How to Save on Interest with a HELOC
Date: Jan 4, 2023
Are you a homeowner who is using credit cards as your primary source for consumer borrowing? If yes, we’re here to introduce you to a better way to navigate your finances. Meet a home equity line of credit, often referred to as a HELOC.
You’re probably tired of being subject to sky-high interest rates on your lines of credit and capital funding resources.
Ready to get rid of the high interest in your life? It’s time to make the transition from unsecured, high-interest borrowing tools to begin leveraging your accumulated home equity through a home equity line of credit.
Here are the steps it takes to ditch high interest and live the strategic HELOC life.
If you’re done with credit cards and high interest fees, the first step is to pursue a home equity line of credit.
While home equity lines of credit have historically been difficult to source, Hitch is changing the game with an innovative solution to HELOC underwriting.
Hitch supports a fully online HELOC process. From testing the waters with a first quote to submitting your application and finally receiving your funds, the entire HELOC journey happens digitally.
This means no in-person meetings, no time lags, and no disruptions — allowing Hitch to provide you with fast access to cash. With Hitch, eligible homeowners will be able to borrow up to 95% of their home value minus the original mortgage balance.
Other benefits of a HELOC with Hitch include:
Eager to learn more about Hitch? Find more information here!
Once you have secured your home equity line of credit, it’s time to map out a customized course of action to alleviate the high-interest charges that are impacting your finances.
At this point, you can begin using your HELOC to address any pending balances on your accounts. This action plan should be curated to your specific needs and circumstances.
For example, you may want to use your HELOC to pay off roll-over balances to stop your credit card companies from charging you high interest. Paying down existing debts is one of the most popular ways to use a HELOC as it can save you money in the long term by reducing interest expenses.
In other cases, some people may even want to close their credit card accounts that no longer serve them. If you do plan on closing out credit cards, it may be a good idea to hold onto your low interest offers and shed the high interest cards.
If you do plan to close out credit cards, know that this can negatively affect your credit score. You will need to weigh the pros and cons here to decide if this is the best step for you.
Perhaps you plan on buying a new car soon and need your credit score to be at its best. In this case, it could make more sense to retain your credit lines and moderately use each, paying it off before your statement hits.
This way, you will no longer be subject to high interest and do not have to take a hit to your credit score by closing the account.
Or, maybe you’re interested in making sweeping changes to your finances and want to be done with high interest credit cards for good. If you have no upcoming circumstances that require great credit, you may choose to close your credit lines and spend time building your credit back up.
These considerations are personal, and your best strategy needs to be fully customized according to your needs.
As you map out your next steps, you may want to speak with a trusted financial advisor to ensure that you’re making the right choices. Your financial advisor will be able to provide insight on best practices for transitioning your spending from unsecured credit lines to your new HELOC.
Once you secure a home equity line of credit and settle your existing debts on your credit cards, it’s important to have a plan to manage your money wisely in the future.
Having a home equity line of credit can give you a major financial advantage, helping you take care of necessary expenses and build wealth.
However, it’s important to remember that a HELOC is technically a form of debt. To ensure that you spend the funds from your tapped equity responsibly, here are three financial tips that can help you for years to come: