What is a HELOC?

Categories: ,

Today we are going to answer the question “what is a HELOC” and help you to determine if it’s the best choice for you. A HELOC, or Home Equity Line of Credit, is like a credit card backed by your home’s value. It’s a flexible way to borrow money when you need it. Instead of taking out a lump sum like a regular loan, a HELOC gives you access to a set amount of money, and you only pay interest on what you use.

Think of it like this: If your home is worth $300,000 and you owe $200,000 on your mortgage, you might have $100,000 in equity. A HELOC lets you tap into that equity, often up to 80% or 90% of the value, depending on your lender.

For example, let’s say you’re approved for a $50,000 HELOC. You can borrow $10,000 for a kitchen remodel now and $5,000 for a vacation later. You only pay interest on the $15,000 you’ve used, not the whole $50,000.

HELOCs can be a game-changer for home improvements, debt consolidation, or even investing in opportunities. But they do come with risks, since your home is collateral, it’s important to borrow wisely.

A HELOC gives you financial flexibility. It’s a tool you can use when you need it, but it’s key to use it responsibly. 

Contact Us Today! 

Is a home equity line of credit right for you? Contact us today to find out more, as well as other ways to use debt to your advantage.

Free Tools For You! 

We also have free tools available! HELOC payment calculator to see which option is best for you! 

Learn more!

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

0 Comments/by

HELOC: How to Get the BEST Interest Rate

Categories:

Today we are going to discuss how to get the best HELOC rate. A HELOC, or home equity line of credit, is an excellent tool that you can use to pay off debt or fix up your property. Here at Smart With Debt we want to show you how to get the best interest rate for your HELOC in order to keep more money in your wallet. Let’s go through it step by step.

Step 1: Find out the Index

First and foremost, what is the index? The index is your starting point for your HELOC rate. This base number is the same for everyone. For example, you could have an index of 8.5%. Be aware, this will go up and down because it fluctuates with the market. 

Step 2: Find out the Margin

What is the margin? The margin is the profit that is added to the index. For example, you could have a margin of 0% to 6%, because each lender charges a different margin.  As a result, rates vary per person because it depends on where you get your HELOC. 

Calculating your HELOC rate

Here’s another way to think of it. Think of it like a gas station. Each station pays the same price for the fuel (aka the index). However, each station charges a different profit (aka the margin). The index plus the margin equals the HELOC rate! 

Step 3: Shop around

It is imperative that you shop around in order to find the best HELOC rate for your wallet. By doing a side by side comparison, you can easily see which lender has the best HELOC. Get started with a free HELOC shopping card today! 

We want to help you!

Finding the best HELOC rate can seem daunting! Don’t let the numbers get the best of you and your wallet. Contact us today to discuss whether or not a HELOC is right for you. Most importantly, download our free HELOC shopping card to compare lenders side by side!

Watch our most recent explainer to find out more about: HELOC: How to Get the BEST Interest Rate

0 Comments/by

Finding the Best HELOC Rate in Today’s Market

Categories: , ,

In today’s market, finding the best HELOC rate in today’s market can feel like searching for a needle in a haystack. Rates are all over the place, and lenders offer different deals depending on your credit, equity, and location. But don’t worry, there’s a simple way to cut through the noise and find the best option for you.

HELOC Rates:

Start by knowing what makes a HELOC rate competitive. It’s not just the lowest rate you see advertised. Some lenders offer teaser rates that jump up after a few months. Instead, look for a rate that stays steady and fits your long-term goals.

For example, imagine two lenders: Lender A offers a 4.5% rate that increases after six months, while Lender B offers 5% fixed for three years. Even though Lender A sounds cheaper at first, Lender B might save you more over time.

Shop Around:

Shopping around is key. Check with local banks, credit unions, and online lenders. Ask about closing costs, annual fees, and rate adjustments. A few questions now could save you thousands later.

Finally, think about timing. If rates are rising, locking in a deal today might be your best bet. But if they’re dropping, a variable-rate HELOC could save you money.

Finding the right HELOC doesn’t have to be stressful. With a little research and the right questions, you’ll uncover the best rate for your needs.

Contact Us Today! 

How can you get started in finding the best HELOC rate in today’s market? Contact us today to find out more about a home equity line of credit, as well as other ways to use debt to your advantage.

Free Tools For You! 

We also have free tools available! HELOC Shopping Scorecard to see which option is best for you! 

Learn more!

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

0 Comments/by

Qualifying for a HELOC: How will your credit affect you?

Categories: , ,

Your credit score plays a big role in qualifying for a HELOC (Home Equity Line of Credit). Lenders use your credit score to see how responsible you are with debt. A higher score can open doors to better rates and higher credit limits. On the other hand, a lower score could result in higher costs or even disqualification.

Here’s an example: Imagine two homeowners, Sarah and Jake. Sarah has a credit score of 750, while Jake’s is 620. Sarah’s strong credit lets her qualify for a HELOC with a 6% interest rate. Jake, with his lower score, gets approved but at 10%. This is a big difference in monthly payments!

Lenders also look at more than just the score. They’ll also review your payment history, total debts, as well as how much of your credit you’re already using. So, even if your score isn’t perfect, improving a few habits, like paying bills on time, can make a difference.

Understanding your credit is the first step to qualifying for a HELOC. With a little effort, you can position yourself for better rates and terms. It’s all about knowing where you stand and making smart choices.

Contact Us Today! 

Do you need to boost your credit score? Contact us today to learn some tips that can help you level up quickly and easily! 

Free Tools For You! 

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! 

0 Comments/by

Calculating Your HELOC Payment

Categories: , ,

Today we are going to walk through the process of calculating your HELOC payment. Just to clarify, a HELOC is a mortgage on your house. However, it operates like a credit card. You can borrow money for anything that you need during the draw period and pay back what you borrow. On average, the draw period lasts between 5 to 10 years. Once the draw period is over, then the repayment period begins. 

Calculate your payment in 5 easy steps:

First: What’s your starting balance

Second: What’s your interest rate?

Third: Grab a calculator.

Fourth: Calculate your annual payment. (Balance x Interest Rate)

Final: Calculate your monthly payment. (Annual payment/12 months)

Example:

Starting balance: $50,000

Interest Rate: 8%

Annual payment: $50,000 x .08 = $4,000

Monthly payment: $4,000/12 = $333.33

Contact Us Today! 

Do you want to find out more about calculating your HELOC payment? Contact us today to learn some tips that can help you to achieve your goal quickly and easily!  

Free Tools For You! 

We also have free tools available! HELOC Payment Calculator to see which HELOC is best for you! 

Learn more!

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

0 Comments/by