Fha Home Loans
Take out home loans to consolidate and pay off multiple debts
Apart from taking out a personal/consolidation loan, you can obtain home loans for debt consolidation. With this loan, you can pay back all your debts at once. There are 2 types of home loans with which you can consolidate your debts. They are cash-out refinance loans and a second mortgage loans. Go though this article to know how these loans help to consolidate your multiple loans/debts.
Debt consolidation - What it means
Debt consolidation is a process by which you can repay your multiple loans/debts with the help of a single payment every month. What happens is you take out a loan with which you repay all your debts at once. Thus, all your multiple bills/debts get replaced by a single loan for which you need to make only one payment every month.
Apart from taking out a consolidation/personal loan, you can obtain secured loans (home loans) for the purpose of debt consolidation.
How home loans help to consolidate debts
You can take out 2 types of home loans for debt consolidation. They are cash-out refinance loan and second mortgage loan, which are discussed below.
1.Cash-out refinance loan
By taking out a cash-out refinance loan, you actually replace your existing mortgage by a new loan that is higher than the remaining balance of your home loan. You utilize the extra amount to pay off your other debts (such as, credit card bills, store card bills, medical bills, etc.) at once. The same property (that is your home) is used as the security for the loan. Before obtaining a cash-out refinance loan, make sure you calculate your outstanding debt amount so that you can take out the required amount in order to repay your dues.
2.Second mortgage loan
You can also take out a second mortgage to pay off your multiple dues. If you have enough equity in your home, then you can use that equity to take out a home loan with which you can repay your unsecured debts. You can either take out a one-time home equity loan or obtain a HELOC (Home Equity Line of Credit) and borrow the required amount from time to time until you exceed your available credit limit.
However, be careful while taking out home loans for debt consolidation as you may lose your home if you cannot pay back the loan on time. So, it is advisable that you assess your financial condition and take out an amount that you can pay back along with the interest within the stipulated loan term
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