How to Get a 20-Year Debt Consolidation Loan
- 1). Decide if you would like a consolidation loan with a fixed interest rate, meaning that the monthly payment will not fluctuate, or a loan with a variable interest rate, meaning that the monthly payment could fluctuate.
- 2). Gather information on all of your outstanding debts and request pay-off amounts so you and the bank will know exactly how much you need to borrow.
- 3). Make appointments and meet with local banks and credit unions in your area to see which will offer the lowest rate with the best term. Loans offered by a financial institution will most likely be either a Home Equity Line of Credit (HELOC), or a Home Equity Term Loan, which would mean using your home as security/collateral. For this example, we will assume a HELOC was your choice.
- 4). Wen choosing a HELOC, you will need at least $10,000 in equity. For example, if your home is owned free and clear and is worth $125,000.00, the bank will lend up to 80 percent of that. This is called loan to value (LTV) and gives you roughly $100,000.00 in equity, or an amount available for you to borrow.
- 5). When choosing a HELOC, remember that they generally come with a variable rate. However, most banks do offer an option to "lock in your rate" so that it will not fluctuate.
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