Debt Consolidation Loans May Soon Benefit From Lower Mortgage Rates

[Apr 8, 2009.]

 

Although not all debt consolidation loans must involve a mortgage, typical debt consolidation loans are usually possible through a mortgage refinance or home equity loan. In these programs, individuals consolidate various personal debt such as car loans and credit card debt into loans with lower rates of interest. As a result, individuals can simplify monthly payments and save a considerable amount of money on the interest paid per month.

Mortgage Rates Expected To Decline In The Future
For those considering a possible debt consolidation loan, a recent article from MSNBC could make the possibility much more enticing. Economists from Bank of America and Merrill Lynch commented that rates on thirty year fixed mortgages could move closer to 4.2% by the end of 2009 due to "disinflationary forces combined with overt quantitative easing from the Federal Reserve".

Currently, the best available thirty year fixed mortgage rates are in the range of 4.875%. Now, keep in mind that these advertised rates are reserved for the most qualified borrowers with excellent credit histories. Fortunately, if mortgage rates decline, they typically affect the entire range of mortgage pricing--good news for those with bad credit and less than stellar qualifications.

Debt Consolidation Loans Through A Mortgage More Attractive
In a typical debt consolidation program for homeowners, individuals can seek debt relief in a variety of ways. For those considering a straight mortgage refinance, one could possibly consolidate his or her existing debt into a new fixed rate mortgage. On the other hand, homeowners can leave their existing mortgage unaffected and consolidate with an additional home equity loan. If mortgage rates continue on a downward trend, these new loans could save individuals hundreds to thousands of dollars every month. Especially when compared to interest rates on credit card debt and personal loans, the interest rates on mortgages are quite spectacular even at their current levels.

Are Low Mortgage Rates Enough Reason To Consolidate?
While many are often excited by the chance to get out of debt, it's also important to carefully analyze the available options. Individuals should first realize that debt consolidation loans and programs do not automatically reduce debt. They will simplify payments and often reduce the amount of interest paid, but they will not eliminate debt itself. Debt consolidation is merely a tool and one of the many possible debt solutions available. Homeowners need to be careful when consolidating debt as it often transforms unsecured debt into secured debt. While the interest rates may be quite attractive, the consequences of loan delinquencies and default escalate considerably. For more detailed information about debt relief in your area, be sure to visit our site resource available here.

Mortgage Rates May Hit 4.2% [MSNBC]

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.