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Debt Consolidation Reduces APRs, Expands Budgets
By Joe Taylor Jr.
CMR Columnist
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According to the Federal Reserve, credit card debt has risen consecutively each month in the last year. Their survey suggests that Americans are increasingly using credit cards to finance purchases despite rising annual percentage rates.
Debt consolidation is an answer for mortgage holders that need to reset their monthly budgets. A debt consolidation loan is a type of home mortgage refinance that will pay off your credit card bills and other loans. Once the new mortgage is in place, you will have just one loan to pay off over a set amount of time.
What your lender should know before your debt consolidation
Before participating in a home mortgage refinance it is important for a debt consolidator to know about your history with your credit card companies. Your mortgage broker should know the:
- Length of your relationship with a credit card company
- Credit limit on your credit card
- Balance to limit ratio on all credit cards
- Number of times you paid late or missed payment
All of these items affect your credit score, which in turn affect your APR. The higher your credit score, the lower your APR. Debt consolidation allows you to reduce creditors and make just one monthly payment. In time, and with proper discipline, this will help raise your credit score.
Home mortgage refinancing can be used with your existing lender
It is usually easier to get your debt consolidation with the same lender. However, debt consolidation is all about saving you money. Shopping for the lowest rates can lead to the best home mortgage refinance deal.
Sources
Bizjournals
CNN Money
The Community Press
About the Author
Joe Taylor Jr. coaches musicians, entrepreneurs, and other adults that want to shift their careers. He holds a Bachelor of Science in Communications from Ithaca College.
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