Debt Consolidation Loan Rates & Information
Debt consolidation loan options include a cash out
mortgage refinance, home equity mortgage, or an unsecured loan, which is used to pay off high interest debts
with a lower rate loan. Fixed mortgage debt consolidation rates are fully amortized, meaning
paid
off at the end of the loan term.
Mortgage consolidation loans are
designed to save money by converting high
interest rates and compound interest into a lower rate with
tax deductible simple interest. Saving money from tax deductible
interest is possible when a loan is placed on an owner occupied
residence.
Get Mortgage Quotes
Here's a loan example: $40,000 of debt at an average
credit card rate of 15%, might have a payment of about $560
per month, when amortized over a 15 year loan term. A mortgage consolidation rate at 8% would have a payment of about $382 over the same
time period, which could save
$178 per month. If your goal is pay off your debt as soon as possible, the loan
term could be reduced to about 8 years by applying the monthly savings to the
loan payments.
In addition to
reducing your rates, eliminating compound interest
can add to
your total monthly savings. In this example, you may save another $50 per month
by converting to a simple interest mortgage consolidation loan, instead of making
minimum payments on credit cards. It's possible that daily
compounded interest on credit cards can accumulate to more than the minimum
monthly payments, which can result in paying interest on the accumulating interest.
Consolidating debts into a fixed rate mortgage loan can help eliminate the
never-ending minimum payment cycle.
|
