Debt consolidation solutions allow you to combine multiple debts on your balance into one single monthly payment. This works by taking out one big loan with a lower interest rate or an extended amortization period to repay all your outstanding high-interest debts and then continue repaying your new loan with one monthly installment.
While you can choose which debts to include in your debt consolidation solution, not all debts can be combined in a consolidation loan. Typically, secured loans such as mortgages and car loans cannot be combined in your debt consolidation loan. A first step before taking out a debt consolidation loan is to make a list of all your outstanding debts so you can assess which of these you can and want to combine in your debt consolidation loan.
Individuals opt for debt consolidation to regain control over their cash flow. It’s much easier to manage finances if you have only one monthly payment instead of multiple payments with different due dates and interest rates.
Unfortunately, the requirements for getting a debt consolidation loan are very strict. You need to have a high credit score, and typically, you need to have assets worth the amount of the loan in your name as collateral.
You should work with your mortgage professional to get more insights into which debt to consolidate and to get a more detailed calculation of how much money you could save by consolidating.
