Unfortunately, a bunch of small debts can quickly balloon into one giant headache. There’s a simple way to get it under control, though. It’s possible to refinance your home to consolidate debt. But, is that the right move for you?
What Is It?
Simply, debt consolidation means combining the entirety of your debt into a single debt. That means all those credit cards, car loans, and otherwise are consolidated into a single monthly payment. When you deal with individual loans and debt, you are paying a different interest rate for each, as well as subject to a variety of balances and conditions. By rolling them into one you are managing your debt as easily and efficiently as possible. Before you decide whether this is the route for you, however, let us walk you through some of the upsides and downsides.
Every month, you pay one single payment. Forget about setting up half a dozen direct debits or more, you don’t need to worry about any of that. It’s simpler to pare down all your debt into one single payment with one interest rate for a fixed period of time.
With a fixed rate and term, you know what your payment amount looks like. It might not sound like much, but the reality of the matter is you are far more likely to be disciplined in paying your debt off when you’re dealing with a fixed situation.
You will have less to pay monthly. Overall, though, you may end up paying back slightly more than original, but by stretching the terms you will reduce your monthly expenditure.