the news by offering bogus ways to apply for loan forgiveness.

Better Business Bureau Scam Tracker received over 500 reports of debt relief and credit repair scams in North America in 2021. These scams cost consumers a reported total of over $283,000, the median consumer losing $600. Most often, these reported scams involved payment by bank account debit.

Upfront fees, including fees to enter a repayment plan, are a common thread among debt relief scams. These upfront charges are illegal. Loan repayment assistance – including loan deferrals, forbearance, repayment, and forgiveness or release programs – is available directly from the Department of Education and Loan Services, and application for these programs is always free.

Some scam companies ask consumers to sign a power of attorney for financial decisions, use it to suspend the consumer’s loans – a way to temporarily stop or reduce payments, during which the loans continue to earn interest – and require the consumer to make payments directly to them rather than to the loan officer. In reality, the company keeps the payments for itself and the forbearance eventually expires without any repayment progress.

Borrowers seeking student loan relief should consider the following tips:

• Do your research on the company and the options available to you. BBB business profiles on debt consolidation and other businesses are available at BBB.org or by calling 888-996-3887. These include customer complaints and how they were handled, customer reviews, and an A+ to F grade.

• Do not pay upfront fees to debt repayment companies. If a rescue company asks for money before helping you, report it to BBB.

• Think twice before signing a power of attorney or giving a company your bank account information or your federal student aid website login information. These actions allow a company to make potentially devastating financial decisions for you.

• Don’t agree to a long-term abstention or adjournment plan without doing your homework. These should only be seen as temporary solutions.

• Don’t be fooled by promises of quick relief. The loan relief and forgiveness options available through the Department of Education still require years of payments, and these loans cannot be canceled by bankruptcy.

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Debt consolidation vs bankruptcy: what’s the difference? https://seattlewto.org/debt-consolidation-vs-bankruptcy-whats-the-difference/ Tue, 30 Aug 2022 13:07:37 +0000 https://seattlewto.org/debt-consolidation-vs-bankruptcy-whats-the-difference/ Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own. Debt consolidation with personal loan or bankruptcy: […]]]>

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

Debt consolidation with personal loan or bankruptcy: Both are debt solutions, but one is better than the other. (Shutterstock)

Debt consolidation and bankruptcy are two options for dealing with overwhelming debt. Both offer a long-term solution to your debt, but they work very differently and have varying consequences for credit.

A personal loan can be a good tool for consolidating high-interest debt. Credible, it’s easy to view your prequalified personal loan rates from various lenders, all in one place.

Debt consolidation vs bankruptcy

Debt consolidation and bankruptcy can both help you manage your debts, but it’s important to understand how each works before deciding which option is right for you. Here are some key differences between debt consolidation and bankruptcy.

Debt Consolidation

Debt consolidation merges multiple debts into one, usually by taking out a new loan or a balance transfer credit card to pay off your existing debt balances. This option is best suited for those who can pay off their debt but have difficulty managing multiple monthly payments or high interest rates.

Debt consolidation can hurt your credit in the short term since it requires taking on new debt. But it can increase your long-term credit as you pay off your debt. Debt consolidation may have a small associated cost in the form of loan origination fees or balance transfer fees, if you are using a balance transfer credit card to consolidate.

How long it will take to get rid of your debts depends on the debt consolidation route you choose, how much debt you have and how much you can afford to pay each month. But it may be possible to be debt free within five years.

Bankruptcy

Bankruptcy is another solution to debt, but with a very different process and different ramifications. Unlike debt consolidation, bankruptcy is a legal proceeding. And instead of helping you consolidate debt or get lower interest rates, it helps you get rid of debt altogether.

If it sounds too good to be true, know that there are some serious downsides. First, not all types of debt can be discharged in bankruptcy, so you may still find yourself stuck with some debt.

What you need to know about debt consolidation

In most cases, debt consolidation involves take out a personal loan to settle your other debts. You will then have only one debt with only one monthly payment to settle. In some cases, you may qualify for a lower interest rate than you’re paying on your other debts, which can also save you money in the long run.

Debt consolidation can also be done in other ways, including using a balance transfer card to manage credit card debt or a home equity loan or home equity line of credit (HELOC) to pay off your debt.

Advantages of debt consolidation

  • Streamlines debt repayment — Debt consolidation can help you go from multiple monthly payments and interest rates to one. Not only is it easier to track your debts, but you might also end up paying less each month.
  • Can get a lower interest rate — Debt consolidation can lead to lower interest rateespecially if you are consolidating high interest debt like credit cards or using secured debt like a home equity loan to consolidate your debt.
  • Can improve your credit — Although you may see a temporary drop when you open new debt, debt consolidation can improve your credit usage and make it easier to make on-time payments each month.
  • Getting Out of Debt Earlier — With a potentially lower monthly payment and interest rate, debt consolidation could help you pay off your debt faster. Depending on the amount of your debts, it can take up to several years or as little as a few months to become debt free.

Visit Credible for compare personal loan rates from various lenders, without affecting your credit.

Disadvantages of debt consolidation

  • Can pay fees — Debt consolidation may incur additional costs in the form of origination fees on a Personal loan or a home equity loan, or a balance transfer fee on a credit card. Consider additional fees to ensure that consolidating your debt will make financial sense.
  • The interest rate cannot be lower — There is no guarantee that debt consolidation will result in a lower interest rate. Personal loans can have high interest rates, especially for borrowers with bad credit. If you already have low interest rates on your current debts, debt consolidation might not be beneficial.
  • Assets could be at risk — Depending on the type of debt consolidation you use, you could be putting other assets at risk. For example, a home equity loan is secured by your home, which means your lender could foreclose on your home if you stop making your payments.
  • May not reach root cause of expense — If you haven’t addressed the root cause of your debt, your debt consolidation loan could help you pay off your credit cards, but encourage you to use them for additional purchases. As a result, you can find yourself in an endless cycle of debt.

