The need to seek out debt settlement programs often occurs when credit cards or other unsecured debts get out of control. The programs are useful in helping get the situation back on track, but it will require a large lump sum of cash to pay the negotiated amount and eliminate the credit cards. Finding ways to raise the cash is not as hard as it might seem for those who own a house.
Home Refinancing
An option to raise a lump sum of cash for debt settlement includes refinancing a home. Refinancing allows a family or individual to take out a new mortgage on the home based on the current value. Those who have home equity where the value of the house is worth more than the current amount remaining on the mortgage can opt to refinance the home.
Refinancing is a matter of taking out a new home loan and repaying the full amount of the original mortgage. It is a new loan, so it does not necessarily need to have the same terms as the original loan. It is possible to take the loan for a shorter period of time and receive cash back beyond the amount obtained for paying the mortgage.
The remaining cash on the home refinancing is then used for the credit card lump sum payment. After the negotiations are complete on one card, the cash comes from the amount provided through the home refinance.
Home Equity Loans
While refinancing can help raise the cash, it is not always the best solution. Those who will not reduce the interest rate on the house will want to consider home equity instead of a refinance loan. Home equity loans use the equity on the home without taking out a completely new mortgage. The original mortgage is still in place, but the amount above the remaining mortgage charges is possible to use as a lump sum for settlement.
A home equity loan is ideal for those who own a house and have equity based on the current value. It is separate from the original loan, but it still has the benefit of a reasonable interest rate and the same cash back value as a refinance loan without the closing costs.
Settling credit cards is a great way to reduce interest rates. Raising a lump sum for the settlement process will require thinking of alternatives to simply saving. Home equity loans or refinancing is one option to get the best deals.
Article from DebtSheild.com