Debt Consolidation

How Does Debt Consolidation Work?

Here's an example; If the current Appraised Value of a home is $200,000 and the principal balance is $100,000 the difference of $100,000 is the equity balance. (Note; in order to avoid required PMI, or Mortgage Insurance, a 20% equity position must remain). Therefore we can reduce the $200,000 appraised value by 20% thereby reducing the "usable value" to $160,000. The difference between the usable value (160,000) and the principal balance (100,000) is, of course, $60,000 -- this amount can be used to pay off almost any other existing loan including:

• 2ND Mortgages
• High Interest Credit Cards
• Pool Loans
• Personal Loans
• Student Loans
• Medical Bills
• Car Loans
• Boat Loans
• Furniture Loans...
• ...and much more!

Equity can also be " Cashed Out " from a refinance loan and used in full or in part for home improvement, or even deposited into 401k investments, or stocks/money market funds

Some of the key advantages associated with Debt Consolidation;

• Paying off high interest rate credit cards.
• One loan, with one low monthly payment.
• Interest portion of mortgage payments are tax deductible.
• 2ND Mortgages can be rolled into the reduced rate 1ST Mortgage. 

There are no significant drawbacks to Consolidating Debt, or cashing out equity. However, it should be noted that a considerable amount of equity is necessary to maximize the potential benefits and savings.