One of the best kinds of loan being offered today is the home equity loan due to several reasons. First, it is easy to obtain. Most financial institutions are offering this type of loan either online or offline to qualified individuals. Second, it is a loan in a secured form. This means that even if a borrower fails or neglects to pay the loan, the creditor will not incur any loss since the home can serve as collateral to regain the money from the borrower.
More so, borrowers obtain a much lower interest rate than what they are currently paying their multiple creditors. This is in contrast with an unsecured loan where no collateral is required at all. However, it offers higher rate of interest as compared to a secured loan.
In light of a home equity loan, for borrowers who want to consolidate their existing or outstanding debts, financial institutions also offer the debt consolidation home equity loan. This loan is a limited loan facility that compiles multiple debts into a single loan. It is not available for just anybody who wants to avail of it. As such, one should know the qualifications in order to obtain such loan.
If you are one of those people who have multiple credit card debts or any other type of debt, you probably need a debt consolidation home equity loan. Many people have several credit card accounts with different banks and companies at different rates of interest, which they can no longer pay due to lack of financial resources. As such, applying for a consolidation loan is the only way out of these financial struggles in order to offset outstanding debts.
However, availing of a debt consolidation home equity loan is only for people who own a home. If you do not own a home, you cannot obtain a home equity loan. Instead, you can opt for a debt consolidation loan, which are also offered by most financial institutions.
Just like in an ordinary home equity loan, a debt consolidation home equity loan is also secured in nature. This means that you turn over your home as collateral against the loan. You can make your home as collateral regardless if you partially or fully own it. This is because the difference of the total value of your home and the amount you owe on your house will be the amount of loan given to you. As such, the level of right you own with regard to the house does not matter.
You are just given back the value you have put into the house. Say, if you have put 80%, you will also receive 80%. Most lenders give as much as 125% depending on the case. Thus, if you are currently owning a house but have multiple debts in which you are struggling to settle, you are most qualified for a debt consolidation home equity loan in order to pay off all your existing debts and turn them to a single monthly payment plan to a single creditor.