At Providential, we believe your future is far more important than your past. So, if you would like to work with our professionals to use the equity in your home to pay off past bills, reduce your monthly costs, and build a stronger foundation for the future, we are prepared to help.
Statistics indicate that many individuals and families have extended their credit beyond a comfortable level. In general, the industry guideline is that your home mortgage payment should not be more than 28% of your gross monthly income, and that all your monthly debt payments should not be more than 37% of your monthly income.
Some of our lenders will allow you to obtain a mortgage even if your total debt obligations (including the mortgage payment) are above 37% of your monthly income. However at this level, the interest rate could be very high (but still half the typical credit card rate). And, you may be able to deduct the interest cost of a home equity loan, whereas you cannot deduct the interest for most other debts.
Example:
Let’s say that you have 3 credit cards with a balance of $2,500 each, an auto loan for about $16,000, education loans totaling $8,000, and an existing home equity loan for about $18,000. Your monthly payments would be approximately $1,100. If we were to roll each of these debts into a new Home Equity Loan or Refinance Loan, the monthly payment can be reduced to about $200 per month. This saves you $900 per month in out-of-pocket expense! That’s $10,800 per year!