Consolidating Multiple Loans

Consolidating Multiple Loans
If over time you​ have accumulated multiple loans it​ may be wise to​ consider consolidating those loans into one single loan .​
There are a​ variety of​ ways in​ which this may be accomplished.
Student Loans
Multiple student loans must be handled in​ different ways depending upon whether they were funded originally as​ private loans based on​ personal credit or​ as​ federally insured loans .​
Private student loans may be consolidated in​ the​ same way that any private loans are consolidated .​
Federally insured student loans were placed with a​ private institution but they were guaranteed against default by the​ federal government .​
This type of​ loan has strict guidelines about how and when it​ can be consolidated.
A federally insured student loan cannot be consolidated with credit card debt or​ any other kind of​ consumer debt .​
Private student loans may in​ some cases be consolidated with federally insured student loans but doing so is​ highly inadvisable .​
Once a​ private student loan has been consolidated with a​ federally insured student loan it​ then falls under the​ same strict guidelines as​ the​ federal loan.
Further,​ federally funded student loans will only be consolidated at​ an​ interest rate equal to​ the​ weighted average of​ the​ rates on​ all the​ loans being consolidated .​
At present that rate is​ capped at​ 8.25% but with all interest rates on​ the​ rise,​ this cap may soon be increased .​
In addition,​ loans must be consolidated within a​ certain time period after the​ student either graduates or​ leaves school without graduating .​
Also,​ federally insured student loans cannot be consolidated a​ second time unless a​ newly funded student loan is​ rolled in​ with the​ loans that were previously consolidated.
Multiple Home Mortgage Loans
If your home currently carries both a​ first and a​ second mortgage you​ may want to​ think about consolidating the​ two .​
This is​ especially true if​ your credit is​ good and the​ interest rates on​ the​ current mortgages are more than two percent higher than current mortgage rates .​
However,​ there are other factors to​ be pondered when considering this type of​ loan consolidation.
Refinancing your home carries certain closing costs .​
In order to​ avoid having to​ pay any out of​ pocket costs,​ these closing costs will be financed as​ part of​ your new consolidated mortgage loan .​
You should examine the​ affect that the​ refinancing will have on​ the​ cost you​ pay over the​ lifer of​ the​ loan .​
Consolidating your home mortgage or​ refinancing that mortgage multiple times can actually be more costly than just sitting with the​ current loans .​
This is​ especially true if​ you​ will not be staying in​ your home more than three to​ five years.
Multiple Personal Loans
You would choose to​ consolidate multiple personal loans for the​ same reason you​ would consolidate multiple home mortgage loans; that is,​ if​ the​ interest rates you​ are currently paying are significantly above the​ currently available interest rates .​
Again,​ in​ order for a​ loan consolidation of​ this sort to​ be viable,​ you​ must have good credit and the​ cost of​ the​ multiple loan consolidation must not outweigh the​ savings you​ would accrue.

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