When people are stuck in debt, it’s often referred to as being “underwater,” an expression which certainly captures the feeling of being trapped. To be sure, everyone has unique financial goals and circumstances and life goals, too, including homeowners.
Some types of debt are healthier than others. Nobody has the exact same financial strategy because our situations and lives are unique. However, there are a few common things homeowners can do to help stabilize their finances and give them a boost.
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Home Equity Loans
Homeowners may not realize how much equity they’ve built up in their property. If this is you, speak to a leading mortgage broker like Burke Financial about whether a home equity loan is right for you.
They’ll give you expert advice centring around nothing but your financial needs. If a home equity loan is your best option, they’ll set you up with the right terms. Home equity loans are a common way to leverage your home’s equity and borrow money for much less than it would otherwise cost.
If you need a lump sum to pay for things like transportation, education, or a home renovation that, in turn, increases your home’s value, a home equity loan might be perfect.
HELOC — Home Equity Line of Credit
A HELOC is similar to a home equity loan, except instead of a lump sum payment, borrowers receive an open line of credit. If you’re unsure when you’ll need the money or precisely how much you’ll need, a HELOC may be best for you.
The best mortgage brokers can work with people across income and debt levels, so don’t feel like you’ll be rejected, even if the bank has already declined you a loan. HELOCs tend to get approved faster than other loans. Because they’re secured by the existing equity in your home, you’ll get a much better rate than can be found using other means.
HELOCs are fantastic borrowing vehicles, but they tend to be used when people are a bit hard-pressed for cash, so financial experts recommend using them circumspectly. Put another way, it’s wiser to use them for major life purchases or for reinvesting back into your home.
It’s hard to think of a healthier use of borrowing than leveraging your home’s equity to increase its home’s value. Emergency repairs are another excellent and common use.
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Second Mortgages
There’s considerable confusion around the idea of a second mortgage, as people tend to think they’re only used to solve financial disasters. In reality, second mortgages are a common borrowing tool.
Using a quality mortgage broker can result in savings of $10,000 annually, which is no small chunk of change! Speak to them and see if a second mortgage is your best financial option.
Owning a home can be an amazing tool to help get your finances stable and back on track. You shouldn’t feel guilt or shame if you get behind on payments, which can happen to anybody. The good news is that there’s always a route that homeowners can take to get back above water.