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By Christopehr M Luck
If over time you have accumulated multiple loans it may be
wise
to consider consolidating those loans into one single loan.
There are a variety of ways in which this may be accomplished.
Student Loans
Multiple student loans must be handled in different ways
depending upon whether they were funded originally as private
loans based on personal credit or as federally insured loans.
Private student loans may be consolidated in the same way that
any private loans are consolidated. Federally insured student
loans were placed with a private institution but they were
guaranteed against default by the federal government. This
type
of loan has strict guidelines about how and when it can be
consolidated.
A federally insured student loan cannot be consolidated with
credit card debt or any other kind of consumer debt. Private
student loans may in some cases be consolidated with federally
insured student loans but doing so is highly inadvisable. Once
a private student loan has been consolidated with a federally
insured student loan it then falls under the same strict
guidelines as the federal loan.
Further, federally funded student loans will only be
consolidated at an interest rate equal to the weighted average
of the rates on all the loans being consolidated. At present
that rate is capped at 8.25% but with all interest rates on
the
rise, this cap may soon be increased. In addition, loans must
be
consolidated within a certain time period after the student
either graduates or leaves school without graduating. Also,
federally insured student loans cannot be consolidated a
second
time unless a newly funded student loan is rolled in with the
loans that were previously consolidated.
Multiple Home Mortgage Loans
If your home currently carries both a first and a second
mortgage you may want to think about consolidating the two.
This is especially true if your credit is good and the
interest
rates on the current mortgages are more than two percent
higher
than current mortgage rates. However, there are other factors
to be pondered when considering this type of loan
consolidation.
Refinancing your home carries certain closing costs. In order
to avoid having to pay any out of pocket costs, these closing
costs will be financed as part of your new consolidated
mortgage loan. You should examine the affect that the
refinancing will have on the cost you pay over the lifer of
the
loan. Consolidating your home mortgage or refinancing that
mortgage multiple times can actually be more costly than just
sitting with the current loans. This is especially true if you
will not be staying in your home more than three to five
years.
Multiple Personal Loans
You would choose to consolidate multiple personal loans for
the
same reason you would consolidate multiple home mortgage
loans;
that is, if the interest rates you are currently paying are
significantly above the currently available interest rates.
Again, in order for a loan consolidation of this sort to be
viable, you must have good credit and the cost of the multiple
loan consolidation must not outweigh the savings you would
accrue.
About The Author: If you would like to read more of my
personal
articles like the one listed above, please visit my loan
consolidation blog. Thank you for your time, and I hope I
could
be of some help!
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