In a recent segment on Inside South Florida, viewers gained valuable insights from Amy McGraw, Vice President of Tropical Financial Credit Union, and her dog Dexter, the Financial Frenchie, on leveraging home equity to reduce debt and manage finances effectively.
With home values skyrocketing in South Florida, homeowners are sitting on substantial equity that can be tapped into for various purposes beyond debt reduction. Amy emphasized that homeowners facing high expenses, such as skyrocketing homeowners insurance or major renovations like reroofing, can utilize their home equity to cover these costs effectively.
"One of the big ways you can use your equity is to reroof your house, which can be really expensive," Amy explained. "If you're carrying high-interest credit card debt, home equity loans offer significantly lower interest rates, making them an attractive option for debt consolidation."
However, Amy cautioned against borrowing beyond 80% of the home's value to avoid private mortgage insurance (PMI). She also highlighted the importance of understanding the distinction between a home equity loan and a home equity line of credit (HELOC).
"A home equity loan is a fixed loan, similar to a car loan, with set repayment terms," Amy clarified. "On the other hand, a HELOC functions more like a revolving credit line, allowing homeowners to draw funds as needed for ongoing expenses like renovations."
Determining which option is best suited to individual financial needs requires careful consideration and consultation with a mortgage loan officer. Amy recommended reaching out to professionals who can provide personalized guidance based on each homeowner's unique circumstances.
To provide further assistance, Tropical Financial Credit Union is currently offering a special promotion on home equity programs, including $250 cash back at closing and no closing costs for loans under $250,000. Interested individuals can visit TropicalFCU.com for more information on the offer and to explore the differences between home equity loan options.
This Inside South Florida segment is sponsored by Tropical Financial Credit Union.
