Low interest consolidation loans can help you get out of debt faster and save you money. Paying high rates means the total debt amount is constantly growing, and you’ll have more to pay off, which is why it takes longer and you lose money. Lowering that rate by even a few points can help you get out of debt faster, and consolidating makes it all more manageable by giving you one monthly payment to worry about.

While there are all of these great benefits to get these you’ll probably have to take some risks and consider a number of factors in your decision to make sure you get the best deal for you.

The first option for low interest consolidation loans is to get a secured loan using your home as collateral. This option can be done several ways. You can get a home equity loan, which means you borrow money that you’ve already paid on your home. Another option is to refinance your home, which means you get a brand new mortgage for your home, and you’ll get the money you have paid on your home to use to pay off your debt. This option does some larger upfront costs that need to be considered. No matter how you decide to do this, you will be putting your home in jeopardy. While you are paying off the money you’ve borrowed you can go on living in the home, but if you fail to make your payments, your home will be responded and sold off to make up the money you owe. If you decide to do this you’ll need to be very sure that you will be able to make payments.

Another option is a secured loan using your vehicle, jewelry, or other high valued collectible as collateral. Typically banks will only use real estate as collateral, but there are many other lenders available to work with, especially online. When you have collateral the lender knows they’ll be able to get their money either way, which means your credit comes into play less, and it means you will be offered a low interest consolidation loan.

For some high rate debts when you don’t have collateral available to you it may be possible to find a lower rate on an unsecured loan, this especially true if your debt is with credit cards or payday loans, which have notoriously high rates. You’ll want to do a lot of shopping around to find the best deal.

A lot of people will advice you that the best way to get the lowest rate is to pay everything off with a new credit card that has a 0% introductory rate. I would like to warn you to be extremely wary of this option however, as if you haven’t paid your debt off before the introductory offer has ended the rate typically jumps up and you are back in the situation you are currently in. Also, this can significantly hurt your credit score on multiple fronts.

Hopefully one of these options will work for you to get a better rate as low interest consolidation loans can help you in multiple ways.

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You can get credit card debt relief with the help from debt settlement companies. Some of these companies are not always honest in what they tell you. So you have to do some research on this topic before you talk with them. Credit Debt Settlement is one approach to relieve you of a skyrocketing financial burden. Getting debt help will also ease away your stress.

Debt consolidation is one solution to your problem. It is the process of having a new firm pay off your existing credit card debts. Generally, this firm issues a check to each credit card company that you owe. As a result, you will only have one loan obligation to settle every month.

Consolidation of debt is deemed the best solution if you have more than one debt. These debts can be from credit cards, banks, or department stores. There are also cases where your existing creditor is charging you high interest rates. These rates will be renegotiated by the consolidation firm.

However, with this solution, the period of payment is extended to make up for the decreased monthly rates. Your elimination of debt plan should include saving so that you can, at times, make a double monthly payment.

Another solution to having credit card debt relief is to transfer your existing credit card balance or debt to another credit card company that has lower interest rates. Generally, credit card companies have specialized balance transfer program with lower rates of interest. You can apply for low interest credit cards before you start having debt payment problems.

Debt settlement is another option for credit debt settlement. This is a method of negotiating with creditors to accept a pay off payment that is less than the total amount of debt you owe.

Usually, it is accomplished by accumulating funds to settle one creditor. If you have more than one debt obligations you will have to save or borrow to pay of the next creditor. Credit Counseling is another method of getting credit card debt Relief.

The Consumer Credit Counseling Agency has professionals who are good at providing solutions for your debt problems. They also have some debt relief solutions and suggest programs that fit your credit history and financial status.

Until your credit debt settlement is done, it is advisable that you stop using your credit cards to prevent the accumulation of more debt. If it is possible, maintain only one or two credit cards and cut off the rest. Choose the credit card company that has the lowest interest rate.

In paying for your credit card debt, include paying the principal or a fraction of it. Paying only the minimum balance can ensnare you to a debt trap. On the other hand, it makes the credit card companies rich, since the minimum payment only goes to the interest, and never the principal.

Re-assess your lifestyle. Are you spending more than what you can earn? Another way to have credit card debt relief is to maintain a way of life according to your means. Review your expenditures in the past months and years and observe the things that had been taking too much of your budget.

It does not mean that you have to be thrift. It only means that while settling your credit card obligations, spend less. You always have the options of getting back to your normal life when your Credit Card debt relief program is complete.

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If you have ever applied for a mortgage, you may well have wondered about where that “28/36 debt-to-income ratio rule” came from that the mortgage broker talked to you about….and whether it even makes any sense.  After sometime researching, I discovered some very surprising facts.

When you apply for a mortgage, the banks will usually calculate your debt-to-income ratio. The idea is that your total monthly debt repayments shouldn’t be above a certain threshold relative to your income.

And there are two numbers. The first one concerns your housing expenses. Your monthly payments towards principal, interest, taxes and insurance for your housing should be no more than 28% of your gross income.

The second number deals with your total monthly debt payments, including credit card payments, car payments, other loans, and housing payments. Those should be less than 36% of your gross income.

But where did these rules come from?

After your mortgage has been created by a mortgage company, it is usually sold to an organization like Fannie Mae or Freddie Mac. These organizations are Government Sponsored Entities, or GSEs, and as such have GSE Standards to abide by regarding what mortgages they can purchase. These aren’t rules made by Fannie or Freddie, but some government bureaucrats who did the calculations and figured out these income ratios.

Now here is what kind of thinking went into these rules: They’re all about the mitigation (lessening) of risk. For whom? For whoever owns the loans!

Most loans don’t stay with the bank that made the loan. Most of them are sold. And the investors that buy them want to make money while minimizing their risk.

Interestingly, there are two contradictory types of risk that can affect the profitability of any loan:

1. First, there is the risk of default. That means that the home owner can no longer meet the debt payments and defaults on the mortgage. If that happens, the investor stands to lose money.
2. Second, however, is a very different risk – the risk of pre-payment. This means that the home owner prepays the mortgage, which saves him or her a lot of interest, interest that the investor won’t get.

So the 28/36 rule has been arrived at in an effort to find equilibrium between the amounts a homeowner can take on as debt without defaulting on the loan, but also to ensure that they have enough debt so they won’t be likely to pay the loan off early.

And 36% of gross income is a substantial amount of money. In the 1950s, they would think you were on the brink of disaster if you had total debt in excess of 25% of your total monthly income. In fact, during the fifties, much higher down payments were the norm (up to 50% or more).

Now, the trend is to borrow as much as we can while still being able to make the payments. This is a system that’s designed to keep us in debt forever. We’ve all seen where that can get us. But we don’t have to keep playing that game.

I believe it’s time to rewrite the rules – to free up money so we can create wealth for ourselves. Just because the bank allows us 36% of indebtedness doesn’t mean we have to actually BE that much in debt. We can lower that ratio – the lower the better – and whatever we don’t have to pay to creditors we can pay to ourselves and invest for our own financial futures.

How best to do that?

• Get a plan.
• Increase your income and pay off the debt.
• Keep track of your progress, and give yourself a big pat on the back as your debt-to-income ratio goes down month after month – and your investments go up.

And if you feel that you are far too beholden to your creditors, maybe it is time something is done about it.  Wealth Advisory Associates has helped many professionals gain control over their finances and achieve financial freedom – or at least move steadily into that direction.

Wealth Advisory Associates, LLC is a Florida Registered Investment Advisory Firm.

Wealth Advisory Associates only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion.

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