Refinance Mortgage: Debt Consolidation
Refinancing a mortgage showcases a variety of potential benefits. If you plan a cash out refinance for your VA or no closing cost mortgage, a calculator can help! Or even better, work with your experienced Real Mortgage Consultant and don’t settle for less. How do you decide, “Is debt consolidation a good idea?”
The purpose of debt consolidation lies in the desire for loan freedom. While it is not pleasant in general, the way to confront your debts is to look at your liabilities head-on. And debt consolidation can be one helpful strategy to do this.
What is Debt Consolidation?
Debt consolidation merges loans from cash out to VA mortgage refinance, where a calculator might come in handy. Technically, it refers to getting a new loan to pay debts and liabilities. Through this new loan, multiple loans are combined into one single mortgage.
The key part in consolidating your debts is that it should result in more favorable payoff terms. Without these favorable terms, consolidating your debts might just be overwhelming. These terms vary and may be one of the following; a lower required monthly payment, interest rate, or both of them.
Debt consolidation is a strategy for debt elimination. Merging VA mortgage with other loans thru a no cash out refinance is possible despite its closing costs. And this is only one of the ways to consolidate debts.
There are different ways to consolidate debt but the vital thing is to do it in the right way. If not, instead of financial freedom, you might end up getting in more trouble with the loan payments.
Truths about Debt Consolidation
In debt consolidation, it is a good idea to start learning everything you can as much as possible. While you can depend on your Real Mortgage Consultant at Winner’s Mortgage, it wouldn’t hurt to know what to expect.
Debt consolidation can be both simple and complicated that at one point a calculator might be helpful. Learn about the basics of debt consolidation. Start with the simple fact that debt consolidation involves merging all debts into one new loan. Why? Rather than “one big loan” perhaps “one loan” can be easier emotionally to focus on rather than many all at the same time.
Debt consolidation is can be a good simplified debt-relief strategy. While can be dangerous, it can be useful when handled and guided correctly by the right consultant, an accomplished Real Mortgage Consultant. There are several factors to consider before deciding on a strategy for financial freedom Before you do that though, here are some considerations to note.
Debt consolidation for lower interest rates requires careful planning and consideration
Low-interest rates are important but they are not the focus of debt consolidation. Even if a calculator shows a low rate for your VA no cash out refinance, it requires more than that. Some of the factors considered for low-interest rates are credit score, payment behavior, and market trends. Low-interest rates are not always available for you. To know the possible rates for your situation, contact your experienced Real Mortgage Consultant.
Your attitude and approach are vital for debt consolidation to be fruitful.
A debt consolidation loan is a cash out loan by definition. This means that more money is borrowed than the current loan amount. It may be through a VA refinance with excess equity as a cash out. One of the purposes is debt consolidation.
Debt consolidation is a strategy for debt freedom and that requires your full cooperation. If you can, avoid cash-out transactions when aiming for financial freedom. Its success will depend on your attitude and approach when handling the loan. Pay the monthly payment loyally and approach your loans as a priority.
Debt consolidation may contribute to the temptation of adding more debts and credit. This temptation comes after refinancing and improving one’s financial situation. If this happens, it can lead to higher mortgages and more debts despite no closing costs involved. This is the best time to ask, “Is debt consolidation a good idea?”
Run-of-the-mill loan officers help process debt consolidation loans but not beyond that. Without the right coaching and advice, it can cause a big problem in the end. You might end up with more debt than what you had when you started. You might even get a bit lenient in paying your monthly dues for your loan. Besides roughly estimating the potential benefits of your debt consolidation in your calculator, you can do these:
Discipline your spending habits
Your spending and payment behaviors are important in your debt consolidation plan. If you want it to be successful, discipline yourself and your expense habits. Make sure not to be tempted just because the mortgages have no closing cost. Make a decision based on the necessity of the loan.
A strong caution comes in the form of increasing your debts, especially after the process. And discipline yourself in handling your savings and expenses.
Get the help of experts like your Real Mortgage Consultant
Avoid run-of-the-mill loan officers and get the help of your genuine Real Mortgage Consultant. A fully-trained Real Mortgage Consultant won’t just get a calculator to help in your debt consolidation needs. Winner’s Mortgage helps borrowers even after the process and has the formula for success. It is important to get the help of experts to make sure you get successful results in the end.
The Winner’s Mortgage Master Plan helps set up people for success in their debt-freedom goal. Learn more about this rock-solid strategy here.
What are the Types of Loans for Debt Consolidation?
The two most common types of debt consolidation are secured and unsecured loans. Some may be no cash out refinance, ranging from VA to FHA mortgages. A no cash out is a straight refinance without taking extra cash, aiming for a lower interest rate or loan term. Borrowers do not receive cash at the closing and costs may be included in the loan. At the closing, they receive the cash to pay their loans, or debts are directly paid.
