Consolidating debt bad idea Chattanooga adult personal ads
Arnold Graf, a certified financial planner with NEBSCO Financial Services, says debt consolidation may be a good idea for people who have sufficient equity in property and are credit worthy, but adds “usually people that consolidate are close to bankruptcy and are trying to push their debt further out as long as they can.” Consolidating debts is basically just buying time, he says, adding that “you have to consider whether you are willing to pay less now but for a longer period of time.” Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling, says, “Debt consolidation is always a good idea on paper.You are presumably taking higher interest credit card debt and rolling it into a lower interest loan [so] instead of paying many different debts each month you are paying one.” However, she said “in practice, unless you are a very disciplined person debt consolidation isn’t going to work.” “We see the most well-meaning people trying to be financially savvy and roll all their bills into a debt consolidation loan,” says Cunningham, but come the next year they are back to running up debt on a credit card that they rolled into the loan while still having to paying the debt consolidation payments.The lender might be willing to give you a mortgage of 3,000 to pay off that credit card debt.You would still have ,000 of equity in the home.Which is why a consolidation loan can often prove to be a better option: it may allow you to get a lower interest rate, which would save you money over the long-run.
If you’re in that kind of situation, there’s a good chance your debt will grow faster than you can pay it off.
That new loan is usually secured on an asset, often your home, but it can be secured against other major assets. Whether you can consolidate your debts and buy a home depends on several factors.
You could consolidate your debts with part of the mortgage proceeds if you have the wherewithal to make a 20 percent down payment, steady income, a low debt-to-income ratio, and the house you're buying has a high enough value to have some equity at time of purchase.
You’ll need a good to excellent credit score — above 690 — to qualify for most cards.
Make a budget to pay off your debt by the end of the introductory period, because any remaining balance after that time will be subject to a regular credit card interest rate.