There are multiple options with it comes to a Debt Consolidation Loan, and with those options come many factors to consider. These include:
- How much debt are you paying off?
- How quickly will you be paying it off?
- What, if any, collateral do you have available?
- What does your financial past and credit score look like?
- And most importantly, what can you qualify for?
Options that CSB offers include unsecured loans, cash-out refinance loans using your vehicle title, and home equity loans. All have their own unique characteristics, and a banker would be happy to walk you through what would fit your scenario best, but to get the conversation started, here is a deeper dive into a home equity loan!
Home Equity Loans (sometimes shortened to HELOANs) are fixed rate mortgages that use the equity in your home to lend you money. This can be the only mortgage you have on your house, or it can be a second mortgage which keeps your original loan (and interest rate) untouched. While a conventional, first mortgage can be a loan for up to 30 years, HELOANs are typically 5, 10, or 15 year loans. What that looks like is when you sign all your final documents, the funds from the loan will be used to pay off your existing debt and you will then begin to make fixed monthly payments (CSB offers weekly & biweekly payments also!) to pay down your loan in the allotted time.
Some of the reasons you might do a HELOAN over the other options listed above are that you are paying off a large amount of debt (over $10,000), you want to keep your monthly payments low (pay over a longer period of time), and you have equity available in your house (keeps the interest rate lower).
Because this loan does use your home as collateral, there are some unique aspects that you will need to consider. The bank will typically require an appraisal as well as new title work to be done which takes time (maybe 30 – 45 days) to be ready to fund your loan. This also means the actual loan itself has more fees up front, even though the interest rate would be lower than the other options which would save money in the long run.
If this sounds like something you’re interested in, it might be time to reach out to our team. It’s super easy to walk through the process. The best thing you can do to prepare is grab your most recent tax returns & W2s (2 years), paystubs (1 months worth), homeowners insurance declaration page, and copies of the debts you want to pay off. We are looking forward to helping you with your needs!
Written by Carla Fiandt
Vice President & Market Development Officer at Community State Bank
questions@csbemail.com
800.488.3958
February, 2024
Vice President & Market Development Officer at Community State Bank
questions@csbemail.com
800.488.3958
February, 2024