Secured loans are the types of debt consolidation loans with collateral. This collateral can come in the form of a car or a house, depending on the situation. This can either a cash out refinance or not on your VA or other loans and will require more computations so get your calculator out! Calculations can help determine if they are advised based on your situation.
Some examples of these secured loans are the following:
- Fixed-rate & Adjustable Loans
- VA Loan
- FHA Loan
In refinancing these loans to consolidate debt, a property will be made as collateral.
Unsecured loans are easier and quicker to process and apply for compared to secured loans. Since the security of real estate is not involved, many steps are not necessary. While unsecured loans are not mortgage refinances, they can be used for consolidating debts. Borrowers can consolidate debts on a zero-interest rate credit card, which will be considered as an unsecured loan.
These loans are not supported by assets as collateral. This means there is nothing the lender can take away from a person if they do not make the payments. The only recourse for legal collection is to go to court or get a judgment, with possible wage garnishment.
Examples of these loans include:
- Credit Cards
- Student Loan Programs
This loan is not a mortgage type that has closing costs but has no collateral to hold.
Both types have their respective policy to follow. And it is a good idea to check out that policy in considering debt consolidation through these loans.
How does Debt Consolidation work through Refinancing?
Debts that are easily consolidated are usually those that are not tied to an asset. The debt consolidation process is more than just using your calculator to add up debts. It involves using different strategies to pay off all debts in many situations, using one mortgage. Through a single liability, multiple debts can be easier to manage.
To have a general idea of how it works, here are the steps.
You don’t need a calculator to know if a VA mortgage or cash out refinance is right for you. You need a recognized Real Mortgage Consultant to help you determine your best options and manage the process. And in this first step, a consultant’s expertise is crucial in its success.
Your Real Mortgage Consultant will get all the important details through the Client Questionnaire for cold, hard facts. After submitting the form and other documents, the next step is to meet with your consultant. He will then discuss your best options based on your situation. And this is done either personally or online. This is one of the most important steps in the process. Primarily because of the analysis involved in finding out what you need.
You can depend on Your Real Mortgage Consultant aims to give you options that are the winning ones. This means that you will have the best options at your disposal. When you apply for a mortgage, no factors will be left ignored from closing costs to rates. This also goes for all financial decisions you plan to make. And in the case of debt consolidation, you will be told if it is a good idea in the first place.
In the meeting, you will get to know your situation better and the best options you have. Unlike a typical run-of-the-mill loan officer, a professional Real Mortgage Consultant will help you win. And this will be just the start of your journey towards financial freedom.
The planning part of the process means finalizing your refinancing strategy. With the options presented, what will you choose? Get your calculator out and go to your recognized Real Mortgage Consultant for your debt consolidation plan for a no cash out refinance.
Your Real Mortgage Consultant will expand on the best option you’ve chosen and help you create a complete plan. The choice is as clear as crystal. In consolidating your debts, it means your goal is to eliminate all your debts as soon as possible. And the best options for it are either accelerating the payment of your loans or lowering the rates. The choice will depend on your situation and what you want to accomplish.
If you plan to get a no cash out refinance on your VA mortgage, all factors are considered like closing costs. It may not fit though in the debt consolidation category. Check out with your authentic Real Mortgage Consultant on the ideal options you can do. This is the time to figure out if debt consolidation is really a good idea.
With the help of your Real Mortgage Consultant, you will have access to all available options. Your top-drawer Real Mortgage Consultant will let you know if a mortgage refinance does not best fit your needs, if instead, you need a referral for other services that can help. Your consultant will also assist you in choosing a strategy that is most likely to work for you. This means providing a clear path towards your goal of debt freedom.
3. Loan Application
In the loan application step, the formalities of the process begin. Your dependable Real Mortgage Consultant will help you through it. This includes the following steps.
- Sending additional documents required
- The signing of Loan Application
- Ordering of Title Opinion and Title Insurance
- Home appraisal
- Verification of employment, bank account, and tax transcripts
- Sending of application to the lender for underwriting
These are the steps that are included in the loan application process. Once this phase is completed, the process moves to the lender for review and approval.
After sending the loan application and documents to the lender, underwriting will commence. The lender reviews the application and decides. There might be additional conditions from the lender. Be ready and flexible to meet the requirements of the lender.
Get your calculator out and listen to your field-proven Real Mortgage Consultant for your debt consolidation and cash out refinance options. Follow the consultant’s advice on locking your rate and possible expectations. The lender will then review the conditions again and issue a “clear to close” to move forward to the next step. Again. Your goal is to receive a “clear to close” determination from the lender so you can move to the next phase.
Your Real Mortgage Consultant will coordinate with you to schedule your closing date, time, and location. The lender will produce the closing documents. Your Real Mortgage Consultant will review the closing documents with you. And you can be in control of the process. The lender will send the Closing Disclosure before the scheduled meeting. This will make sure you know what to expect in the meeting.
