Ask Kim: Money Smarts Part Two – Milwaukee, Wisconsin

Milwaukee, Wisconsin 2021-04-30 17:46:07 –

Currently, there are still many uncertainties. I have some money in my house and savings, but what more can I do to cushion myself in case of unexpected cost or loss of income?

Uncertainty feels ubiquitous these days, and taking control as much as possible really empowers us.

First of all, congratulations on securing your savings. Emergency funding is one of the first things to build to reduce financial stress and reduce the likelihood of overexpansion in the event of unavoidable and unexpected costs. As a homeowner, you know that the water heater goes out, the dishwasher breaks down without notice, and the siding is damaged by the storm.In fact, it’s probably more accurate to say we have Be expected Expenditure at unexpected times.

Homeowners can use their home assets as a backup for premature costs. I think it’s a safety net. It can also be used for other types of expenses.

This backup loan is called the Home Equity Credit Line and is also called “HELOC”. HELOC is a type of loan that allows you to borrow for the equity of your home (the difference between the value of your home and your mortgage balance) and withdraw only the amount you need, when you need it.

This is in contrast to a one-time mortgage loan, which is funded at once and begins to repay monthly over a set repayment period. If you pay with a lump sum mortgage loan, your balance will decrease and you will not be able to use the repayment money.

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HELOC, on the other hand, acts like a credit card. You are approved to borrow up to a certain amount based on the capital of your home and you can borrow it immediately or in the future as much as you wish. When you pay your balance, the money you repay will be available again, just as a credit card payment will release your funds again. This is how HELOC provides a stress-relieving cushion. You can spend your days knowing that you can get money very quickly and easily when you need them and you can only pay when you use them. It’s really fast.

Some lenders charge an annual fee for HELOC. Find something that isn’t, like the Summit Credit Union. It’s an expense you don’t have to pay and money you can save. You will also need to confirm with the lender about the lottery period (the number of years you can withdraw funds from HELOC and the repayment period). The period during which the balance needs to be repaid. HELOC can also be refinanced if it makes sense based on market rates.

Another advantage is that HELOC rates are often much lower than credit card rates. As long as you don’t overuse your credit card, HELOC is a smart way to consolidate your credit card and other high interest rate debt. You can take advantage of your monthly payment savings to pay off your debt faster and have more HELOC available as needed.

Ready to use when you need it, HELOC is a stress reliever and another tool for managing your money. If you are a homeowner, I recommend you contact the Summit Credit Union, where our lenders are ready to help you create your own cushion of certainty .. I own it now.


Kim Sponem

Kim Sponem has been the CEO and President of Summit Credit Union, a $ 4.2 billion member-owned financial cooperative with more than 202,000 members since 2002.

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April 30, 2021

4:46 pm

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