If you have a number of secured and unsecured loans outstanding and are having trouble making the monthly payments, you might want to consider debt consolidation. The idea is to take loans with higher interest and/or high monthly payments and combine into loans with lower interest and/or lower monthly payments. The amount of time required to pay off a loan often determines the amount of the monthly payment.
Make sure that the balance on the loans is enough to warrant a debt consolidation loan. If the balance of three credit cards is a little over $1,500, you are probably better off to work a little extra time and pay the loans off without consolidating them. Only consolidate loans that are going to take you over 5 years to pay off. And then only increase the amount of time to pay off the loans as needed to bring the monthly payments within your budget.
Debt consolidation will help you to relieve your stress levels, feel better about your finances, make your monthly payments and keep your credit in good standing. Receiving calls from collectors at night is something that can be very unwanted with all the other responsibilities that you have. Late fees add to the balances and make your time to pay off greater. And letting your credit scores slip only provides the credit companies with an additional reason to increase your interest rates.
Getting a debt consolidation loan should start with your mortgage company. If there is equity in your home, that is the best kind of financing available. Make sure to keep enough equity as a cushion in case you want to sell the home or the value of homes declines in your area. Refinancing the first mortgage can be truly beneficial with opening up a second mortgage or a line of credit being almost as equally helpful. Next you should look to your local banks and local credit unions for personal lines of credit or credit cards with low interest rates.
If you situation warrants some consultation, the financing company may ask you to spend some time reviewing your financial affairs with someone that specializes in helping folks that have gotten a little over their heads. This can only be a good thing and provide you with additional suggestions that you have not found on your own.