A good rule of thumb is: debt consolidation is not a good option if your debt is more than 50 percent of your income.
It is also not a fit if you do not have a consistent source of income that more than covers your monthly payment.
While consolidating debt certainly has merits, it is not the right choice for every individual.
Consolidation loans are a popular way to get a handle on debt.A home equity loan does not replace the existing mortgage as a cash-out refinance does, but it is another loan in addition to the existing mortgage.HELOCs differ from home equity loans in that, instead of receiving a lump sum of cash, borrowers have an agreed-upon amount that they can take from their equity, and access as needed over time. Cash-out refinancing involves replacing your mortgage loan with a new one for more than you owe, taking part of the difference between your old and new loans in cash. There are two categories: a federal Direct Consolidation Loan and private consolidation or refinancing options.This allows you to pay off those debts more quickly while still paying down your regular mortgage over a longer period of time, without combining the two.The downside of using a mortgage for debt consolidation is that you're putting your home on the line.Some people even open a new card with a 0 percent APR for a promotional introductory period (many of these run the gamut from six to 24 months) and transfer other balances over to that card.This can be a viable solution if you think paying the card off within that promo time frame is doable.Some people prefer a debt management plan, while others benefit from simplified singular payment of a consolidation loan.It all depends on the person and the type of debt they’ve accrued.Third, interest paid on mortgage debt, even from a debt consolidation, is tax-deductible up to certain limits – so that can save you money as well.A Mortgage Debt Consolidation Loan can be one of two types: a home equity loan/line of credit, or a cash-out refinance.