Debt consolidating remortgage loan
Creditors are willing to do this for several reasons, including that it maximizes the likelihood of collecting from a debtor.These loans usually are offered by financial institutions, such as banks and credit unions, but there also are specialized debt-consolidation service companies.Even if the monthly payment stays the same, you can still come out ahead by streamlining your loans.Say that you have three credit cards that charge a 28% APR; they are maxed out at ,000 each and you're spending 0 a month on each card's minimum payment.“If the principal is paid down faster [than it would have been without the loan], the balance is paid off sooner, which helps to boost your credit score,” says Freeman.
Usually, the interest for this type of loan is deductible for taxpayers who itemize their deductions.However, if you have a lower-interest loan that is causing you more emotional and mental stress than the higher-interest ones (such a personal loan that has strained family relations), you may want to start with that one instead.Your monthly payment and interest rate might be lower, thanks to the new loan.Although each lender will probably require different documentation depending on your credit history, the most commonly required pieces of information include a letter of employment, two months' worth of statements for each credit card or loan you wish to pay off, and letters from creditors or repayment agencies.If you have a good payment history with a bank, credit union or credit card company, asking that institution about a debt consolidation loan should be your first step.
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This amounts to a total savings of $7,371.51 ($3,750 for payments and $3,621.51 in interest).