It is not surprising that many people are falling into debt in this weak economy. Fortunately, there are many options available for people to pay off debt without ruining their credit rating or subjecting themselves to potential legal action. But before you make any decisions on this important matter, it is necessary to understand the various positive and negative consequences from these different choices.
The best option available, if you can obtain it, is to consolidate your debts with either a mortgage refinancing or a home equity loan. This simplifies the debt repayment process thanks to the fact that you will only have to repay one creditor, the bank that gave you the loan. In addition, this process will not negatively affect your credit rating. Indeed, if you are able to pay off the loan in a timely fashion, it could actually improve it.
Unfortunately, it may not be possible to obtain such a loan, depending upon your circumstances. If you already have a low credit rating, you may not be able to obtain a loan without paying interest rates comparable to that of a credit card. A home equity loan is a viable option only if you have already built up equity in your house. If you bought your house in just the past few years, there is a decent probability that this is not the case. As for a mortgage refinancing, this is a smart solution depending upon your existing interest rate. Although current mortgage rates are low, they may not be low enough to cover the costs of a refinancing.
If you can't directly obtain a home equity loan or a mortgage refinancing to consolidate your debts, you may wish to consider getting a loan to settle your debts. The main benefit to this option is that the debt consolidation company will likely be able to reduce your overall debt burden, meaning you will have to borrow less money to settle the debt. However, it will be difficult to do this without hurting your credit rating, making it more difficult to borrow money in the future. But if you can only obtain a loan on the condition of debt resettlement, then the benefits of being able to pay off debt outweighs the risks.
The best option available, if you can obtain it, is to consolidate your debts with either a mortgage refinancing or a home equity loan. This simplifies the debt repayment process thanks to the fact that you will only have to repay one creditor, the bank that gave you the loan. In addition, this process will not negatively affect your credit rating. Indeed, if you are able to pay off the loan in a timely fashion, it could actually improve it.
Unfortunately, it may not be possible to obtain such a loan, depending upon your circumstances. If you already have a low credit rating, you may not be able to obtain a loan without paying interest rates comparable to that of a credit card. A home equity loan is a viable option only if you have already built up equity in your house. If you bought your house in just the past few years, there is a decent probability that this is not the case. As for a mortgage refinancing, this is a smart solution depending upon your existing interest rate. Although current mortgage rates are low, they may not be low enough to cover the costs of a refinancing.
If you can't directly obtain a home equity loan or a mortgage refinancing to consolidate your debts, you may wish to consider getting a loan to settle your debts. The main benefit to this option is that the debt consolidation company will likely be able to reduce your overall debt burden, meaning you will have to borrow less money to settle the debt. However, it will be difficult to do this without hurting your credit rating, making it more difficult to borrow money in the future. But if you can only obtain a loan on the condition of debt resettlement, then the benefits of being able to pay off debt outweighs the risks.
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