What you need to know about bankruptcy

If your financial situation is dire and you are considering bankruptcy, here are the two different types:

  • Chapter 7 Bankruptcy — This type of bankruptcy allows you to pay off certain debts. In return, your non-exempt assets will be sold to help provide compensation to your creditors. What is considered exempt property depends on your state, but can include work-related items, a personal vehicle, equity in your personal residence, and household furniture.
  • Chapter 13 Bankruptcy — With Chapter 13 bankruptcy, a court representative will help you create a repayment plan rather than paying off your debts. You will pay installments to your creditors for a number of years and, in exchange, you will be able to keep all your assets. Any outstanding debt at the end of the repayment term will be discharged.

It is important to note that some debts cannot be discharged in a Chapter 7 bankruptcy. Debts that will not be discharged include child support, alimony, taxes, and student loans. Chapter 7 bankruptcy also has an income limit. Those who wish to declare bankruptcy and are not eligible for Chapter 7 can use Chapter 13 instead.

Advantages of bankruptcy

  • Can provide debt relief — Bankruptcy can relieve you of your debt and, in the case of a Chapter 7 bankruptcy, help you pay off some of your debts entirely.
  • Can help you avoid foreclosure — Bankruptcy can help you avoid a legal judgment or foreclosure due to unpaid debts.
  • Some goods will be taken – While some of your personal assets will be liquidated to pay off loans, others will be exempt from liquidation.
  • May not lose all your possessions — In the event of a Chapter 13 bankruptcy, you may be able to keep your assets while having some of your debts discharged.

Disadvantages of bankruptcy

  • Sustainable credit effects — Bankruptcy stays on your credit report for up to 10 years and could prevent you from borrowing money, renting an apartment, getting insurance, or even getting certain jobs.
  • Could lose your property — Depending on the type of bankruptcy, you could end up with a lot of your personal assets seized and liquidated to make payments on your debts.
  • Not all debts are eligible for discharge — Certain debts, including student loans and child support, cannot be discharged in bankruptcy.
  • May have to pay a fee — Bankruptcy can result in additional court, administrative and attorney fees during a time when you are already struggling to pay what you owe.

Bankruptcy should be considered a last resort. Consider a personal debt consolidation loan instead. You can quickly and easily compare personal loan rates with Credible to find the one that meets your needs.

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Debt consolidation in times of uncertainty https://seattlewto.org/debt-consolidation-in-times-of-uncertainty/ Fri, 26 Aug 2022 13:03:18 +0000 https://seattlewto.org/debt-consolidation-in-times-of-uncertainty/ “Under the right circumstances, shifting increasingly expensive short-term debt to longer-term, lower-rate duration can help reduce monthly expenses, at a time when every little bit counts.” The research was conducted among 2,068 UK adults in June 2022, 58% of whom were homeowners, of whom 25% also had an unsecured loan. It revealed that the vast […]]]>

“Under the right circumstances, shifting increasingly expensive short-term debt to longer-term, lower-rate duration can help reduce monthly expenses, at a time when every little bit counts.”

The research was conducted among 2,068 UK adults in June 2022, 58% of whom were homeowners, of whom 25% also had an unsecured loan.

It revealed that the vast majority (78%) of UK homeowners found themselves spending more on living costs than six months ago. Three in 10 (30%) of those with revolving credit, including credit cards, store cards and overdrafts, said they had an average balance of almost £3,000 and had seen their rates rise over the course of the same period.

Overall, our research found that around 12.7m UK homeowners could face an average increase of over £750 in annual interest rate payments on revolving credit, with 3.8m seeing a increase of over £60 per month.

With the two pinch points of the rising cost of living and more expensive credit, and an average balance of £8,738.90 per owner for revolving credit and unsecured loans, such as car loans, the moment may have come for savvy spenders to consider debt consolidation. .

Not a last resort

For many, the term “debt consolidation” can carry negative connotations, suggesting an unmanageable or poorly managed amount of debt, and a person in dire straits. Indeed, our research found that only 30% of people with outstanding debt would consider consolidating it into a single loan, while 45% said they wouldn’t see it as an option at all.

However, far from being a matter of desperation, with much of the UK dependent on unsecured credit, rising rates and the economic outlook looking constantly bleak, it is simply a matter of good money management .

While no financial solution is perfect for every client, under the right circumstances, shifting increasingly expensive short-term debt to longer-term, lower-rate duration can help reduce expenses. monthly, at a time when every little gesture counts. There’s also the added benefit of streamlining all additional fees and charges and having one easy-to-manage payment per month, reducing the risk of complications or missed payments.

A homeowner can use their home’s security in a number of ways in this situation, including re-mortgaging to raise capital to pay off debts, but the best option may be second mortgages, as this allows borrowers to stay on a potentially more favorable market. first rate of charge while enjoying the equity accumulated in their home.

At Pepper Money, the average median salary among our second charge clients who take out a debt consolidation loan is £53,900. These are high-income earners who take proactive steps to ensure their continued financial stability, in addition to potentially boosting their credit ratings, while leaving a safe buffer of equity in their home.

While there is risk with any form of borrowing, Pepper Money prides itself on taking a careful and thoughtful approach, backed by humans and technology working together to deliver positive results for clients.

In this time of uncertainty, this is an opportunity to make the most of the continued stability in the housing market, leveraging the power of home equity to gain some breathing room. With rising inflationary pressures, now is the time to find out if secondary debt consolidation is right for your clients.

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