Is a HELOC right for me?

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So many people ask “is a HELOC right for me?” A HELOC, or Home Equity Line of Credit, is like having a credit card tied to the value of your home. It lets you borrow money when you need it, based on the equity you’ve built up in your property. The best part? You only pay interest on what you actually use.

Think of it this way: Let’s say your home is worth $300,000, and you still owe $200,000 on your mortgage. That means you have $100,000 in equity. With a HELOC, a lender might let you borrow up to 85% of your home’s value, minus what you owe. In this example, that could be $55,000 ready for your projects or emergencies.

People love HELOCs because they’re flexible. You can use them to remodel your kitchen, cover unexpected expenses, or even invest in another property. Plus, during the “draw period,” you can borrow, pay it back, and borrow again—kind of like a revolving door of cash.

The key is to use it wisely. Borrow for things that improve your financial future or add value to your home, not just for quick fixes or vacations. In the end, a HELOC can be a powerful tool to unlock the value sitting in your home.

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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.

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The pros and cons of 0% APR credit cards

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Today we are going to look at an article that discusses the pros and cons of 0% APR credit cards. A 0% APR credit card can be a helpful tool for managing debt, but only if used wisely. With these cards, you can pay off your balance without interest during the intro period, which could save you a lot of money. For example, if you have $4,000 in debt at 20% interest, it could cost you around $906 in interest. With a 0% APR card, that number drops to zero, allowing you to pay off the balance faster.

However, there are downsides. You may need to pay a balance transfer fee, and if you miss a payment, you could lose the 0% APR offer and pay higher interest. Plus, once the intro period ends, the remaining balance will start racking up interest again at the card’s regular rate.

These cards can also offer perks, like rewards or protection on purchases. They may also help improve your credit score if you use them responsibly. But be careful—if you’re not disciplined, you might find yourself with more debt than you started with. If that happens, or if you’re not able to pay off the balance in time, a 0% APR credit card might not be the best option.

In short, a 0% APR card can be a great tool for debt reduction. However, you need to stay on top of payments and have a clear plan.

Click here to read the entire article.

Contact us today if you have more questions regarding the pros and cons of 0% APR credit cards.

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The Shortest Refinance Boom EVER – Good or Bad For You?

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For just a couple of weeks, we had what might be the shortest refinance boom ever. Interest rates dipped into the 5% range, which got everyone talking about cash-out refinances to manage their debt. But was it really the best option? Let’s break down why this might have been more of a blessing in disguise.

Why a Cash-Out Refinance Might Not Be Right for You

When rates dropped, many homeowners considered a cash-out refinance. The goal was simple: consolidate debt and make monthly payments easier. But for most people, this wasn’t the best option. Here’s why:

  1. You Lose Your Good Mortgage Rate
    If you have a mortgage with a low rate from just a few years ago, refinancing could double or even triple that rate. This means you’d be paying more on debt you’ve already been handling well.
  2. Higher Total Interest Over Time
    A cash-out refi stretches out your debt, adding interest over more years. So, even if monthly payments seem smaller, you’re likely paying more to the bank in the long run.
  3. Better Alternatives Exist
    Instead of locking into a higher rate for all your debt, other options could work better for managing specific debts, like credit cards or car loans.

Better Options for Your Debt

Refinancing isn’t the only way to free up cash and simplify your payments. These alternatives can put more money back into your life without adding to your mortgage balance.

1. Fixed-Rate Home Equity Loans

A home equity loan lets you tap into your home’s value without affecting your current mortgage rate. Unlike a HELOC, which is often adjustable, a fixed-rate home equity loan keeps your rate steady and predictable.

2. Balance Transfers to 0% Credit Cards

Got good credit? Consider moving high-interest credit card debt to a 0% APR balance transfer card. Even with a small transfer fee, the savings can be big. For example, transferring $10,000 at 25% interest to a 0% card could save over $2,000 in interest a year.

Use This “Break” to Get Financially Ready

With the refi boom gone (and possibly not coming back anytime soon), it’s a good time to look at other ways to get into better financial shape. Here are a few steps to consider:

  1. Improve Your Credit Score
    Aim for a 700+ credit score. This isn’t just about looking good on paper; it can make a big difference in the types of loans and interest rates you qualify for. With a high credit score, your monthly payments on things like credit card debt could drop by hundreds of dollars.
  2. Reduce High-Interest Debt First
    Focus on paying off higher-interest debts like credit cards and personal loans first. Lowering your overall interest costs frees up cash each month.
  3. Use Tools to Compare Options
    Tools like our free calculator let you compare a refinance vs. a home equity loan, so you can make the best choice for your needs.

Keep Debt Working for You, Not the Other Way Around

Debt doesn’t have to weigh you down. By choosing the right kinds of debt, you can focus on what matters now and build a solid future. Here are some tips for keeping debt manageable and beneficial:

  • Aim for “Healthy” Debt
    Debt can help you buy a home, car, or even fund a vacation. But always aim for manageable, “healthy” debt — the kind that supports your goals without stretching you too thin.
  • Focus on Debt That Lets You Enjoy Life
    Good debt isn’t about giving more to the banks; it’s about keeping more in your pocket. Imagine saving hundreds each month by switching to better debt and putting that money toward experiences you enjoy today and security for tomorrow.

The Bottom Line: Say Goodbye to the Refi Boom & Hello to Better Choices

The shortest refinance boom ever was, in some ways, a wake-up call. Yes, refinancing sounds appealing, but it’s not always the best path to financial freedom. Instead, use this moment to find better debt options, boost your credit score, and put more money back into your life.

For tips on finding the best debt solutions, visit us at Smart with Debt, where we guide you on smarter ways to handle your finances and keep your future bright.

Watch our most recent video to find out more about: The Shortest Refinance Boom EVER – Good or Bad For You?

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U.S. credit card debt

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Today we are going to share an article regarding U.S. credit card debt. Experts like Rakeen Mabud point out that the Federal Reserve’s rate hikes are making life harder for those who rely on credit cards. Interest rates are becoming a bigger burden than inflation itself.

The credit industry’s lack of competition is also a factor. With fewer options, credit card companies are charging record-high APRs. This is making it tough for consumers to break free from debt. Additionally, new financial tech products like “buy now, pay later” are making it easier for consumers to spend. Another thing to keep in mind is that these products often don’t follow the same rules as traditional credit cards. Therefore these products are adding to debt without having the proper protection in place.

In conclusion, the rise in credit card debt shows how inflation and high interest rates are hitting lower-income families hard, even though their struggles may not immediately affect the overall economy. Where do we go from here and how can we decrease credit card debt? Only time will tell.

To see the complete article please click here.

Do you have questions regarding U.S. credit card debt or how you can decrease your credit card debt? Contact us today!

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