22 Jul

Benefits of an Interest-Only HELOC

Interest-only heloc

A home equity line of credit can be a great tool for homeowners. And an Interest-Only HELOC allows for even more flexibility with your money and lower monthly payments.

This loan product gives you an allotted amount you can spend with a set amount of time to spend it. Essentially borrowing money against the equity built up in your home, with the interest being the minimum monthly payment.

In order to make the most of an Interest-Only HELOC, it’s important that homeowners understand what it is and how to utilize it to its full potential.

Access to More Cash

Home equity line of credit is comprised of two phases, a draw period and a repayment period. They’re pretty self-explanatory.

  • During the draw period, you’re able to access money from your line of credit to make monthly payments. Those payments go toward the interest you owe. In the long run, this adds flexibility.
  • Then, during the repayment period, you pay back the remaining interest and principal.

When you only have to make payments toward the interest, not the principal, the result is extremely low monthly payments.

Low Interest Rates

Interest-Only HELOCs are one of the most affordable and flexible ways to borrow money. The lower your HELOC interest rate is, the lower your monthly payments, so make sure your bank offers competitive rates. An Interest-Only HELOC has the monthly payment as the interest accrued, so that means even lower payments!

For example, RMLEFCU offers interest only HELOCs with rates starting as low as prime +1% APR.

Unlike a loan, a home equity line of credit is readily available whenever you need it. You apply for the line once, then draw on it as you need it. Remember, as the principal is repaid, funds immediately become available for use again.

Flexible Payments

In an Interest-Only HELOC, you only pay the monthly interest rate during the draw period, so you can manage your budget around those expectations.

Additionally, you can choose to pay back just the interest cost or make additional payments toward the principal. The freedom to choose your pay back amount can alter based on your available budget and income.

How to Know if an Interest-Only HELOC is Right for You

Most people choose an Interest-Only HELOC when attempting to conserve monthly income in the short run. However, there are other times when this option is beneficial:

  1. When you’re juggling fluctuating income and need flexible payment options
  2. If you plan on selling your home after renovations
  3. If you need to consolidate debt
  4. When you need a large sum of cash for an investment
  5. If you’re trying to minimize monthly payments during a flip
  6. If you’re making a down payment on a second home before selling your first

Call us today to discuss our low HELOC rates and put your home’s equity to great use! (303) 458-6660

19 Jul

Colorado First Time Home Buyer Tips

colorado first time home buyer

Getting ready to buy your first home can feel a bit like a trip into the unknown – one with pretty high stakes too. By taking the process in stages, you can be sure that you are prepared to take the plunge and properly prepare your finances before the big purchase. Read our Colorado first time home buyer tips to get you started on your path to homeownership.

Get Your Credit Score Up

Buying a home is likely going to be the biggest purchase of your life, so getting a good interest rate will make a huge difference in how much you pay over the life of the loan. Your interest rate is largely determined based on your income and your credit history.

Get your credit score up as high as you possibly can before applying for a mortgage. If your score is low, it is worth it to take some time to work on it. Your score will have a big impact on your interest rate. Check out our credit builder loan to help improve your credit.

A good place to start if you want to get your credit score up is to get a full credit report. This will tell any about any outstanding debts, how long you have had all of your accounts, what your total debt amount is, and will even tell you what’s hurting your score and what’s helping. Take the advice seriously and fix the things you can, like paying off outstanding debt and cutting back your credit card spending. In the months before you apply don’t make any changes to your credit, such as take out a new credit card or apply for anything that might run a hard credit inquiry, this can cause dips in your score.

Get Pre-Approved for a Loan Before You Look

Don’t fall in love with a house you can’t afford! Before you even start to look, meet with a loan officer and get pre-approved for a mortgage amount. Have the loan officer show you what your monthly payment would be at different loan amounts and settle on an amount that is comfortable for you to pay back. Remember – you don’t have to use the total loan amount you are approved for!

Once you start looking, save yourself some pain and don’t go see houses you can’t afford or that would be at the top of your budget. If you are using a realtor, be firm on what your ceiling is. Trying to afford a house out of your reach won’t end well. With enough patience, everyone can find a home that will work for them in their price range.

Pick an Area or Neighborhood & Don’t Settle

You know how they say location, location, location? Well, it’s true how important it is – location is everything. Pick a town or neighborhood you want to live in and stick to it. Weigh your commute to work, proximity to amenities and hobbies, and even the crime rate and school districts.

Is there a part of town you would hate to be in every day? Avoid looking at houses in that area. Is there a neighborhood you would love to live in but are worried you can’t afford it? Just stick with the hunt and go see houses right when they come on the market. With a little luck and patience, you might be the one to snag that rare deal.

Colorado First Time Home Buyer

The Colorado landscape changes quickly and can be intimidating for seasoned investors, let alone first time home buyers. Prepare for your first mortgage as early in your financial life as you can and find a few trusted professionals like us to help along the way.

02 Mar

Put Your Home’s Equity to Work with a RMLEFCU HELOC

How to use a Home Equity Line of Credit HELOCRMLEFCU would like you to put your home equity line of credit (HELOC) to work! HELOC’s are a great way to consolidate debt, pay for college, or make home improvements. RMLEFCU even has the convenience of making your home equity line of credit available with a visa card, perfect for emergencies or long-term projects. Not sure about all the details concerning home equity? Read on to learn more!

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