5 Tips For Savvy Use Of Your Home Equity Line Of Credit
|
Tapping your home's equity to pay college expenses, consolidate credit card debt or even to buy a new car or boat is common place. Many economists attribute the additional buying power afforded consumers through home equity debt as a primary reason the nation's economy has been able to emerge from the recent recession. Yet, aside from simply allowing consumers to spendmore, the flexibility and efficiency of a home equity line of credit (HELOC) can provide the financially savvy person with the means to savemoney, make money or simply take advantageof opportune situations he or she might otherwise miss out on. Here are five tips to show you how:
Tip 1: Take Advantage of Higher Insurance Deductibles! You probably know that raising deductibles on auto and homeowners insurance policies can mean big savings on insurance premiums. If you increase the deductible on a homeowner's policy from $500 to $1,000, you'll cut your premium by as much as 25%! Yet many people don't do this because they fear they may not have the necessary cash available in the event of a loss. With low-interest cash readily available through a home equity line of credit you'll have the security and confidence you need to raise your deductibles and reap the savings!
Tip 2: Lock In Big Savings! Credit card companies (e.g. the GM card) frequently have shopping programs with names like "Main Street Savings" on a 30-day free trial basis. These programs allow you to buy discounted gift cards (20% discount) for major national retailers like Target, Sears, and Home Depot. The flexibility afforded by a home equity line of credit can allow you to purchase (during the free trial period) a large amount of discounted gift cards for major retailers you frequent. Then use these cards instead of cash or credit when you purchase everyday items (The cash you would have spent can be used to pay down the HELOC).
Although you pay low interest on the home equity credit line, you receive a front-end discount of 20% on everything bought. When combined with store coupons and sales, you can realize total savings of 70% or more! In short, a HELOC provides the low interest cash availability to take advantage of bargains like this that you might otherwise have to pass on.
Tip 3: Take Advantage of 0% Balance Transfer Offers! We've all seen no-fee credit card offering "0% APR" on balance transfers for 6, 12, and even 18 months. If you have a balance on your HELOC, you may be able to take advantage of these offers. Here's an example of how: last year I accepted such an offer and promptly transferred $10,000 from my home equity credit line balance (which had a 4.25% rate). Then I cut up the card! For the next eleven months, I paid the monthly minimum credit card payment (3% of the outstanding balance) by writing a check from my home equity line of credit. In the twelfth month, prior to the expiration of the 0% offer, I paid off the remaining balance with another home equity credit line check. During the 12 months, I also made sure to continue my regular payment towards the HELOC at the same level, meaning that more of each went to pay down principal and less went to interest.
Net result: interest savings of over $350.00, lower principal balance on my HELOC, and a positive addition to my credit repayment history!
Tip 4: First Pay With a Rewards Credit Card! If you're contemplating using your HELOC for a major purchase, you should consider whether or not the merchant your dealing with accepts credit cards. Why? Because it makes a great deal of sense to pay first with a rewards credit card and then pay off the card with your HELOC check. On a recent $14,000 bathroom remodel, I was able to charge plumbing services, cabinets, and almost everything else to my Fidelity/MBNA 529 College Rewards Mastercard. This card pays you back by putting 2% of everything charged into a 529 college savings plan. Result: $280.00 in college savings that would have been missed if I paid the bills directly with home equity credit line checks! Whatever rewards credit card you favor, it's sensible to pay first with the card whenever possible. Keep in mind, though, you must promptly pay off the balance and not incur finance charges.
Tip 5: Replace Your 1st Mortgage with a HELOC! According to Money Magazine, if you have more equity than debt and plan to stay in your home for 3 years or less, you should consider replacing your first mortgage with a home equity line of credit. HELOCs are currently available around the country at rates of 4% or lower. Even if rates increase a full percentage point each year, they'll still be low when you pay off the loan. Best of all, there are no closing costs with most HELOCS so you won't have to worry about recouping them through interest savings as you do with a traditional mortgage refinance. A savvy person - using tip 3 in conjunction with tip 5 - might even move a portion of his mortgage to a 0% credit card thanks to the flexibility of a home equity line of credit.
