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Is debt consolidation as good as it is considered to be?

Guest post provided by Nancy Smith

When you are struggling in the quagmire of debt, you can go for debt consolidation to help you come out of it. The process of debt consolidation allows you to pay off a number of other loans or lines of credit. According to some, one of the best ways is to consolidate debt. However everything comes with its vices. Let us look at the pros and cons of debt consolidation.
Pros of debt consolidation
1. One payment every month – According to statistics, US citizens pay debt to an average of 11 creditors every month. Such multiple payments are very difficult to keep a track of. By consolidating your debts you can merge your multiple payments into a single monthly payment thereby facilitating your payback process and making it easier.

2. Reduced interest rate – Most of the times a debt consolidation loan is taken as a home equity loan, also known as second mortgage, hence the interest rates are lower than most other consumer debt interest rate. This is because such loans are secured against collateral which is your house. Even if your consolidation loan is not a home equity loan, you get it at lower interest rate as you take out a large loan to payback all the other loans. Hence the interest rate on it is comparatively lower than other smaller loans.

3. Lower monthly payments – The amount of monthly payment is reduced significantly as you now have to pay back just one loan with a lower interest rate as compared to the ones you had earlier.

4. Tax breaks – If you consolidate your loans with a second mortgage then you are entitled to tax discounts also.

Cons of debt consolidation
1. Can lead you to further debt – Since now handling your finances have become easier after consolidating the loan, you may again start using your credit cards indiscriminately and resume the spending habits that got you into your present situation in the first place.

2. Longer payoff time – Most often mortgages come in 10 to 30 years of loan terms. This means that instead of spending a couple of years to come out of debt you have to spend the term of your mortgage to come out of debt when you are using second mortgage as a debt consolidation loan.

3. You may lose your house – Usually when you don’t pap credit card debts you end up having bad credit but your home is secure as credit card debts are unsecured loans. But when you take a second mortgage, your consolidation loan becomes a secured loan with your house as collateral. In the event of you failing to pay back the loan, your house will go into foreclosure.

Thus you should opt for debt consolidation after considering these pros and cons.

Short Sales Up in South Florida in 2010

The South Florida housing market has been hit hard by the economic downturn. The Palm Beach Post had more evidence of this, as the newspaper reported that the short sale market in South Florida took off in 2010. The newspaper noted that a report by Miami-based Condo Vultures and CVR Realty showed that short sales increased by 49 percent last year over the previous year.

This report is the latest in a series of sobering pieces of information about the South Florida housing market. In November 2010, housing research site Zillow.com released data which showed that about 42 percent of homes in the area were in negative equity — otherwise known as being “upside down.” In addition, more than 47 percent of local homeowners who sold their houses in November 2010 did so at a loss. Click here for more information about Zillow.com.

The good news is that if you are in the market to purchase a new home, now is a great time. You can search short sale listings to find amazing real estate bargains. Click here to look for MLS listing in South Florida or anywhere in the United States.