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Austin's Home Loan Guide - Debt Solution

Debt consolidation, especially when used in advance of a borrower actually falling behind on his payments, can be a very effective and useful tool for paying off bills while maintaining good credit, by avoiding missing payments. But, as with anything involving finance and your credit, it pays to be careful and considerate in moving forward.

Things to beware of:  

• Transfer fees. The card issuer or bank should be willing to waive any transfer fees, after all they'll be making money on interest from your balance. However even if transfer fees are not waived, consolidation can be worthwhile; just make sure to calculate money saved over the lifetime of the loan compared to your previous debt situation, and choose what's best for you. 

• Interest rates. Make sure you know what the rate will be on the amount transferred. Some advertised rates on credit cards, for example, are just for purchases made, and the transfers, like cash withdrawals, are charged a higher rate. 

• Teaser rates. Make sure you know what the interest rate will be long-term. Don't be tricked into a six month teaser rate, or the like, if you can't pay your balance that fast. 

NOTE:
Stop charging. Especially if you can only afford to pay the minimum on your credit cards, you are going to accrue debt faster than you can pay it if you do not make a firm decision to stop.

Loans to Avoid:

• 125% home equity loans. These are available in some parts of the country, and often include very high closing costs. But more importantly, if you have to sell your property, you will likely have a very difficult time finding anyone to pay more than the real value of your home. Don't bank on appreciation to pay off your debts. 

• Debt consolidation loans with very high interest rates (over 18-20%). They will likely sound good if you are in a difficult situation, because they tout they're low monthly payments. But low monthly payments can cause you to extend the life of your debt and increase your lifetime payment by thousands of dollars. The goal is to pay off your debt as quickly and efficiently as possible.

12 Step Solution:

1. Self Repayment Plan
2. Debt Settlement
3. Debt Consolidation
4. Debt Consolidation loan
5. Credit Counseling
6. Cash out Refinance
7. Retirement Benefits - 401k
8. Credit Unions Loan with lower interest rates
9. Use Home Equity loans
10. Borrow Against Insurance
11. Use Credit Cards
12. File Bankruptcy (Last Resort)