there is an increase in homeowners subscribing to home equity loans in paying off current debt
Philadelphia, PA (PRWEB) June 23, 2014
Debt Consolidation USA shares in an article published last June 18, 2014 the advantages and disadvantages of taking out a home equity loan. The article titled “Is It Wise To Use Your Home To Consolidate Debt?” points out the dangers of using the house to pay off for debt. It also shares some instances when loan consolidation using a home equity loan might work for a consumer in debt.
The article explains that there is an increase in homeowners subscribing to home equity loans in paying off current debt. Home equity is earned by years of paying down the mortgage loan and increasing the ownership on the house. With the increasing number of homeowners using this debt relief program, consumers must carefully weigh out the domino effects of using the equity on the house to pay off for debt.
The number one factor to consider is losing the house. The article shares that this should always be on top of mind of the consumers when taking out a home equity loan. Certainly the payments would be lower and consolidating the debts would streamline the payment process, but inability to pay in the future for a secured debt will allow the lender to execute on their lien on the property and take it away from the borrower as payment.
A lower monthly payment from loan consolidation using home equity does not automatically mean savings. The article explains that the borrower must look into the details and see how the lower payment but longer payment term can affect the total paid amount for the loan. Paying longer on a small repayment amount might be more costly than high payment amounts over a shorter period of time.
The article also shares how loan consolidation using the funds from a home equity loan is considered as treating the symptom rather than the root cause of the problem. Borrowers paying off the existing debts using another loan is similar to simply replacing multiple small loans with one big debt. And to top it off, the house is on the line in case the debt owed will not be paid back as agreed with the lender.
There is a reason consumers get into debt and finding out the root cause of being saddled with multiple debt payments is important. It has to be addressed as quickly as possible because if left unchecked, the borrower will not be able to pay for home equity loan and could lose the property.
To read the rest of the article, click on this link: http://www.debtconsolidationusa.com.