In an economic downturn, everyone is being more careful in re-evaluating and managing their finances. Some are finding themselves out of work, drowning in credit card debt, and unable to make their minimum monthly payments. Or perhaps you simply want to lower your expenses as a means of smart money management and build your savings… just in case. Regardless, there are ways to protect your credit score and release the financial pressure you may be feeling in our current economic condition. If you are among the newly unemployed, are looking to lower your monthly payments, get rid of high interest credit card debt, or simply free up some cash, you should be looking into equity loans and refinancing.
What is an equity loan?
Home equity loans borrow against the equity you have built in your property, so that you can make use of your money now. It is essentially taking out a line of credit that is secured by your home. This differs from refinancing, because it leaves your mortgage untouched and is comparable to taking out a second mortgage. Many financial institutions refer to this as an “equity take-out” loan. This means the equity you have already built in your home can help you take advantage of lower interest rates and consolidate or eliminate other high interest loans. Credit card loans, car loans, uninsured lines of credit, and second mortgages can have interest rates well over 10%. With an equity take-out mortgage from AC Lending, you can save money by paying less interest.
What is refinancing?
Refinancing your home can also be a great way to take advantage of lower interest rates and free up the cash you have built in your home equity. This approach will provide you with the lump sum of your entire equity at once, unlike an equity loan where a line of credit is established. Most lenders will allow you to refinance up to 80% of your home’s value. This can help lower your monthly payments and free up cash flow. The perks to paying off high-interest loans and freeing up cash flow often outweigh the penalty costs of refinancing. Equity loans and refinancing are also great options for financing a renovation on your home, beginning a new business, or going back to school.
Let us work with you to help you save money and make the most of the money available to you. Contact us today to work with AC Lending and determine what the best option is for you. See our other blog posts for more tips and information on making the most out of your mortgage.
Original Post courtesy of Jordan Thomson