Ease financial stress with these debt consolidation tools
Are you feeling financially squeezed with the amount of bills coming your way each month? You’re not alone. With the economic news lately, many 7 in 10 Americans are feeling financial stress.
While there are many ways to manage your financial stress, one of the most effective is by managing your debt. Debt can stand in the way of your financial goals, making it harder for you to save and invest. Reducing debt frees up more resources to focus on your financial future.
There are many ways you could get a better handle on your debt and start working towards eliminating it. Many homeowners use the equity they’ve built up in their home to help them consolidate debt. But even if you don’t have substantial equity in your home to put towards debt consolidation, you could still find solutions that will help you take control of the amount you owe.
Our Debt Consolidator Products could help you get the financial flexibility you’re looking for. Here’s a rundown of the options you could take advantage of, and make sure you get in touch with a loan officer, who can help you decide which product suits you the best.
Debt consolidation through home equity
Home equity is simply the difference between how much your home is worth minus how much you still owe on your mortgage. It’s basically your ownership interest in your home.
Determining your home equity is relatively easy.
For example, say you bought a home for $200,000, made a down payment of $20,000 and borrowed $180,000. Five years down the road, you’ve paid $13,000 of your mortgage off, you still owe $167,000, and your home’s value has increased to $220,000. To determine your equity, you take what your home’s current value is ($220,000) and subtract the amount that’s still owed ($167,000) – in this case, your home equity would be $53,000.
You could tap into that equity and use the funds to consolidate your debt through a cash-out refinance, a home equity line of credit (HELOC), closed-end second mortgage or a reverse mortgage.
Home Equity Line of Credit (HELOC) 1
A HELOC is a revolving line of credit that you could draw from as needed, similar to a credit card. The credit limit is based on your home equity, and you could withdraw funds during the initial draw period, typically up to 10 years.
HELOCs offer flexibility, as you could borrow and repay multiple times during the draw period, with interest usually charged at a variable rate. After the draw period, you enter the repayment phase, where you must repay the principal along with interest.
Cash-Out Refinance 3
A cash-out refinance replaces your existing mortgage with a new, larger one. The difference between the new loan and your current mortgage balance is paid to you in cash, which you could use to consolidate your debt.
This option could be beneficial if you could secure a lower interest rate on the new mortgage, potentially reducing your overall borrowing costs. However, you must maintain a minimum of 20% equity in your home after the refinance.
Using a cash-out refinance to help with your debt brings with it many of the benefits of refinancing: new interest rate, the ability to change your loan term and much more. It's simple, too. Use a cash-out refinance to take the equity of your home and apply it to debts with higher interest charges, from medical debt to credit cards to private student loans.
Often, the interest rate on the new home loan, otherwise known as the mortgage rate, will be lower than the interest rate on your debt. This makes it possible for you to pay down that debt quicker because more of your monthly payment is going to the principal.
Reverse Mortgage 3
Available to homeowners aged 62 and older, a reverse mortgage allows you to convert part of your home’s equity into cash without selling your home.
The lender makes payments to you, and the loan, along with interest, is repaid when you sell the home, move out permanently, or pass away. This option could be a good choice for retirees looking to supplement their income without monthly repayment obligations.
We offer a Home Equity Conversion Mortgage, or HECM, which is a type of reverse mortgage insured by the FHA. Borrowers also must also participate in independent counseling to ensure that they fully understand their financial decision.
Personal loans 4 to consolidate debt
A personal loan is money borrowed from a lender at a fixed interest rate that is paid back by the borrower monthly over 1-5 years depending on the time frame and monthly payment option selected. Our personal loans typically offer higher loan amounts and lower rates than a credit card, feature a fixed payment plan and require no collateral.
You could use a personal loan for nearly any expense, including paying down high-interest debt. Personal loans range from $4,000 to $50,000 in most states and offer a fixed interest rate.
