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Home Equity Debt Consolidation Loan Requirements

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A home equity debt consolidation loan is an option if you need to manage your debt and have built up equity in your property. When you are seeking a consolidation loan, you likely have a high amount of debt and possibly a bad credit score. To ensure your loan application is accepted, you may use the equity you have built in your home as collateral.

You will need to have the ability to collateralize your home equity. Your senior lender, the mortgage company holding the lien on your mortgage, may prevent you from doing this.

You cannot consolidate government loans, such as federal student loans, with other private loans. If you need to consolidate government loans, you will have to check with the loan program you used in order to determine the method for resolving the debt.

You will need to have enough equity built in your current home to supply a loan large enough to cover your remaining debt. You will be taking on a whole new loan, and the amount you can place as collateral will largely determine the size and interest rate on this loan.

You will need to show you have an income high enough to meet monthly payments on your new loan. This ability to pay will take precedence over your credit score in such a high risk loan.