When debt consolidation first arrived on
the scene, your home became your credit, and without a home you
had few choices about debt consolidation. Over the years, debt
consolidation companies have been focusing more on the renter than
the homeowner, partially because renters are more likely to need
assistance with their financial situation than a homeowner. As
a homeowner, the needed credit was obviously there at one point
in order to qualify for the mortgage in the first place.
Debt consolidation for non homeowners is usually run on a scale basis. A debt
consolidation loan is designed to allow people to pay off their bills at a lower
interest rate. The way it works is really quite simple. If you are paying a high
interest credit card and simply need the monthly payment to drop, this means
that you are still going to pay down the principle owed, just at a lower interest
rate.
The credit card company that we are using as our example is smart enough to recognize
that they are about to get their money in a large lump sum. The credit card company
is going to bank on your continued use of the credit card, and therefore will
be able to rope you in once again to high interest payments that got you to where
you are in the first place. If you’re the smart cookie in the jar, you’ll
be shredding your credit card as soon as you debt consolidation loan has been
approved.
The credit card company then accepts the money from a third party while your
interest rates go down and this gives you the opportunity to pay off your debt.
Consolidation is the act of doing this with all of your high interest debts.
Non homeowner debt consolidation loans generally do not apply to assets, such
as cars, boats, or other items of value. These are designed for credit cards
and back debts on other high interest payments.
These services can be used for non homeowners seeking to become home owners and
are turned down not on their credit history, but their debt to income ratio.
In some cases, a debt to income ratio that is too high can stand in the way of
being approved for additional loans, such as a home loan, despite the fact that
the bills are all paid on time. Mortgage lenders only deal with numbers, and
don’t make exceptions. If your debt to income ratio is higher than .4,
then you are likely to need to either make more money or to lower your debt.
One of the debt consolidation loans for non homeowners can change that ratio
enough to help you qualify for a loan.
These loans have helped thousands of people get out of debt much faster than
any other form of credit assistance. Debt consolidation loans are still loans,
and you do have to qualify for them, however, the restrictions are usually pretty
lenient. State to state, the regulations and qualifications for debt consolidation
loans are going to change. It is definitely a worthwhile endeavor to thoroughly
investigate a non homeowner debt consolidation loan if your interest payments
are drowning you under the endless sea of bills.
