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Avoid These Debt Consolidation San Diego Schemes |
The economical crisis has deepened San Diego's credit card debt problems. As a counter-measure, droves of San Diegans have turned to home equity loans. The loans' debt consolidation benefits help borrowers get reduced interest rates and lower monthly payments. However, many borrowers are also encountering disastrous consequences.
A major problem for borrowers has been trading off unsecured debt, such as credit cards for a "secured" home equity loan. As a result, a borrower must use the equity on his home as collateral to guarantee repayment of the home equity loan. (Note: Equity is the spare capital after the current market value of your home minus the outstanding principal balance.) Thus, a loan default will cause your lender to foreclose on your home. In turn, this satisfies loan repayment by liquidating your home equity into cash.
The ease of equity has led to numerous debt consolidation San Diego schemes. One of the worst schemes is the "interest-only" adjustable-rate mortgage loan. Although this loan will pay off interest, it will not reduce the debt principal.
Be equally watchful of the "payment option" debt consolidation San Diego scheme. This scheme causes you to pay a variable interest rate on unpaid interest added to your loan principal. Also look out for "teaser rate" loans, which feature a low initial rate that can substantially increase as much as double.
Perhaps the most flagrant predatory lending scheme is "equity-stripping." In this unethical practice, a mortgage broker will try to convince you to take out a loan using the equity in your home despite your inability to keep up with loan payment. They may even ask you to falsify your income to get you approved for the loan.
To help you avoid being trampled by a debt consolidation San Diego scheme:
- NEVER use all of your home equity to take out a debt consolidation loan.
- NEVER get a debt consolidation loan if the monthly payments are unbearable.
- NEVER sign loan documents that you have not read or don't understand.
- NEVER be pressured to sign any loan document, or sign a blank loan document.
- ALWAYS be aware of the loan term, clauses, and conditions of your loan agreement.
In lieu of a debt consolidation loan, you can also pay off your debt by enrolling in a debt settlement program. This doesn't require you to use your home equity to qualify. It doesn't put you at risk of losing your property or paying steep interest rates and fees. And, your total debt can be reduced more substantially than by debt consolidation via a home equity loan.
About Debt Free League:
The complete debt settlement service provider is pioneer of the National Debt Relief Stimulus Plan. The company employs in-house debt negotiation specialists to help people in financial hardships negotiate settlements of personal, medical, and business debts. The average client savings is 50 percent. The company is also affiliated with Libre de Deudas, which services the Hispanic community. Free debt settlement phone consultations are available by calling 800.213.9968.
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