At the closing, you will sign the required loan papers and receive the money from the loan. For typical run-of-the-mill loan officers, this is the end of the process. The loan officer has achieved his or her goal, which is doing the loan and receiving the commission check. However, for your dependable Real Mortgage Consultant, and Winner’s Mortgage, the process continues so you can really WIN. This is only one way that Winner’s Mortgage is uniquely focused on you WINNING.
6. Debt Freedom
The final step and real goal of refinancing and debt consolidation is debt freedom. Your credible Real Mortgage Consultant will still be by your side at this stage. This is unlike what a typical run-of-the-mill loan officer does.
Freedom from loan payments will require you to follow the plan you and your classic Real Mortgage Consultant set up and agreed with at the beginning. And every decision you make onwards, keep your long-term goal of loan payment freedom primary in your decisions. Your Real Mortgage Consultant will be with you in this process too when performance counts.
Learn about this process more thoroughly through this page.
Benefits of Debt Consolidation
Debts can be a big concern when mishandled, and expense even if they seem under control. One viable tool for handling them is debt consolidation – when it is handled the right way and with your fully-trained Real Mortgage Consultant. From fixed-rate loans to no closing cost mortgages, merging debts can be a good decision.
Debt consolidation offers the following benefits:
Single Monthly Payment
By combining multiple debts into one loan, you will reduce your number of payments. This means you won’t have to manage several payments using different interest rates. The hassle of paying them is another factor that makes debt consolidation a good idea.
Less Stress and Pressure from Different Lenders
Consolidating debts will ease the stress and pressure you get from different lenders. With a new single loan, calls and letters will be cut down to one. This depends on your situation but it is a good option to consider. With an updated loan, you improve your ability to handle your debts better.
Get A Possible Tax Break
When you get a no cash out refinance of your VA mortgage, or other mortgage types, get your calculator for a tax break is possible. Although the benefits of mortgage interest deductions have been reduced with the 2018 law, the tax benefit may still be a benefit. Check with your tax advisor for advice on your tax strategies. Tax deductions are only possible with secured loans though.
Improve Your Credit Score
Debt consolidation is a good idea when you plan to improve your credit score. In paying off your loans as soon as you can, your credit score may improve. Even if you plan to keep the required monthly payments low, as long as you keep paying, it will help immensely. Good payment history can affect your credit score and standing.
A no closing cost mortgage can be used for debt consolidation and you would need a calculator for it. Depending on your situation, get a Real Mortgage Consultant to help confirm anything you may find with a calculator. Don’t gamble and bet on a winner!
Besides the interest rates and closing costs, requirements will depend on the borrower. Some lenders require fewer documents if you are refinancing from them. But this is only always true for no cash out and depends on the borrower’s situation.
Debt Consolidation vs. Debt Settlement, Management, and Refinancing
In understanding Debt Consolidation better, it is vital to learn about other terms related to it. These terms are even used interchangeably though they have different meanings. Some of these terms include:
Compared to debt consolidation, debt settlement is not about getting another no-closing cost mortgage. You may need a calculator to add up debts like your VA cash out refinance and other loans you’ve incurred. Debt settlement needs to deal with this at the start of this strategy.
In debt settlement, borrowers are asked to save money and stop paying unsecured debts. The money saved will be put in a special fund and used at the right time. This is after the negotiation of reduced payment by the debt settlement company. The negotiation will hopefully get rid of a part of the debt. Is this a good idea compared to debt consolidation?
Debt settlement poses many negative impacts, including a 15 to 20 percent service fee. This might be a good choice for a customer depending on their situation. While it requires no closing cost and does not involve a mortgage in any way, it is one of the last options to consider.
Unscrupulous companies also operate in the industry and can take advantage of customers. It is vital to find a credible company if you choose this option.
Debt management is a service that may also be offered by a debt settlement company. It may also be offered by organizations that focus solely on debt management services. It involves negotiating new lower payments and interest rates on unsecured debts. Customers will have a notation in their credit report resulting in a lower credit rating. This may be considered as a last option.
It is important to be careful in trusting companies dealing with these negotiations. Make sure you make the right choice to avoid losing more than you expected. Just like debt settlement, many untrustworthy organizations offer this service.
Debt refinancing is different from consolidation more than in numbers in the calculator. It refers to getting a new loan with better payment terms. Compared to consolidation, you can get a cash out refinance from your VA loan. You can refinance for more specific reasons than consolidation.
A mortgage with no closing cost can be tempting to get a refinancing. It is important to remember that refinancing must be done for specific reasons. And one of those reasons is to settle or reduce your debts without compromising your assets.
