The Ultimate Debt Consolidation Refinance

This week, I'd like to share some customer experiences with one of the most
popular new strategies in debt consolidation refinance. Over the last few
months, a select few in the mortgage banking industry have developed
programs which allow borrowers to accomplish the 3 greatest goals of debt
consolidation: Get Cash to Pay Off High Interest Debt, Lower the Overall
Monthly Minimum Payment, and Boost Cash Flow to allow borrowers to save up
money in a short amount of time. The benefits are nearly indisputable:
Higher Credit Scores, Lower Monthly Minimums, and Greater Flexibility. But
one of the biggest criticism of debt consolidation is that borrowers who
consolidated their debts were still not saving enough money after the
refinance, and needed to tap into home equity repeatedly to achieve their
final goal. What if I told you that there is a new loan product available
today which allows you to do all of these things, but also allows you to
Make No Payments for 90 Days, with 0% interest due over the introductory
period?

David in California said what many of you just said, that's too good to be
true! If you can do that, sign me up! David had a typical Southern
California situation, he works in sales, makes a decent living, has a young
family of 5 and about $30,000 of credit card and other debt, which cost
about $1100 a month in minimum payments just to cover the finance charges on
his revolving debt. But David, like a lot of people in California, has seen
solid appreciation year after year in the real estate market, and his home,
which he purchased for about $350,000 in early 2003, was appraised for over
$500,000 a bit more than 3 months ago. He owed $300,000 on the house, on a
traditional principal and interest mortgage with a minimum payment of $2100
a month. Because of the relatively high level of consumer revolving debt,
David's credit scores had gone down to about 630 even though he was making
all of his payments on time.

When David called us, his loan officer walked through each of David's credit
card bills a with him, and together they determined that David was paying
and average interest rate of over 27% on his credit card payments, because
his credit card companies had raised his rates as his overall debts had
increased, which had hurt his credit scores badly. To make matters worse,
David, like a growing number of Americans, wasn't saving any money. If he
got sick, had a slow quarter, or was otherwise unable to work for any
meaningful amount of time, he would be at risk of financial ruin.

We looked at the whole situation, and used this new debt consolidation
mortgage refinancing strategy to show David how he could pay off all $30,000
of his revolving debt and take out an additional $20,000 or so to provide a
small cushion, partially to be used for value-adding home improvement.
Remember, David's old minimum payments were: $2100/month for the mortgage +
$1100/month for a total of $3300/month, his credit was getting worse each
month and he had no cash in the bank. After refinancing, David's new minimum
monthly payment was consolidated and reduced to Less Than $1300 per month
Total! And he now had $20,000 in the bank which he wisely put into a high
yield savings account earning 5.25% until he needed it. This monthly minimum
payment being $2000 a month lower is amazing in and of itself, however what
makes this product revolutionary is that for the first 90 days, David had
Zero Percent Interest and No Payments due, allowing him to save substantial
money each month. He socked it away each month for
3 months, and now 90 days after his debt consolidation he's managed to save
an additional $10,000, which combined with the $20,000 he cashed out means
he went from almost nothing in savings to over $30,000 in the bank earning
solid interest.

But what about David's credit? Now, it's only been a bit more than 90 days
since the refinance closed, but I am happy to say (as is David!) that his
three scores are now 667, 684, and the high score is 703! Why? His debt
ratio is down, and his debt to income ratio is way down too. Combined with a
little advice from our credit specialists, the debt consolidation refinance
has been the difference for David. He went from a total minimum payment of
$3300 a month down to under $1300 a month. He went from 0 in the bank to
Zero Percent and Zero Payments for 90 Days, and put over $30,000 in the bank
between the refinance and the resulting monthly savings. Not only does he
have some money saved up for a rainy day, the new, lower payment is much
easier to make even when times get tough, dramatically lowering his risk of
missing a payment. And because his credit scores have already improved and
will continue to do so, any new car payments or loans he takes out over the
next couple of years will be substantially less expensive, allowing him to
qualify for low cost car leases and zero-interest, cash back credit cards.

So through this illustration, we've explored some of the benefits of using a
minimum payment mortgage refinance with no payments & no interest due for 90
days as a debt consolidation tool. More so than other type of mortgage
refinance, this new loan and other mortgages like it help borrowers achieve
all of the key goals of debt consolidation, offering great payments and a
real "vacation" from making payments. If you ask David and other borrowers
like him what they like the most about the product, they'll tell you it's
the "breathing room", the ability to get out from under debt and take a
couple of months off of worrying about making the payment so they can
concentrate on organizing their finances and improving their situations. We
can all use that space from time to time, and I agree with our borrowers
about the importance of this feature.

There are a lot of reasons we consider the "Zero Interest/Zero Payments for
90 Days" plan the ultimate debt consolidation mortgage refinancing tool.
There are some limitations though, which do vary somewhat from lender to
lender: While you don't need perfect credit, a minimum middle credit score
of 620 is required to qualify for the 90 days with no payments option.
You can borrow up to 80% of the value of your home with no payments for 90
days, with the balance above 80% rolled into a separate second mortgage (or
you can keep your existing second mortgage if you have one). You are allowed
up to one 30 day mortgage late within the last 12 months, however you cannot
qualify if you have multiple late mortgage payments showing on your credit
report over the last 12 to 24 months, and this program is not offered in all
states. Depending on your credit, you may be able to state your income, or
even qualify without considering your income. Contact your mortgage
professional for more information, and if they don't have a program that
allows you to pay off your debts, lower your payments, and get 3 months off
of making mortgage payments all in one, find yourself a new lender!

Our next article in this series will tell the story of a single mother who
has impressed us greatly with the way in which she's secured her family's
financial situation with this loan immediately following a challenging
divorce. If you have any questions about this article, please feel free to
contact us, or visit us online.

About The Author: Tristan Hunt is a seasoned financial professional with a
wealth of experience in the mortgage industry, advising clients on debt
consolidation, refinancing & investor loans. Phone: 800-515-8443 Website:
http://www.RefinanceOne.net