What Is a Fixed Rate?

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Today we are going to answer the question, “what is a fixed rate?” A fixed rate is a steady, unchanging interest rate on a loan. No surprises. No sudden jumps. You lock in one rate, and it stays the same for the life of the loan.

Think of it like locking in the price of your favorite coffee. If you could pay the same $3 per cup for 30 years, no matter how much prices rise, that can make a big difference in the long run.

For example, if you get a fixed-rate mortgage at 6%, your monthly payment stays the same, even if market rates go up to 8% or drop to 4%. That means predictability in your budget.

The opposite is a variable rate, which can change over time. That might start lower, but it can go up, sometimes way up.

This option is great when interest rates are low or when you want stable, predictable payments. It keeps your budget in check and helps avoid surprises.

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Debt Consolidation EXPOSED: Do It the Right Way!

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Today we are going to discuss debt consolidation exposed: Do it the right way! The numbers don’t lie. We’re going to show you how to pay less instead of falling into a massive debt trap. If you’ve been told that consolidating debt with a new mortgage is the best move, think again.

What’s the Goal of Debt Consolidation?

For most people, lowering their monthly payments is the top priority. However, here’s the problem. Most lenders and TV personalities only focus on monthly payments instead of total debt costs.

At Smart With Debt, we love debt, when it’s used the right way. We believe in good, healthy debt that keeps more money in your pocket, not the lender’s.

So, let’s break down the numbers as well as expose the real cost of debt consolidation.

The $200,000 Debt Mistake

Let’s look at an example of a homeowner trying to consolidate debt:

  • Original Mortgage: $300,000 at 4% interest (from four years ago).
  • Current Mortgage Balance: $277,000 with 312 payments left (26 years).
  • Credit Card Debt: $30,000 across three cards at 21-24% interest.
  • Total Monthly Payments: $2,432 (Mortgage: $1,400 + Credit Cards: $1,000).

The goal? Lower the payments. But watch how lenders trick you into paying far more in the long run.

Refinancing at 7%: A Costly Move

If you refinance your $277,000 mortgage today at 7% interest, your new mortgage payment would be:

  • New Mortgage Payment: $1,800 per month.
  • New Loan Term: 30 years (360 payments).
  • Total Interest Paid Over Time: $664,000!

That’s over $200,000 MORE than your current loan!

Now, what if you refinance both your mortgage and your $30,000 credit card debt into one new loan?

  • New Loan Amount: $312,000 at 7%
  • New Payment: $2,075 per month (Yes, slightly lower)
  • Total Debt Paid Over Time: $747,000!

You just turned a $30,000 problem into a $747,000 mistake!

This is what lenders aren’t telling you.

The Right Way to Consolidate Debt

fInstead of rolling everything into a new mortgage at a higher rate, try this instead:

First, Keep Your Mortgage Intact.

  • You already have a low rate (4%)—don’t touch it!

Second, Use a Home Equity Loan Instead.

  • A fixed-rate home equity loan at 8% costs much less over time than refinancing your whole mortgage.
  • Loan Amount: $31,000 (credit card debt + closing costs).
  • New Payment: $376 per month (over 10 years).

Third, New Total Monthly Payment:

  • Mortgage ($1,400) + Home Equity Loan ($376) = $1,776 per month.

You save money upfront AND in the long run.

Key Takeaways: The Smartest Debt Strategy

  • Leave your low-rate mortgage alone!
  • Use a home equity loan to tackle high-interest debt.
  • Lower your payments AND reduce your total debt cost.
  • Avoid the debt trap of long-term refinancing!

Calculate Your Best Option

Want to see how this works with your numbers? Use our free Smart With Debt Calculator to compare:
Refinancing vs. Home Equity Loan
Total Interest Paid Over Time
Monthly Payment Breakdown

Download the calculator today!

Watch our most recent video to find out more about: Debt consolidation exposed: Do it the right way!

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What Impacts Your Credit Score the Most?

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Today we are going to answer the question, “what impacts your credit score the most?” Your credit score plays a big role in your financial life. It helps lenders decide if they can trust you to borrow money. But what really affects your score the most? Let’s break it down.

Payment History:

The biggest factor is payment history. Paying your bills on time shows lenders you’re reliable. Even one late payment can hurt your score, so it’s important to stay on top of due dates.

Credit Usage:

Next up is credit usage. This means how much of your available credit you’re using. Experts recommend keeping it below 30%. For example, if you have a credit card with a $1,000 limit, try not to carry a balance higher than $300.

Credit Age:

Another big piece is credit age. Lenders like to see that you’ve managed credit responsibly over time. Older accounts can boost your score, so think twice before closing that old credit card.

