I have around $20,000 in debt. Some is credit card debt, an auto loan and some are personal loans. I own my home and some land. I would like to consolidate some of this debt into a one-year payoff period.
I want one year because I could calculate how much I will make in one year, get a loan for that amount and have the money up front. I could pay off my credit cards (higher rates) auto and personal loans, and use the remainder to pay my bills through the rest of the year. If there is a better option, I'm all ears.
Here are some recommendations. First, visit with your bank and speak with a lender. Have information with you as to whom you owe and in what amounts. Also take something with you such as a recent appraisal or tax appraisal showing the value of your home and land.
Ask first about a home equity loan, a refinance or a second mortgage on your property. This is often the most valuable asset a person has. What you need to figure out with the lender is, what equity you have in that property. The equity is the difference between what it is worth and what is owed on it now.
Borrowing an amount equivalent to your annual income and planning on using some of that to repay the debt is not a sound lending practice for the bank. Your bank will want collateral. That is where the equity comes in. Your car may also have equity, but cars tend to depreciate (lose value) faster than land and homes. Also, you are free to schedule a repayment plan that extends well beyond one year, but repay it faster to save on interest expense. That way you don't have as much financial pressure to make such a large payment if something comes up. Sometimes, the best way to rid yourself of debt is to visit with a credit counselor and prioritize your debts, paying them off one after another, and staying away from the credit cards when you are not planning to repay all the charges that same month.
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Here are some recommendations. First, visit with your bank and speak with a lender. Have information with you as to whom you owe and in what amounts. Also take something with you such as a recent appraisal or tax appraisal showing the value of your home and land.