Advantages for the Borrower
The debt consolidation promotion is advantageous to the borrower in several ways. There are subtle differences between credit card debt and mortgages in terms of advantages for the borrower. As part of the promotion, all the credit cards are consolidated into one account. A new account will be created, and this will hold all the old credit card debts This action can wipe out credit card debt in one swoop. Furthermore, the interest for the consolidation loan is lower than the interest on credit cards, saving consumers on their monthly payments and over the longer term. Since there is now only one account, there is only one interest rate, and a single monthly charge. With a single card, the user would have an easier time paying off the credit card debts.
Mortgage owners garner almost the same benefits of a consolidation loan. It is possible to take out a second mortgage on a home, also known as a home equity loan. Each bank has its own requirements, but for the most part, the second mortgage is usually used for home improvement. The amount is usually loaned through a second bank. It is possible to consolidate this with Chase doing all the backend work.
As with most financial products, there are fees that need to be paid. Part of the fees include the closing costs. These will have to be paid before the mortgages are consolidated into one. After consolidation, the owner only needs to pay Chase instead of two banks. Most of the transactions, paperwork, and procedures will be handled by the banks, freeing the consumer’s time. There are some items which consumers must handle personally, but Chase loan officers will be able to help. The owner can negotiate for the length of the pay period, as well as the new interest rate.
One reason that debt consolidation for mortgages is popular is due to the amount of interest that they are paying. Sometimes, mortgages follow a balloon payment schedule, or an adjustable rate mortgage payment. These may have looked advantageous given the financial situation of the owner at the time the loan was made. These mortgages can be restructured during the loan consolidation. The homeowner can end up with monthly payments that are more affordable.
After the consolidation, the owner owes Chase and pays regularly according to the schedule set out in the terms of the loan. The new mortgage terms usually include lower interest rates, and a straight payment scheme. That means that the scheduled mortgage payments will be a flat rate, and must be paid every month. The mortgage will also be payable over a fixed length of time. Unless expressly allowed, the length of the mortgage payment is also fixed, either 20, 25, or 30 years. Although terms of 5, 10 and 15 are also possible depending on the mortgage balance.
How Does a Debt Consolidation from Chase Work?
If you are considering debt consolidation, it is best to apply at one of the local branches for Chase. Because Chase is one of the largest financial institutions in the country, there is likely a Chase branch location near you. The application process will be almost exactly the same for any branch that you choose. However, there will be slight differences between the way a credit card consolidation is done, as against a mortgage consolidation.
You will be evaluated for loan eligibility based mostly on your credit score. If you have a higher credit score, you will be more likely to be approved. In addition, you will be offered an interest rate that is also based on your credit score. Another consideration that will be made is your debt-to-income ratio (DTI). This means that the bank will make a calculation of your total debt obligations and your annual salary. You should be sure that all sources of your personal income, such as any annuities you may have, are calculated in this figure. Essentially, you want to be able to show the bank that you have sufficient income to be able to pay the debt obligation that you have accrued. For mortgage loan consolidations, the type of house will also be taken into consideration. Typically, single and double wide trailer houses are not eligible for debt consolidation.
homes are usually the biggest and most important investment any family has. Depending on the nature of your consolidation loan you may lose equity that must be rebuilt. However, this is no different than the situation that exists with multiple mortgages, so it is not a major concern for most home owners.
Banks will also evaluate your credit score. Checking a credit score can cause it to drop slightly, so be wary if you are planning on taking on any additional loans or applying for new credit. The better your credit score, the better the rates you’ll be offered on your home consolidation loan and other financial products.
Credit card consolidation also results in an initial hit on the individual’s credit rating. However, it’s important to keep in mind that while the inquiry may cause your score to fall a few points, lowering the amount of revolving credit used will create a huge jump in your score. Moreover, if you pay your consolidation loan bills on time, then your credit score will climb to reflect that you are a responsible borrower.
How Will You Know What You Qualify For?
When you submit your loan application to a Chase branch, it will be assigned to a Chase representative for review. If the assigned representative has any questions about the information that you submitted with your application, he or she will contact you directly. You can also ask any questions that you may have by contacting that representative directly. Consumers will find that their credit card balance has been reduced to zero, as all of the money they owe has been transferred to the consolidation loan account. For mortgage loan consolidation, there would be documents still to be signed before these are finalized by Chase. In both cases, a lot of the actual leg work is done by Chase as part of the service.
Loan applications typically do not take much time at all to process. You can expect a decision in as little as a few days. For credit card debt, the quicker you are able to pay off your debt, the sooner you will be able to qualify to borrow money at a lower interest rate to take care of the last portion of your debt. For mortgage payments, you need to understand whether the consolidated mortgage payment period can be shortened by paying more money upfront. This may not be allowed in some instances.
Financial firms do transactions with each other every day. Although the main selling point for consolidation loans is a lower interest rate, there are other advantages for the borrower. The convenience of having only one creditor bank is immeasurable. It also helps give the borrower some peace of mind that they can repay the resulting consolidated loan amount.
Some people might be intimidated by taking out such a large loan. Others might be intimidated or ashamed of the size of the debt they’ve accumulated. However, when everything is considered, the advantages outweigh the negatives. A consolidation loan gives consumers a better chance of paying off the credit card balance or their mortgage, and lets them save money while doing it.