Today almost every second Americans has loans. However, most borrowers pay more than one loan back. And each of them has its own payment term, its own amount, its own bank, where you need to pay the money back. It is clear that this is not very convenient – and if there are more than two loans, it transforms into a problem. Today, many organizations propose to combine loans – take a new loan, under more favorable terms, and pay only it.
Benefits of debt consolidation loan
Firstly, it is much more convenient to pay off one loan at a time. Having closed all debts in other banks and MFIs, you pay only to one bank.
Secondly, you can significantly reduce loan payments. In the case of expensive unsecured loans, the amount can differ significantly. If we compare the rates of consumer loans and loans for “debt consolidation” secured by real estate, you will notice that the rate for the latter is lower. Banks are ready to give loans for a long period – up to 20 years. This will significantly (sometimes several times) reduce the monthly payment and the burden on the family budget per month.
Thirdly, the borrower has the opportunity to get an amount greater than all existing debts (up to 60% of the appraised value of the apartment). This money can be spent on large purchases, repairs. For example, you have four loans in the amount of $400,000, and an apartment costs $500,000. You have a chance to apply for the loan amount necessary. Once approved, decide to take all or part of the approved amount to pay off your debts.
Fourthly, if you use, for example, part of the loan amount for the reconstruction of housing (which should be spelled out in the contract and the costs of repairs are documented), then there is a chance to get a property tax deduction.
How many loans can you consolidate?
Usually, it is possible to consolidate 5 or 7 loans, inclusive. Although some programs practically do not limit the number of such “debts” to refinance.
I was denied by the huge bank departments. What to do?
You can also make an application in relatively small banks. There, borrowers are usually treated more loyally. Many small institutions are engaged in loan consolidation. In this case, certificates may be sufficient to confirm the income level. In general, a company assesses income from both employment and income from its business.
How much should I expect when consolidating loans?
Most often, borrowers take out a loan from several thousand dollars. If this is not enough, you can take the largest possible amount on the security of the apartment. In this case, the amount can grow several times.
What loans can be consolidated?
There are the most different loan counter offers: commodity, consumer, automotive and others. Difficulties may arise with loans that you took in foreign currency – not everyone is willing to work with them.
Consolidated loan term
If you issue a loan secured by an apartment, then the loan can be obtained for a period of up to 20 years. Most often, having received such a loan, the borrower repays ahead of schedule in 5 to 7 years.