If you are thinking about refinancing your home and paying off credit card bills or other personal loans that debt consolidation financing is probably a good choice. When you consolidation your debt, you immediately reap the benefits of having all your monthly debt Debt Consolidation Texas reduced to one monthly payment with an interest rate that will probably be lower than any that are attached to the credit cards and loans you now have. Your interest will also be tax deductible.

Most people apply for debt consolidation loans because they prefer to have one monthly payment and want lower monthly payments. They can also depend on a fixed or adjustable loan rate for the duration of the loan. Be wary of adjustable rates of three years or less, as they may start off very low but can jump substantially at the end of the term. It is also nice to know that the extra cash that you may have after paying off your debt can be used any way you wish. You can borrow up to 125% of the equity in your home, except in Texas, which is 80% or the equity.

There is a down side to debt consolidation because you are putting your home up as collateral to borrow money. If you fail to make payments, or you make too many late payments – you could lose your home. In addition to interest payments on the loan, you are also responsible for “points.” Points equal one percent of the amount you borrow. Remember that these loans require you to put up your home as collateral. If you can’t make the payments – or if your payments are late – you could lose your home. There are also several other closing fees involved that can add several thousand dollars to the loan.