Credit Mix:

There’s also credit mix. Having different types of credit—like a mortgage, car loan, or credit card—can work in your favor. It shows you can handle various types of debt.

New Credit Inquiries:

Finally, new credit inquiries play a role. Applying for too many loans or credit cards in a short time can make you look risky.

In Conclusion:

Each of these factors matters, but payment history and credit usage are the heaviest hitters. Keep an eye on these, and your score will thank you!

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Hidden Wealth in Your Home: HELOC Qualification Breakdown

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Today we are going to talk about hidden wealth in your home. Unlocking the hidden wealth in your home starts with understanding how a HELOC (Home Equity Line of Credit) works as well as how to qualify for one. Let’s break it down step-by-step, so you can see if this option works for your needs.

What is a HELOC?

A HELOC is like having a financial safety net. It’s a second mortgage that lets you borrow money based on your home’s equity while keeping your existing mortgage in place.

Here’s the key: A HELOC is tied to your home’s lendable equity, which depends on your property value as well as how much you still owe on your first mortgage.

How Lenders Calculate HELOC Amounts

Everything comes down to CLTV (Combined Loan-to-Value). This calculation determines how much equity you can access.

Here’s how it works:

  1. Determine Your Home’s Value


    Find your property’s current market value. Use tools like Zillow or Redfin for a quick estimate or check with a local appraiser.

  2. Know Your Current Mortgage Balance


    Look at your latest mortgage statement to see what you still owe.

  3. Calculate Lendable Equity


    Most lenders allow between 80% and 90% CLTV. Multiply your home’s value by the lender’s CLTV percentage, then subtract your current mortgage balance.

Example:

  • Home Value: $400,000
  • Lender’s CLTV: 85%
  • Current Mortgage: $280,000

Calculation:

  • $400,000 × 85% = $340,000
  • $340,000 – $280,000 = $60,000 of available equity for a HELOC.

Why Choose a HELOC Over a Cash-Out Refinance?

To clarify, HELOCs are often better for smaller, flexible borrowing needs:

First, Lower Costs: No need to refinance your first mortgage, avoiding high closing costs.

Second, Keep Your Low Rate: If your existing mortgage has a great rate (e.g., 3%), you keep it intact.

Finally, Flexibility: Borrow only what you need, when you need it.

In most cases, you can access 5–10% more equity with a HELOC compared to a cash-out refinance.

How to Shop for the Best HELOC

  1. Compare Lenders: Start with local credit unions or mid-sized banks—they often offer the best terms.
  2. Focus on CLTV and Rates: Higher CLTV percentages and lower rates can save you money.
  3. Use Tools to Compare: Download our free HELOC Shopping Scorecard to track offers and find the best deal.

Take Control of Your Home’s Equity

In conclusion, a HELOC offers more than just money, it gives you options. Whether you’re funding home improvements, consolidating debt, or creating an emergency fund, your home’s hidden wealth can help you get there.

Start today by calculating your CLTV and comparing lenders. Smart debt is the key to paying less interest and keeping more money in your pocket.

Contact us today to find out more about: Hidden Wealth in Your Home: HELOC Qualification Breakdown

Watch our most recent video to see the calculations step by step! 

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What Is a Second Mortgage?

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Today we are going to answer the question, “what is a second mortgage?” A second mortgage is a loan that lets you borrow money against the equity in your home. Equity is the difference between your home’s value and what you owe on your first. For example, if your home is worth $300,000 and you still owe $200,000, you have $100,000 in equity.

With a second mortgage, you can use that equity to fund big expenses like home improvements, debt consolidation, or even investing in real estate. But unlike your first mortgage, a second mortgage doesn’t replace your current loan. It’s an additional loan on top of what you already owe.

Think of your home like a pie. The first mortgage claims the first slice. A second one gives you access to another slice of your home’s value, but it also comes with monthly payments and interest.

There are two main types:

  1. Home Equity Loans – You borrow a lump sum and pay it back over time.
  2. Home Equity Lines of Credit (HELOCs) – Similar to a credit card, you borrow as needed up to a limit.

Remember, a second mortgage uses your home as collateral, which means you could lose it if you don’t repay. That’s why it’s important to know the costs and risks before jumping in.

If you’re smart about it, a second mortgage can help you achieve your goals without selling your home. It’s a powerful tool when used wisely!

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What is a second mortgage and is it right for you? Contact us today to find out more about how to turn your debt into your friend instead of your enemy! 

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We also have free tools available! Accelerate Debt Payments Calculator to see which debt option is best for you! 

Learn more!

Visit our YouTube channel to learn more about using debt instead of letting debt use you!

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