Colorado Debt Consolidation

Written by Patricia Tunstall
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Colorado debt consolidation loans are actually home equity loans which the borrower chooses to use to combine various debts. Frequently, credit card bills constitute the main part of the debt, and consolidating them into one low-interest rate payment makes good sense. You can save a considerable amount of money by taking out these Colorado debt consolidation loans.

First, you save on interest; credit card interest rates are typically high, while home equity loan rates in Colorado are low. Next, you are converting the compound interest charged by credit card companies into the simple interest on an equity loan. Finally, the interest on an equity loan may be tax deductible because it is secured by a mortgage lien on your house.

Colorado Debt Consolidation May Be a Solution

Besides saving money, Colorado home equity loans may break the cycle that comes with heavy credit card debt--making the minimum payments. Minimum payments allow the interest to accrue, which only puts off the day when you can pay the entire bill. By converting from the daily compounded interest of credit cards to the fixed rate of a Colorado debt consolidation loan, you end the monthly minimum payment trap.

Another advantage of an equity loan is you can accelerate the payments and pay off the loan more quickly than required by using the savings to apply to the principal. Keep in mind that such a second mortgage loan does not affect your first mortgage, and does not require insurance, as it may in refinancing. Consult with a Colorado lender about details and to see if a consolidation loan would benefit you.

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