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Lower Monthly Credit Card Payments By Refinancing or Taking out a Second Loan - Consolidate Credit Cards into an Equity Line Of Credit

March 9th 2006

Lower Monthly Credit Card Payments By Refinancing or Taking out a Second Loan - Consolidate Credit Cards into an Equity Line Of Credit

Cash When you Need It

Now that credit card companies are forced to double their minimum payments, many who relied on the funds for medical emergencies or business may find themselves in a financial bind.  New bankruptcy laws may make it more difficult to shake this debt as well.  Taking a second on your house or refinancing may become more appealing.

Many financial gurus say this is a bad idea because you are taking unsecured loans and turning them into secured loans with your house as collateral.  But if you truly intend on paying off the loans, it might make since, especially if interest rates go higher.  In fact it might be the right time to consider consolidating your debt or taking out a line of credit, whether you use it or not.

 

You may want to begin saving the special loan offers that come in the mail and when you are ready to look into it, compare the offers.  You may not want to wait until you are backed into a corner before you decide to take out an equity line of credit.  The banks may not want to take a risk if you wait are financially strapped.

Lenders may require a small yearly fee.  We have seen fees range between $50 and $150 by various lenders.  But if you are able to lower the monthly payments, lock in a low interest rate and extend the life of the loan, the $50 fee may be incidental.

 

Some lenders will offer homeowners with enough equity a stated loan.  This is a loan where the borrower is not required to show income documentation.  These loans are popular with business owners because many of their expenses are written off, or they may be in the process of developing their business.  They may not have much income in these early years.

You may want to pay the loan off early when you are making more money.  Ask if the new loan has a pre-payment penalty.  Some lenders will require a small prepayment penalty, especially in the first few years of the contract.  This is not unusual.

Read over the offers carefully. Make a list of questions to ask while you are on the phone with the agent, and take notes of their answers.  Donít be afraid to ask; it could save you heartache and lots of money in the future. 
 
 
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By Dan Wilson
Best Syndication Staff Writer

Books on Lending

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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:48 PM