While debt refinancing does not mean debt consolidation, it can be one of the ways to do so. Is refinancing a good idea for debt consolidation? If it will help you improve your financing standing, then the answer is yes.
Other Options to Consider besides Refinancing
Take your calculator out and know what to expect from your no cash out refinance for your debt consolidation. But that is only one of your options. There are different ways you can consolidate your debts but make sure you do it with open eyes. A VA or FHA cash out refinance may not get your ideal numbers in the debt consolidation calculator. Get help from experts like your acclaimed Real Mortgage Consultant.
In consolidating debts with refinancing, you may get lower interest rates or longer term. It is important to stick with the plan you decided to follow in consolidating your debts. Remember why started the process in the first place. It’s important to handle your debts better to have the best chance of succeeding with debt consolidation. Here are some ways you can do it successfully.
Look into your retirement or savings accounts
Get your debt consolidation calculator out and check out your accounts. This will be a good option if you have savings or retirement funds in the first place. If you are in a situation where you can use these accounts, make it a first choice. Check on your calculator if you can avoid taking out a cash out refinance. Depending on your situation, it may be a wise decision to use some of these funds. Your accomplished Real Mortgage Consultant can help you with that analysis.
For your savings account, it might be risky when you exhaust your emergency funds. Whether to use savings is a decision based on each person’s situation. It can also depend on your risk tolerance.
Winner’s Mortgage Loan Payment Freedom Secrets program, part of the Winner’s Mortgage Master Plan, available as a free give with your mortgage from Winner’s Mortgage, can help with the decision whether to use savings. In the meantime, your Real Mortgage Consultant can also help you decide on an option tailored to your needs.
Your retirement funds can be another option. Funds from retirement savings may incur tax penalties, so check with your tax advisor first.
Restructure Your Loan Rates or Terms
Here are two strategies you can consider in refinancing for debt elimination. One or all may apply depending on your situation. These include the following:
- Consolidate debts and accelerate the payoff of balance loans
- Use reduced interest rate to accelerate the payoff of all loans
When it comes to refinancing mortgages, no closing cost is possible. You can take advantage of this and get a reduced interest rate. Another option you can do is to accelerate the payoff by shortening your loan term.
Like all debt consolidation methods, this also runs with a risk. The possibility of mismanaging your payments is clear if you don’t pay religiously and on time. Get your debt consolidation calculator and make sure this does not happen.
Consider credit card balance transfer
Another way to consolidate your debt is by transferring your credit card balance. In transferring all your debts to one credit card, you get to track only 1 monthly payment. In addition to that, you only have to concern yourself with 1 interest rate.
An advantage of this strategy is that you won’t have to risk any asset. It will also be an easier and quicker process to accomplish compared to other methods. It is important to inquire about your credit card limit and APR before applying for the transfer.
The deal with this debt consolidation solution though is that you will need a high-limit card. This is to be able to accommodate all your debts into that one card. If you have a lot of debts, this might be difficult to accomplish with one card.
Get a debt management plan
Another solution you can explore is getting a debt management plan. If all plans fail and you feel like you have no other choice, try to negotiate with creditors. This will take more than just getting your calculator to compute for your cash out refinance. In getting a management plan, you would need the help of an expert agency to do so.
If this is the case, make sure you stick with agencies affiliated with legit companies. And trust a debt counselor certified by the Financial Counseling Association of America. You can also consider those certified by the National Foundation for Credit Counseling.
The fastest way to get out of debts is to pay them off. And the most practical way to take care of multiple debts is by consolidating them. It is a good idea to get into debt consolidation if you know how to make the most of it. Get the help of your credible Real Mortgage Consultant to make this possible.
Special Consideration & Option: Bankruptcy
Bankruptcy is a special consideration in handling your debts. Bankruptcy is expensive both for the creditors and borrowers. If your debt consolidation calculator can’t handle the numbers anymore, this is it. This is the last option you can take if you have no other choice left.
When it comes to bankruptcy, there are two primary types you can consider:
In Chapter 7, the court will discharge any further liability for all unsecured debts. Secured debts on the other hand are excluded or re-negotiated. While this gives the borrower a fresh start, it will have a major negative effect on their credit standing. This bankruptcy record on their credit will last for 10 years.
In Chapter 13, the court will offer something similar to a Debt Management plan. The court will devise a revised payment plan that the borrower should agree with. Similar to Chapter 7, it will also have a major negative effect on their credit.
Bankruptcy is the last option you should consider. Debt consolidation is an excellent tool towards debt freedom. It demands discipline from borrowers though to stick with the payment plan. Soon enough, debts will be a distant memory from the past.
Debt consolidation is one way to successfully eliminate debts. Its success though depends on several factors. The borrower’s dedication towards the goal, debt-freedom, is a big consideration. And having a dependable Real Mortgage Consultant as your guide in this journey is also vital.