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.

Following Are Two Samples Of Debt Consolidation Results:

EXAMPLE #1;

TYPE BALANCE   PAYMENT
Mortgage Loan @ 8% $ 100,000 P&I $ 734
VISA Card $ 7,538 ---- $ 266
Master Card $ 2,300 ---- $ 92
Furniture Loan $ 3,700 ---- $ 115
Discover Card $ 1,723 ---- $ 51

Totals $115,261 --- $ 1,258

 Debt Consolidation Results

TYPE BALANCE   PAYMENT
Mortgage Loan @ 7% $ 115,300 P&I $767
Visa Card $ 000 ---- $ 000
Master Card $ 000 ---- $ 000
Furniture Loan $ 000 ---- $ 000
Discover Card $ 000 ---- $ 000

NEW Totals $115,300   $767

 *****TOTAL SAVINGS***** $ 491 Per Month!!! *****



EXAMPLE #2;

TYPE BALANCE   PAYMENT
Mortgage Loan @8.250% $ 100,000 P&I $ 751
Second Mortgage @ 10% $ 32,000 ---- $ 280
Home Depot $ 4,198 ---- $125
Discover Card $ 3,957 ---- $118
Walmart $ 1,638 ---- $55
Car Loan (Balance) $ 18,207 ---- $375


Totals $160,000   $ 1,704


Debt Consolidation Results

TYPE BALANCE   PAYMENTS
Mortgage Loan@ 6.875% $ 160,000 P&I $ 1,051
Second Mortgage $ 000 ---- $ 000
Home Depot $ 000 ---- $ 000
Discover Card $ 000 ---- $ 000
Walmart $ 000 ---- $ 000
Car Loan (balance) $ 000 ---- $ 000

NEW Totals $160,000   $1,051

*****TOTAL SAVINGS***** $ 653 Per Month!!! *****

 


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