Debt Consolidation

Debt consolidation entails taking out one loan
to pay off many others. This is often done
to secure a lower interest rate, secure a
fixed interest rate or for the convenience of
servicing only one loan.Debt consolidation
can simply be from a number of unsecured loans
into another unsecured loan, but more often
it involves a secured loan against an asset
that serves as collateral, most commonly a
house. In this case, a mortgage is secured
against the house. The collateralization of
the loan allows a lower interest rate than
without it, because by collateralizing,
the asset owner agrees to allow the forced
sale (foreclosure) of the asset to pay back
the loan. The risk to the lender is reduced
so the interest rate offered is lower.