Debt Consolidation and Credit Card Counseling

Suppose that you have a job, a house and good health. That’s great. If you are like most Americans, you also have a lot of debt. Worse, you probably don’t have a lot of savings. The whole financial machine that is your life continues to work only because you have a job, a house and good health. What happens if something goes wrong with that?

It could easily happen, as hundreds of thousands of people in New Orleans and the Gulf Coast found out in late 2005. A “perfect life” can turn into a mess in a very short time. If it does, are you ready? Probably not. What can you do?

One great solution for those “just in case” scenarios is a home equity line of credit, or HELOC. A line of credit is similar to a home equity loan, but instead of receiving the money in one lump sum, you can take it over time. When you apply, you are approved for a maximum amount. You may immediately borrow anything up to that amount, or nothing at all. You are given either a checkbook or a debit card, and you can use the money as you see fit, when you see fit. The interest rate is adjustable, and the repayment schedule is flexible, working much like a credit card bill. If you don’t actually borrow any money, then you have no payments, nor do you have any interest to repay. But you do have the peace of mind of knowing that if disaster should strike, you have the ability to obtain some cash in a pinch.

Taking out this type of loan is easy to do.  We got a letter in the mail just yesterday telling us that we are “pre-approved” for one. It’s much easier to obtain that a first mortgage, and the process moves much more quickly. The lender will still need proof of income and an assessment of the value of the house, along with a copy of your credit report. Since your equity is the difference between your home’s current market value and the amount you owe, an appraisal is probably necessary. Still, the entire process generally takes a couple of weeks at the most. 

Few people today are financially prepared for an emergency. Worse, few people today manage to save much money. It’s all going to charge card bills and gas bills for the sport utility vehicle. If you cannot manage to put aside a generous amount of money into a savings account just in case something goes wrong, and most people cannot, then you should do the next best thing. And the next best thing is to have that money available to you if you need it in the form of available financing. It’s far better to have one and not need it than to need it and not have one.

If you have any questions about whether such a loan is right for you, discuss it with a local lender.

If you have a mortgage with a high interest rate, you may want to ponder refinancing. You could consolidate your debt and lower your monthly mortgage payments. Ameriquest Mortgage can make it easier to refinance now.

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