Are you ready to get started and clear up your debt and your worries?
Most people carry balances on credit cards and lines-of-credit from month-to-month that take away from their family cash flow.
If you own a house, your likely have equity in the home. What happens when you consolidate your debts into the mortgage is that you bring the debts all under one payment. This will help your cash flow and your credit history.
Consolidating your debts will take your financial worries and stress away. Even if your credit isn’t strong there are still good options.
Some tips for you!
1. Pay off higher-interest debt first
Paying-off higher interest debt first such as credit cards is a good approach to paying down consumer debt. The interest rates on credit cards are normally much higher than on debt that is secured by a property (such has a mortgage).
If you do not have a budget that’s aggressive to allow you to pay-off your credit cards in a few months, you may want to consider consolidating all your debt into one line-of-credit or mortgage. You can then be more aggressive at paying off that one credit facility.
2. Pay off debt that has the highest payments first
Positive cash flow is the most important aspect of an individual or family’s financial health.
Another approach to paying-off debt is to review all the monthly payments on your credit facilities and look at paying off the ones with the highest payments first. The highest payments usually come with car loans or credit cards. Once you eliminate a car or credit card payment, you can then focus on the other debt to improve your cash flow.
3. Consolidate debt into a lower-interest mortgage
If you’re still finding that you can’t pay-off your outstanding debt in six months, consider wrapping it into your mortgage. There will often be a penalty to pay, even if you go with your existing mortgage provider. However, the penalty may be of-set because you are paying off high interest debts.
If this is the approach you’re going to take, ensure you speak to both a mortgage broker who has access to many different financial options rather than a bank representative. The mortgage professional should also help you with your family budget so you don’t run into the same situation again.
The benefits of paying-off consumer debt are that it will allow you to increase your credit score and put you in a better financial position.