Consolidating home and auto loans
Cash-out refinancing involves replacing your mortgage loan with a new one for more than you owe, taking part of the difference between your old and new loans in cash. A home equity loan gives the borrower access to home equity in cash, which can be used to pay off other debts.A home equity loan does not replace the existing mortgage as a cash-out refinance does, but it is another loan in addition to the existing mortgage.You can take out a personal loan to pay off existing debts and then work to pay off that loan over time.This makes the most sense when the personal loan has a lower interest rate than you’ve got across your existing debts.The specifics of how debt consolidation works will vary by the type of debt you have and the method you choose.“Depending on the type of consolidation, there are debt consolidation firms that will negotiate any sort of debt that’s out there,” said Rod Griffin, director of consumer education for the credit bureau Experian.To come out ahead, you need to find a consolidation loan with a low interest rate and a reasonable term.
You can consolidate most federal student loans with a Direct Consolidation Loan, which you can read more about here.
“There may be restrictions by the lender, but generally, most debts can be consolidated or settled.” No matter what type of debt consolidation loan option you’re looking into, it is important to understand how to consolidate debt.