Many people take out debt consolidation and mortgage loan refinance at one time to help their financial crisis get on right track such as to reduce loan repayments, to get rid of calls from creditor for the loan repayment. By putting their asset as collateral they can make their credit card loans and medical bills affordable. This is indeed as a better option than to take help from unsecured debt consolidation loan.
Benefits of debt consolidation loan
These two loans work wonders when worked together. There are many advantages of these two loans. With these loans borrowers can merge all their unpaid medical bills, credit card loans, repossession deficiencies, unsecured loans, auto loans and student loans in one loan. They don’t have to pay off many loan payments to different lenders. All they have to do is to make a one payment for a new loan that contains all previous unpaid loans and bills. Another benefit is that the borrowers can have their loan term extended and in this way they can make their loans more affordable.
Unsecured and secured loan
Deb consolidation loans are really helpful for financially troubled people, as these loans can convert unsecured loans into secured loans. The only requirement from a borrower is to ensure on time repayments. However, is borrower becomes default on the loan contract then the lender holds the right to put borrower’s property on foreclosure.
Fixed loan term
With debt consolidation and mortgage loan refinance, borrowers have the benefit of having a fixed loan term and a specified loan repayment debt.
However, many borrowers make a mistake of leaving their card active or fail to strict the credit limit while consolidating their credit card loans.
Total or cumulative interest
Borrowers should consider total interest that is still to be paid off over a particular term of loan while extending the loan term. That is because borrowers have to pay off total interest when they extend the term of the loan.
The best alternative to these two loans is a debt relief plan. Debt settlement allows a borrower to achieve a debt free life within few months. However, it will leave a bad mark on the credit history of the borrower.
Debt consolidation and mortgage loan refinance are two best solutions for all financially troubled borrowers who are unable to pay off their huge debts and bills. These two loans help borrowers to simply their personal finances and reduce the overall monthly burden of loan repayment. However, it is very important for borrowers to understand the risks involve in converting unsecured loans into secured loans. Lenders are very sharp and know the art to recover their loss if the borrower becomes default. If borrowers are looking for an alternative program to pay off their debts and get a debt free life then debt management program is the best available solution.