How to use your loan to consolidate debt
The money you obtain from one of our Debt Consolidator Program products could be used to consolidate debt, from credit cards, education loans and more. If you use one of our home equity-based products, you are essentially transferring all your debt into one place: your mortgage. A cash-out refi, HELOC, personal loan or reverse mortgage allows you to get rid of differing due dates and various companies you owe to, putting all your loans and debt into one, easy to remember payment.
The benefits don’t stop there, however. The interest rates on mortgages and personal loans are generally substantially lower than on credit cards, for example. So, by paying off a higher mortgage rather than credit card debt, you are saving potentially hundreds of dollars each month5.
What to consider when consolidating debt in a mortgage
Even after securing a debt consolidation loan, it’s important to keep in mind that your debt isn’t gone; it’s just in a new place. You need to remain disciplined in your spending and not overspend on your now “debt-free” credit cards.
Another thing to consider is that it is almost never a good idea to secure a cash-out refinance at an interest rate that’s higher than the one you’re paying right now. If you find that is not possible, then a reverse mortgage (if you qualify) or a HELOC may be the way to go.
Also, make sure you’ll be able to afford the new payments on your new mortgage or personal loan. When undergoing a cash-out refinance, the balance of your mortgage increases by the amount of debt that you are paying off. Similarly, you’ll have to make monthly payments on any withdrawals you make from a HELOC or your personal loan.
To see if our Debt Consolidator Program is right for you be sure to talk to one of our expert loan officers to see if this form of financing is right for you.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply.
Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Origin Point for current rates. Restrictions apply.
1 The Origin Point home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently only available in California, Pennsylvania, North Carolina, Florida, Washington, Illinois, Washington DC, and Indiana. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Origin Point for more information and to discuss your individual circumstances. Restrictions Apply.
Your journey home begins here.
OriginPoint's Same-Day Mortgage (aka “FastTrack”) promotion offers qualified customers who provide certain required financial information/documentation to OriginPoint within 8 hours of locking a rate on a mortgage loan the opportunity to receive a loan approval within 1 business day of timely submission of documentation and does not suggest that the borrower will receive funding on the same day as their application submission. For purposes of this offer, documents provided after 1 pm local time or on a weekend or company holiday will be deemed submitted the next business day. OriginPoint cannot guarantee that a loan will be approved or that a closing will occur within a specific timeframe. OriginPoint reserves the right to revoke this approval at any time if there is a change in your financial condition or credit history which would impair your ability to repay this obligation. Read and understand your Loan Commitment before waiving any mortgage contingencies. Borrower documentation and Intent to Proceed must be signed within 8 business hours of receipt. Not eligible for all loan types or residence types. Minimum down payment requirements apply. Self-employed borrowers and Co-borrowers are not eligible. Not all borrowers will be approved. Borrower's interest rate will depend upon the specific characteristics of borrower's loan transaction, credit profile and other criteria. Eligible borrowers who successfully provide all required documentation within 8 business hours will receive a $250 Closing Cost Credit applied at closing, no cash value, and may not be combined with any other Lender promotions, discounts, or concessions. Not available in all states. Restrictions apply. Visit OriginPoint.com/same-day-mortgage for terms and conditions.
**Eligible borrowers must qualify for a "Clear to Close Loan Commitment" ("CTC”). OriginPoint cannot guarantee that a loan will be approved or that a closing will occur within a specific timeframe. CTC is subject to certain underwriting conditions, including clear title and no loss of appraisal waiver, amongst others. Not eligible for all loan types or residence types. Minimum down payment requirements apply. Property must be eligible for an Appraisal Waiver and borrower must opt in to AccountChek for automated income and asset verification. Self-employed borrowers and Co-borrowers are not eligible. Not all borrowers will be approved. Restrictions apply.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact OriginPoint for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. OriginPoint LLC fka Guaranteed Rate Affinity, LLC does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by OriginPoint LLC fka Guaranteed Rate Affinity, LLC. OriginPoint LLC fka Guaranteed Rate Affinity, LLC its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. OriginPoint does not provide tax advice. Please contact your tax adviser for any tax related questions.
