Put Your Credit Score to Good Use
If you have a good credit score, its a great time to refinance or secure a home equity line of credit. During the last week of January, fixed rate mortgages were down to about 5.75. Lending standards have tightened however, and people with low credit scores may find it difficult to qualify for financing.
If you have a high fixed rate mortgage, refinancing at a lower rate can free up your monthly cash flow. You can then divert that money into savings. If you have an adjustable rate mortgage, switch to a fixed rate. Don’t put yourself in a position where you cannot afford your mortgage payments after your rate adjusts.
A home equity line of credit (HELOC) can be a great source for an emergency fund if you absolutely need cash to get through a rough spot. Don’t spend it on home renovations right now because the return on investment is currently low. Just secure the credit and use it for an emergency only if you have to.
Rates are good right now, but remember, debt is a tool. Be smart about it and use it wisely.
