Homeowners who need cash now should try these 3 things
Homeowners in need of cash may want to consider a mortgage refinance loan, balance transfer credit card, or personal loan. (iStock)
The COVID-19 pandemic has left millions of homeowners coping with financial uncertainty. If you're facing tough times and need cash now, there are some options available.
While you may be considering a home equity line of credit (HELOC) to free up funds, a number of major banks have tightened credit standards and made securing this type of loan all but impossible unless you have a high credit score and rock-solid financial credentials.
If you need money fast, here are three other options to consider.
- Refinance loans
- Balance transfers or 0% APR Credit cards
- Personal loans
1. Refinance loans
With today's low interest rates, it may be possible to secure a new refinance loan to pay off other debts that are currently at higher rates.
This is an especially good option if you have a mortgage loan and can drop your interest rate, or private student loans and qualify for an affordable student loan refinance loan. Refinancing your home loan or your student loans could result in a lower monthly payment that gives you more flexibility in your budget. And it may even be possible to secure a cash-out refinance loan if you have sufficient equity in your home, thus giving you money to cover other bills.
If you're interested in refinancing your home, use Credible to compare mortgage lenders and save money on your monthly payments. Checking personalized rates only takes three minutes and doesn't impact your credit score.
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Of course, your ability to refinance depends on having a good credit score and proof of income so you can qualify for a new loan at a lower rate than you're currently paying.
To explore student loan refinancing options, plug your loan amount and other information (like your estimated credit score) into Credible's free tools. You can get results instantly.
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You can also use an online student loan refinancing calculator to see what your new monthly payment could be if you can secure an affordable refinance loan.
2. Balance transfer or 0% APR credit cards
Balance transfer and 0% APR credit cards can also be good options if you're struggling to pay your credit card bills.
If you have high-interest credit card debt, transferring the balance to a balance transfer credit card could make your bill much more affordable as you could temporarily reduce your interest rate down to 0%. This would allow more of your monthly payment to go principal, which could help you become debt-free faster and eliminate a monthly obligation.
Consider using an online marketplace like Credible to compare some of the top balance transfer cards side by side and pick the right one for you.
HOW TO GET A BALANCE TRANSFER CREDIT CARD NOW
A 0% APR card, on the other hand, allows you to charge purchases and pay no interest during the promotional period. If you're struggling to afford necessities, you could put purchases on this type of credit card without worrying about owing interest until the promotional rate ends.
The biggest benefit of a zero percent interest credit card: it allows you to avoid paying interest on your purchases for a certain period of time. You can also spread out your payments on a large purchase over a number of months without accruing additional interest charges.
Credible can help you find the right credit card for you. Choose zero percent credit cards and get a breakdown of the annual fee, welcome offers, credit needed and more.
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If you're not sure which credit card to choose — balance transfer or zero percent — then you can always browse all available credit cards on Credible's marketplace. Maybe you want to consider other credit cards (like a rewards card or others). See what's right for you.
HOW TO FIND THE BEST CREDIT CARD REWARDS
3. Personal loans
If you need to borrow money, a personal loan is a good option as the money you borrow can be used for any purpose.
Unlike refinancing or transferring a balance, both of which simply reduce existing payments, securing a personal loan can be a quick way to generate new cash to cover your needs. That's especially true as some personal loan lenders will provide funding within just a day or two after you submit your application.
There are both secured and unsecured personal loans, but if you're looking to borrow to cover costs during COVID-19 without using any assets as collateral, an unsecured loan is your best option. You'll need to have good credit and proof of income to qualify for a personal loan at a competitive rate, but there is a wide variety of different personal loan lenders catering to all different kinds of borrowers so it pays to shop around.
Personal loans tend to have a lower interest rate than credit cards, and you have a fixed schedule for repayment so you'll know when you'll become debt-free. You'll also have a choice between a fixed- or variable-rate personal loan. If you want to lock in today's low rates and know upfront exactly how much your loan will cost, a fixed-rate loan is likely going to be your best bet.
You can visit Credible to compare rates and lenders and find a personal loan that's right for you.