Home Equity

• One of the most popular ways to consolidate high interest debt and credit card payments is to take out a home equity loan. The equity in a home is determined by the current balance on the loan subtracted from an estimated market value that is validated by an independent appraiser.
  
  A home equity loan is typically requested through the primary mortgage holder, who validates the equity in the home, and will make an extension of credit that can be used and re-used (revolving) as needed. While most home equity loans will come with a price tag carrying a higher rate of interest than a first mortgage, and will typically require an interest only payment. This means that payments will be substantially lower when compared to high interest credit cards or personal loans. Typically, this type of loan will only be approved if a homeowner has 20 percent or more equity in their home.
  
  

Debt Consolidation Loan

• For consumers possessing strong credit, a personal debt consolidation loan could be a good answer for individuals not meeting the equity requirements for a home equity loan, or for individuals who do not wish to borrow against their home's value.
  
  These are considered a personal loan and will normally offer an attractive interest rate. In many cases, a debt consolidation loan will request payoff information on all other financial obligations during the application process. This allows the lender to pay off current obligations directly from the newly opened account and then begin their billing cycle to the consumer once the other debts have been settled.
  
  

0% Interest Credit Cards

• Another good option for consolidating finances comes in the form of a 0 percent interest credit card. Many creditors will offer an introductory rate of between six and 12 months with no interest, allowing a consumer to pay off current debt obligations and negate interest charges. Simply move the current debts owed to the new card, and potentially save thousands in interest charges over time by paying them off during the introductory period.