Thursday, May 8, 2008

How To Find A Debt Consolidation Loan

There are very few online debt consolidation lenders that will really help debtors reduce their debts. If you choose to use one of these groups be vary cautious and consider the fact that by getting into one of these programs your credit scores will suffer.

Homeowners who are in over their heads in debt can use their homes as collateral to payoff their debts. A homeowner can get a cash out refinance to payoff the smaller debts. How much you qualify depends on how much equity you have in your home.

An FHA cash out refinance will allow up to 95% LTV. A Conventional cash out refinance will only allow 90% LTV. If you don't have enough equity for a cash our refinance of your first mortgage your next option would be to take out a 2nd mortgage. Second mortgages usually allow a higher CLTV (combined loan to value). Some lenders will go as high as 100%CLTV but the interest rate is higher.

The loans offered are given to the debtor to repay the debts; and then the debtor must payoff the loan in monthly installments. In other words, your bills are calculated and rolled into one monthly installment. If you have credit cards, then the interest rates will roll into the monthly installment, as well if you have personal or home loans or other types of loans, then the interest rates are rolled in to one balance per month.

Some debt consolidations make it easy and offer short applications, which will link you to an expert who will search for a solution to reduce your debts by assessing your information. Money Management International (MMI) is one of the many online "Consumer Credit Counseling Services" (CCCS) that is a non-profit organization that offers support to debtors.

The non-profit organizations are sometimes safer to use than the organized services. Since MMI is a member of the Better Business Bureau, I will refer to this debt consolidation reduction organization to help you get an idea of what is available to you.

Once you sign up at an online debt consolidation reduction organization and are approved, then the professional financial guides will work with your creditors, asking for leniency. This means that the experts will work hard to get a reduction on your debts. For example, if you are paying $1000 per month in bills, some debt counselors will work to get your debts reduced to $500 give or take a couple hundred. This figure is half the amount you were paying in the first place. What a bargain!

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