Secured Loan Consolidation

There are many people trying to save money any way they can these days. One thing that can help put some extra money back in your pocket each month is a debt consolidation loan. These loans can include secured loan consolidation or unsecured loan consolidation. While many people use these loans to pay off unsecured debts such as credit cards, it is possible to consolidate secured debt as well. Secured debt is any loan secured by real property, personal property, or a vehicle. In the event the borrower defaults on the loan, the lender will have a right to pick up the security and sell it to pay off the balance of the loan.

Many lenders now require security as part of a consolidation loan. Secured consolidation loans are normally real estate related, making them a mortgage or equity loan. A personal consolidation secured loan will likely either include a car title or a list of personal property as security for the loan. When applying for a secured loan consolidation, there are a number of factors to consider.

Fist of all, are you a homeowner? If you don’t own a home, then that rules out the possibility of being able to consolidate secured debt by taking out a mortgage or equity loan. In the event you are a homeowner, there are two things you will want to consider when applying for a consolidation loan secured by your property. First, you need to figure out what your equity position in the home is. This is simply done by dividing the balance owed on the home by the value of the home. Most mortgage lenders will only lend up to 80 percent loan to value, so making sure you have the equity to qualify for a real estate secured loan consolidation is an important first step.

Once it is found that there is lendable equity available, you should be able to figure out if a consolidation secured loan will help you. One of the most expensive types of secured loans is an auto loan. By paying off your auto loan and consolidating that loan with your mortgage, you may find that you will be able to save a hundred dollars or more per month. In the event that you don’t want to refinance your first mortgage but have equity available, you may want to take out a second mortgage as a means of secured debt consolidation.

Consumers who are not homeowners will have to look for a secured personal loan in order to consolidate their secured debt. The amount of the loan will be based on the value of the security, so it is important to consider the value of any security prior to applying for any secured loan consolidation. A classic example of how this type of loan can help consolidate secured debt is a consumer or couple that has two car payments. This could be a situation where there are two cars that are being financed, but the balances owed on the loans are only about half of what the cars are actually worth. In this instance, it may be possible to use one car title to secure a loan to payoff both vehicles. This will now mean only one vehicle is being used as security on the loan, there will now be only one monthly payment to make instead of two, and the payment amount will likely be much less than what was being paid on the two previous loans.

Secured loan consolidation can be a great asset in lowering your monthly payments and it will also result in less creditors to pay as well. For those looking to consolidate secured debt, knowing your options can help in finding the loan you seek.