Green Trust Cash What Is A Debt Consolidation Loan?

Green Trust Cash What Is A Debt Consolidation Loan?

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Credit card balances are on the rise, spurred in part by a slow economy, causing people to use credit lines that provide a temporary financial service, but usually at a high cost.

For some, one way to alleviate the high cost of credit cards is a debt consolidation green trust cash direct cash loan online. Combine multiple high interest debts into one low rate payment. Sounds simple enough, but you have to be a homeowner, and you need to have equity, and you need decent credit.

A debt consolidation loan is really another name for a cash out refinance or home equity loan. Unsecured credit cards, or other debts, are paid off using the equity in a home. A low fixed rate loan reduces the monthly payment, and because a debt consolidation loan is fully amortized, the debt will be gone at the end of the loan term. Converting debts to a secured home green trust cash online no credit check loans direct lenders may also save money because of tax deductible interest.

Another lesser known benefit of a debt consolidation loan is the elimination of daily compounded interest on credit cards. More interest charges accumulate on a compounded interest loan as opposed to a simple interest loan. Paying interest on the interest charges could be the end result if only the minimum payments are made.

Consider a loan example: An average rate of 15% on credit cards with a combined balance of $40,000 could have a monthly payment of about $560, over a 15 year term. A debt consolidation loan with the same balance at 8% could have a payment of about $382 over the same term. A lower rate would of course result in more savings. Also, the loan could be paid off in about half the time by applying the monthly savings to the payments.

Because a debt consolidation loan may involve a refinance, it should be noted that some lenders have an underwriting guideline called seasoning. Cash out can be limited under this guideline based on when home equity was taken out. Restrictions may apply if there was a cash out refinance done within the last 6 months to 1 year. Usually, this guideline applies if the new loan is over 75% of value. FHA loans offer more flexibility, with cash out up to 95% loan to value.

The seasoning on a conventional debt consolidation green trust cash bad credit no credit check installment loans may not be limited only to a previous refinance. If there was a home equity loan, second mortgage, or line of credit, within the last 6 months to 1 year before refinancing, the new loan could also be subject to cash limitations.