Tag Archive for: lenders

HELOC: How to Get the BEST Interest Rate

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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

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Should you pay points?

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When you are shopping for a mortgage you may hear about points. Points are a percentage that is added to a loan amount. For example, 1 point or 1% of a $300,000 loan would equal $3,000. Points are a way for you to pay upfront in order to get a lower rate. Many people ask whether or not you should pay paints and if it is worth it in the long run, however, it is dependent on your financial situation. Buyers beware! Even lenders who say that there are no points often increase the interest rate so that they can still make money on the loan. 

What is the right move for you?

The decision to pay points depends on your plans. If you’re only staying in your home for a couple of years, it may not be worth it to pay points. On the other hand, if you’re planning on staying longer, you could save thousands by paying points and reducing the interest rate.

Contact Us Today! 

Do you want to find out more about mortgage rates with and without points? 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! Accelerate Debt Payments Calculator to see which debt option is best for you! 

Learn more!

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What Credit Score Do I Need for a Cash Out Refinance?

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Today we are going to discuss what credit score you should have for a cash out refinance. What is a Cash Out Refinance?A cash out refinance lets you replace your current mortgage with a new one. The new loan is for more than you owe on your house and you get the difference in cash. This money can be used for anything you need.

Why Does Credit Score Matter for a Cash Out Refinance?

Your credit score shows how well you handle money. Lenders use it to decide if you are a good risk. Therefore, a higher score makes it easier to get a loan with good terms.

Minimum Credit Score Requirements for Cash Out Refinance

Here’s a simple guide to credit scores and cash out refinancing:

  • Excellent Credit (740 and above): You will likely get the best rates and terms.
  • Good Credit (700-739): You can still get good rates but not the very best.
  • Fair Credit (620-699): You can get a loan, but the rates might be higher.
  • Poor Credit (below 620): It will be hard to get a loan. You might need to improve your score first.

How to Improve Your Credit Score

If your credit score needs a boost, here are some tips:

  • Pay Bills on Time: This is the best way to improve your score.
  • Reduce Debt: Try to pay down your credit cards and other loans.
  • Check for Errors: Look at your credit report and fix any mistakes.
  • Limit New Credit: Don’t open new credit accounts right before applying for a loan.

Other Factors Lenders Consider

Credit score is important, but it’s not the only thing lenders look at. They also consider:

  • Income: Do you make enough money to cover the new loan payments?
  • Debt-to-Income Ratio: This is how much you owe compared to how much you make.
  • Home Equity: The more equity you have, the better your chances of approval.

Final Thoughts

Getting a cash out refinance can be a great way to get extra cash. Make sure that your credit score is in good shape in order to get the best terms for your cash out refinance. If you need help improving your score, start with the tips above.

Contact Us Today!

Do you need help navigating your financial future? Contact us today!

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