About The Author
Tim Paul has more than 25 years executive financial management experience. His recent area of focus has been to develop and catalog proven strategies for financially savvy persons to get the most from their home equity credit lines. His website is www.sagetips.com.
|
|
|
Imagine Cutting Over $8,000 Off Your Mortgage This Year
I once helped a customer cut over $700 off his monthly mortgage payment. That's right, over $8,000 each year and over $40,000 in just five years. Now, not everyone can save ...(related: Mortgage Refinance)
How A Commercial Mortgage Can Help Your Business
A commercial mortgage or commercial remortgage is a business loan which is secured against a commercial property.Commercial mortgages are often used to buy business premises, such as offices, shops, restaurants, or pubs.But they can also be used to buy other business assets such as plant or machinery.As well as being a useful way of financing the purchase of business premises for ...(related: Mortgage Refinance)
How To Save Hundreds A Month On Your Mortgage
When it comes to American spending habits, the sad truth is that most people don't put their financial assets to the best use. One of the greatest examples of this is the home mortgage. Surprisingly, most people fail to educate themselves about the dangers an...(related: Mortgage Refinance)
Why Choose A Home Equity Loan?
There are many reasons for choosing a home equity loan. A home equity loan allows homeowners to obtain a loan in addition to their original loan using the equity in their home. Home equity loans are generally a second mortgage, and are used for personal use.Home equity loans are also known as equity release schemes. Home equity loans are aimed mainly at those homeowners that have paid their mortgages off. They can receive a cash lump sum or some income by unlocking that capital.People take out a home equity loan for a variety of reasons. Some people do it in order to finance home improvements, buy a new car, co...(related: Mortgage Refinance)
Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy
If you have a recent bankruptcy on your credit and are looking to get financing for a home, there is hope. Buying a home with bad credit will just put more emphasis on the other two factors needed to get a mortgage loan, which are; income verification and a down payment.After bankruptcy most lenders want you to wait at least 2 years from the time of the bankruptcy discharge before they will consider you for a mortgage loan. After the two year waiting period is over, you should be able to get financing easily. You should also be able to get 100% financing as well. You can usually achieve this as l...(related: Mortgage Refinance)
Jacksonville Florida Real Estate Mortgage Home Loans - Get The Best Rate Everytime
There are hundreds of mortgage companies in the Jacksonville real estate market. All claiming to have the lowest rate and excellent customer service. Well, it is simple to figure out that if you are reading this information off of billboards or in an expensive yellows page adverisment, it is very possible this isn't so.Very often, a real estate agent will refer a customer to me. I will ask the questions regarding their financial picture to determine credit worthiness. Then I will tell them the inter...(related: Mortgage Refinance)
Online Mortgage Brokers - What You Might Not Know About Home Loans & The Internet
You may think that applying online for a mortgage is the same as applying with a broker in the 'real world', only more convenient.While applying for a mortgage online is much more convenient, and sure to help you get a lower rate because of the amount of competition online, there is another benefit to using the internet when applying for a loan.Sometimes when you meet a broker and he/she takes a look at your financial qualifications, they might say, we can get you this rate. And that's it. That is your loan option with that broker. Most brokers hav...(related: Mortgage Refinance)
Why You Should Not Get Hung Up On The Interest Rates!!
This is what a mortgage can do for you!AND Why you shouldn't get hung up on the interest rate!Let me show you the bottom line or the total dollar amount you will pay when paying a mortgage and paying rent and what the benefits of a mortgage are:Let's say John bought a home and has a $75,000 mortgage @ 10% interest for 30 years on his home with a payment of $750.00 per month. John's friend Bill is renting a house, but he is paying $750.00 per month in rent with no interest (I am using these numbers for illustration purposes). Now, it's a funny thing, but both men live in their homes for the full 30 years and guess how much money both paid out in that 30 years?Do you...(related: Mortgage Refinance)
Seller Financing
Although any loan used for buying real estate is strictly called a purchase money mortgage, the term is ...(related: Mortgage Refinance)
When Is The Right Time To Refinance Your Mortgage?
You've heard that interest rates are down and you think it could be time to refinance your existing mortgage, but the entire loan application process was so exhausting during the initial loan that you aren't sure it's worth the hassle. You could very well be right, but there are some things you can do to help decide whether it's time to refinance your mortgage.The first thing you need to verify is the interest rate for your existing mortgage and the interest rates being offered across the board for new loans. If there's not at least a one and a ...(related: Mortgage Refinance)
site-map - Copyright © 2006 mortgage-refinance.myinfohut.info | Contact Webmaster | All Rights Reserved. | Mortgage Refinance