Is Debt Consolidation Right For Me?

What Is Debt Consolidation?

Debt consolidation is the combination of multiple debt sources with different interest rates, payments, and due dates into a single loan with a more-favorable term structure. There are multiple options for debt consolidation; based on the circumstances involved, such as credit score and overall amount of debt, some methods may be more beneficial than others.

Personal Loans:

Combining several sources of debt into a fixed monthly payment amount.

Credit Card Balance Transfers:

Moving outstanding balances to a card with a lower APR. Introductory rates are often offered.

Home Equity Loans:

Pay off higher-interest debt using your home as collateral.

Debt Management and Credit Counseling:

Utilize recommended third-party agencies to renegotiate or pay down existing debt over time.

Are There Disadvantages To Consolidating Debt?

All financing scenarios, including debt consolidation, carry pros and cons. As an example, there may be limits to how much may be combined at once, minimum credit scores, and transfer fees or closing costs. It’s best to weigh multiple options thoroughly and make an informed decision after careful consideration.

Should I Consider Debt Consolidation?

One fixed payment at a lower rate is typically the primary goal of combining debt. Items to consider before consolidating debt include checking your current credit score, determining the overall amount of money you need to borrow, and comparing interest rates. Your trusted mortgage professional will present your best options and assist with making a informed decision to improve your overall financial standing.