Tag Archive for: mortgage

Is a HELOC More Dangerous Than a Credit Card?

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When it comes to borrowing money, many people wonder:
Is a HELOC more dangerous than a credit card?

The answer?
Yes… and no.

Let’s break it down using real examples so you can decide what’s right for your situation.

How HELOCs Are Less Risky Than Credit Cards

Let’s start with interest. That’s the big one.

  • Most credit cards charge around 24% interest.

  • A HELOC (Home Equity Line of Credit) is closer to 8%.

So, if you owe $10,000…

  • A credit card might cost you $2,400/year in interest.

  • A HELOC? Just $800/year.

That’s a difference of $1,600 — and that money stays in your pocket instead of going to the banks.

That’s a huge win for your budget.

Lower monthly payments mean less stress and fewer risks of falling behind. You’re also not paying extra just to carry the debt.

How HELOCs Are More Risky Than Credit Cards

Now let’s talk about the risk.

A HELOC is a mortgage. That means it’s tied to your house. If something goes wrong and you miss payments:

  • It affects your credit more than a credit card would.

  • You could even face foreclosure.

That’s a big deal.

You’re giving up equity in your home and putting your property on the line. This is why you should only use a HELOC if you know where your repayment will come from.

If lowering your interest helps you get ahead, great.
But if you’re falling behind already, a HELOC might only delay the problem.

What About a Refinance Instead?

If you’re thinking about using your home to consolidate debt, a HELOC is usually a smarter option than a full refinance.

Here’s why:

  • Refinances roll your entire mortgage into the new loan.

  • If your current mortgage is at 3%, why bump the whole thing to 6% or 7%?

  • A HELOC lets you borrow just what you need, at a lower cost (sometimes as little as $500 vs. $5,000+ for a refinance).

Plus, most HELOCs let you borrow up to 80–85% of your home’s value.

So, Is a HELOC More Dangerous?

Only if you’re not careful.

✅ If you need to lower your payments and have a plan:
A HELOC can save you thousands and reduce financial stress.

⚠️ But if you’re struggling to make payments already:
Tying that debt to your house could make things worse.

Download Free Tools

Want to see the real numbers for yourself?

📥 Download our free tools at Smart with Debt:

  • Credit Cards vs HELOCs

  • Refinance vs HELOCs

These side-by-side comparisons show how much you could save — or risk — based on your situation.

Make your debt work for you, not against you. Contact us today to find out more.
That’s what being Smart with Debt is all about.

Watch our most recent video: “Is a HELOC More Dangerous Than a Credit Card?”

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What Is a Cash Out Refi and Is It the Best Move for You?

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Today we are going to discuss, “what is a cash out refi and is it the best move for you? Need cash and own a home? A cash out refinance might be the answer. It’s a way to take money out of your home’s value without selling it.

How does it work?

Here’s how it works. Let’s say your home is worth $300,000, and you only owe $200,000 on your mortgage. A cash out refi lets you replace that old loan with a new one—maybe for $250,000. You pay off the $200,000 you owe, and the extra $50,000 goes to you in cash.

What can you use the money for?

People use that cash for all kinds of things—fixing up the house, paying off credit cards, or starting a business. It can be a smart move if the new loan has a lower rate or helps you clean up high-interest debt.

Is this the right move?

But is it right for you? That depends. You’re trading home equity for cash. That means you’ll owe more on your home again, and your monthly payment might go up.

Here’s a quick example:

  • Old loan: $200,000 at 4%

  • New loan: $250,000 at 6.5%
     Even though you’re getting $50,000 cash, your payment could jump by hundreds per month.

A cash out refi can work well—but only if the math makes sense. In the full article, we’ll walk through when it’s a smart move and when it could backfire. Let’s make sure you’re getting ahead, not falling behind.

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Is a cash out refi the best move for you? Contact us today to find out more.

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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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Which loan is best for you? Contact us today to find out more about: “What is a fixed rate? 

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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! 

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What Is a Mortgage and How High Is Too High?

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Today we are going to answer the question, “what is a mortgage and how high is too high?” A mortgage is a loan you use to buy a home or property. You borrow money from a lender and pay it back over time, usually with interest. Most mortgages are spread out over 15 to 30 years. The monthly payment includes the loan amount, interest, taxes, and insurance. It sounds simple, but how do you know if your mortgage is too high?

First, look at your income. Experts say your monthly housing costs shouldn’t be more than 28% of your gross income. For example, if you make $5,000 a month, aim to keep your housing costs under $1,400. This helps you balance other bills, savings, and goals.

Next, think about your debt. Adding a mortgage to credit cards, car loans, or student loans can strain your finances. Lenders often recommend keeping total debts under 36% of your income. If your mortgage pushes you over, it might be too high.

Finally, plan for the future. What if you lose a job or face unexpected expenses? A mortgage that feels fine now could become overwhelming later. Consider creating a budget that leaves room for savings and emergencies.

For example, Sarah bought a home with a $1,800 monthly mortgage. But when her car needed major repairs, she had to dip into her emergency fund. Keeping her housing costs closer to $1,400 would have helped her avoid stress.

In the end, a mortgage is too high if it leaves you feeling stretched. Stay within your limits, and you’ll enjoy your home without financial headaches.

Contact Us Today! 

Not sure which loan is best for you and your needs? Contact us today to find out more about how to turn your debt into your friend instead of your enemy! 

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!

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