Why it Makes Financial Sense for Debt Consolidation

By: Wayne Hemrick

Many individuals are making less money today than they did in years past. Downsizing of corporations plays a part, as do inflation rates that exceed income. Whatever the reason, many people are looking for ways to reduce their monthly payments. It makes good financial sense for mortgage companies to offer debt consolidation to help consumers reduce their debt.

Debt consolidation benefits individuals in several ways. Through consolidation, it makes it easier to pay bills. All of the unsecured debts, which come from credit cards, department store cards, cell phone bills, medical bills, legal bills, and personal loan bills, are bundled together, so that instead of writing several checks for different amounts, you write one check for the same amount each month.

Consumers also find debt consolidation appealing because it usually reduces the interest rates that they are paying. Unsecured debt rates are higher than those rates paid on secured debts. Secured debts are secure because the creditor is given certain rights to the property in question if the loan is not paid back as agreed upon by both the creditor and debtor. Secured debts include items such as a house payment or an auto payment. Because the debt is secure, the creditor is able to offer a lower interest rate because they face less of a risk in lending the money.

For those with credit cards, minimum monthly payments have recently doubled. That, along with the high interest rates that are often charged on credit cards, is why many people want a fixed rate that can be obtained with a debt consolidation loan. In this way they know how much they will owe each month, and won't be subject to rising, fluctuating changes in their payments.

As a mortgage broker or loan officer, you have the loan products available to help consumers save money each month. By procuring debt consolidation leads, you can talk with people interested in what you have to offer. You will want to check the quality of each mortgage broker debt-consolidation lead to make sure it provides a financially expedient investment of your resources. One way to ensure quality is to find out how the leads were generated. Companies that offer big prizes or incentives for people to sign up yield leads that are often no good. Instead, you want consumers to sign up because they want a qualified person to contact them to help them with debt consolidation. Also check to see if the debt leads are yours exclusively, or if you will be sharing them with other brokers. Exclusivity makes for a much greater closing rate. Debt management leads should also be screened for accuracy of contact information, and that the lead has a large amount of unsecured debt.

Debt Consolidation
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