Loan OptionsDebt consolidation refinances can be done using a variety of different mortgage loans.These can include everything from a 30 year fixed loan to an interest only loan to a minimum payment option loan.You need to figure out how much you are comfortable spending on your mortgage. This will vary from borrower to borrower.How To DecideIf you have a lot of equity in your property you may decide to have this work for you.Lower payment mortgages may make sense for you.An interest only mortgage gives you a lower monthly payment than a regular mortgage. This is because you are paying only the interest component of your loan. No principal is being paid off.Your loan size remains the same as long as you pay the interest only level.For a borrower with a lot of equity this may be fine. They will profit from any increase in their property value, and they have enough equity that a decrease in value will still leave them with some equity in their property.If you need a rock-bottom monthly payment than a minimum payment option mortgage may be for you. This loan offers the borrower the opportunity to make a minimum payment loan that is usually less than the interest only level.This gives the borrower a much smaller payment than a regular mortgage will. The monthly reduction in payment can often be over $1,000.This type of loan also has the potential for negative amortization. Any time you pay less than interest only the difference between your payment and the interest only amount is added onto your loan. For example, if the interest only level is $1,500 per month and the minimum payment is $1,000 per month, then if you choose to make a $1,000 minimum payment the $500 difference will be added onto your principal.For many borrowers this is acceptable in exchange for the lower payment. This is something that borrowers with equity may consider.
There are a number of ways for you to get a debt consolidation loan without owning a home. There are two main paths for you to go down when looking at how to do this–you can look into other secured loan options, or look into unsecured financing. Both of these paths will have their own advantages and disadvantages, and frame most of your borrowing experience, so they should be considered carefully.As far as looking into other secured options go, you can always offer some other form of collateral. Having collateral gives you a number of benefits. Lenders decide whether to lend to you at all, and how much of an interest rate to offer you, based on how likely it is that they will get the money they lend back. When you have collateral they have some way to recuperate their funds if you fail to repay them, so they’re more willing to lend to you, and at a more reasonable interest rate. While most banks will only accept real estate as collateral, it’s fairly common for other lenders to accept a vehicle, and you can often find those who will accept high priced collectibles or jewelry.Unsecured options have the downside of being based largely on your credit history. If your rating isn’t in great shape you’ll have a harder time finding lenders who will work with you, and your interest rate will be higher. But, if you know that going in and this is what’s available for you, you can still try and make the best of it. If there is anything you can do to improve your credit score, you should take care of that first, as any improvement will help. If you have a well paying job that you’ve had for a while this will also greatly help your situation, as it shows stability and a way to repay the loan.No matter which of these paths you decide to go down, the important thing is that you are taking control of your financial problems.
BenefitA 2/28 mortgage is a loan that is fixed for 2 years and adjustable for the final 28 years. This is a loan with a 30 year term.This type of loan is generally cheaper than loans that are fixed for a longer term, such as a 30 year fixed loan.2/28 mortgages have been used extensively in recent years during the real estate boom. It was often used with 100% financing.The prepayment penalty for many of these loans is typically for 2 years as well. This allows a borrower to refinance after the end of 2 years so they don’t have to pay a prepayment penalty. A prepayment penalty can often be 6 months of interest or something similar.DIfferent Loan Options To RefinanceA borrower who gets this loan will typically want to switch out of it when the interest rate adjustments. This happens at the end of the first 2 years. At that time, the interest rate will adjust per the terms of the loan. It can typically go up substantially. A monthly payment can increase by 50% or more.Many borrowers will have different loan options, including:
30 year fixed
40 year loan
50 year loan
10 year interest only
minimum payment option loan
How It WorksA borrower can use their additional buildup of equity to leverage into a lower mortgage rate.The process is similar to the last time the mortgage was done. Make sure that you use any additional equity built up into your property. Generally the more equity you have in your property the lower your interest rate should be.