Section 12 _Debt
Consolidation… Do's & Don'ts
 The
process of combining a new refinance loan with debt consolidation
can be one of the most rewarding financial tools available to
homeowners.
How Does It 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, if the $200,000 appraised value is reduced
by 20% the "usable value" is $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 debt, such as:
- High Interest 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
may be 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 the more equity, the greater the potential benefits
and savings.
$AVINGS
$AMPLES
Following
Are 2 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 |
*****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 |
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!!! *****
- Click the Lighthouse at top left to
return HOME at any time
|
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