There is single, all-important factor that you should keep in mind if you are seeking a loan to consolidate debt. Simply put, debt consolidation is not a magic bullet. It will not eliminate or lower debt. If done correctly it may reduce payments or interest rates, and cut down on threatening phone calls from creditors. But, the same dollar amount of principal debt will almost always exist.

For the vast majority of people, the need to obtain a loan to consolidate debt arises primarily from the mismanagement of credit cards and their huge interest rates. The goal in debt consolidation is to acquire a single loan with a lower interest rate, and pay off the higher interest debts that can easily bleed you dry. While the internet and airwaves are full of commercials for debt consolidation firms, you should proceed slowly and with a healthy paranoia before hiring such a company.

If you own property, the best way to get a loan to consolidate debt is to look into either a home equity loan or a total home refinance with a cash-out option. This can be accomplished if you have suitable equity built up in your home, hold a good to excellent credit score, and can prove a level of income that will allow you to service the loan they seek. In 2009, with a global economy that is in shambles, lenders will insist on written proof of this trio of financial components.

Assuming that all these factors exist, then a refinance with a cash-out option is the best method to get a loan to consolidate debt. Search for the lowest, fixed-rate interest loan available, and pay extremely close attention to the fees being charged by the lender. If done correctly, you can cut interest rates otherwise paid to credit card companies by anywhere from half to two thirds. Payments should also be affordable, as the new loan will generally be spread over 20 to 30 years.

The second option available when seeking a loan to consolidate debt, is the home equity loan. Again, one must have all the previously mentioned criteria before being accepted. But, beware of interest rates on home equity loans. Most of these are adjustable rate mortgages (ARMs) and their interest rates will rise or fall based on widespread economic conditions.

In 2009, a home equity loan may offer a five percent interest rate. However, most economists, and in America even the Congressional Budget Office (CBO), predict that the present massive spending by the federal government will lead to spiraling inflation by 2011. Inflation, in turn, will cause interest rates to skyrocket. One’s low-rate, home equity loan could easily turn into a high-rate albatross. If at all possible, opt for a fixed rate loan.