Ever wondered why I’m passionate about real estate? It’s simple: to help people like you. Today, a significant number of individuals are considering options to leverage the equity in their homes. Whether it’s to tackle debts or unexpected emergencies, the journey begins by understanding your choices.
The airwaves are abuzz with ads – especially those enticing “VA loans commercials.” If you’re looking to tap into your home equity, there are two main paths: refinancing or obtaining a Home Equity Line Of Credit (HELOC). Let’s delve into the details and explore why the HELOC route could potentially save you substantial interest.
Imagine you’ve paid down a $316,665k 30-year loan for 2 years at 3.5%. Now, let’s assume you need $40k for an emergency or to tackle high-interest debts. You have two choices: a HELOC at 8% over 15 years or a full refinance at 7%. Here’s where the numbers come into play. Using a HELOC could save you $912 in the first month alone, translating to $10,994 in the first year. Your combined principal and interest monthly payment would be $1760 with the HELOC, whereas a single refi loan might cost around $2,283. Here’s the exciting part: in 15 years, you’d be back to a single loan at the original 3.5% interest.
It’s crucial to remember that these calculations focus solely on Principal and Interest. Factors like home insurance and taxes vary based on your unique circumstances. And while I’m here to provide insights, please note that I am not a lender. Think of me as your guide to understanding these concepts.
This isn’t rocket science – anyone can utilize online amortization calculators to crunch their numbers. I’m just here to simplify and consolidate the information for you. It’s all too easy to be swayed by a TV commercial and miss out on thousands of dollars in potential savings.
If you find these calculations align with your financial goals, consider sharing this information with others. If someone you know is contemplating a refi, let them in on the benefits of HELOCs. By spreading the word, you could be instrumental in helping someone preserve their hard-earned money.
Thank you for being part of the Real Estate Insights community. Stay tuned for more valuable insights in our upcoming newsletters. Remember, knowledge is power, especially when it comes to your home and finances.
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