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How to Use a Home Loan for Debt Consolidation

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Do you own your own home? Are debts sucking the life out of you? Do you feel like you are working simply to pay your debts with nothing left for living life? Are you considering bankruptcy?

As a homeowner, you are sitting on, or more accurately, living in, what is probably your greatest financial asset to help you break free of the stress of your debt.

Making the Right Decision

Transferring your debt to a loan on your home is not an easy decision to make in many respects. It comes, as do most of our decisions, with pros and cons you need to consider seriously before taking this leap.

First, find out what the value is on your property. Have knowledge of what the current interest rates are for a home equity loan. These change daily so it is important to check into the rates at the time of your consolidation. Have a clear picture as to what your other assets of value are and your total debt.

Know your credit score, debt ratio to the income you make and what your credit history is like. Decide if you want all of your bills consolidated or have some left as they are. The more you know ahead of time the less you will be caught off guard and the more realistic your decision will be as to whether or not you want to tie your home up in a consolidation loan situation.

A change in your spending habits is also important. Many of your financial woes are from situations beyond your control such as loss of a job, job lay-off, uncovered medical bills and lengthy illnesses. Other financial woes can be of a person’s own doing when you want something right now but desire to pay for it in the future. Then you discover you still can’t afford what you have already purchased.

Your home can be a lifesaver if debts are beyond your ability to pay. Know your spending history, the pros and cons and make sure you can continue to afford the payments on your home loan now and in the future.


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