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Debt Consolidation Quotes are Only the Beginning Staff - Mortgage Lenders Plus.com

Debt consolidation loan quotes are only the beginning of the process if you are taking a close look at dealing with overextended credit. A debt consolidation loan can take the form of a standard, unsecured loan, a home equity loan, a home equity line of credit or even an entire refinancing of your mortgage into a larger loan – larger due to home equity - that provides you with cash for paying off debt.

On paper, a debt consolidation quote using home equity can’t fail to be attractive. The loan has a lower interest rate than your credit cards, the interest is tax deductible, and the length of the loan lowers your monthly payment obligations to a manageable level. For many people, this option is irresistible. The monthly relief is critical, but in some instances applying home equity to debt retirement can cost you money.

If you choose to refinance into a new mortgage, the inclusion of the debt can raise the interest rate a little. But on a thirty year mortgage, raising the interest rate just a quarter of a point can offset the savings on a vastly reduced interest rate for short term, credit card debt. So when you debt consolidation quote is for a new mortgage that lowers the interest rate six points or more, take a look at the long term impact that is caused by any adjustment in your mortgage interest rate due to the debt you’ve folded in.

A debt consolidation quote on a home equity loan or line of credit (basically a second mortgage) is going to be two to four percentage points higher than the interest rate on a primary mortgage with a fixed rate. That’s for a fifteen year loan in the $30,000 range. Once again, it pays to see how consolidation and non-consolidation pencil out in the long term. These loans also have tax deductible interest, as with a primary mortgage, which adds to their attractiveness.

A non-secured debt consolidation loan is going to have an interest rate somewhere in the teens, although it will probably be lower than some of the credit cards you’re paying on. It will lessen the monthly pressures as the rest of these loans will, because it spreads your debt retirement over an extended period of time. In virtually all cases however, this option is going to cost you money.

To get an accurate look at the cost of your debt consolidation quote, use the Mortgage Lenders Plus Debt Consolidation Calculator found at http://www.mortgage-lenders-plus.com/calculators_debtconsolidation.asp. This handy online device will give you a look at total interest costs associated with any loan you are considering. It won’t factor in the tax deduction you’re getting on a home equity loan – that will be up to you and your tax bracket.