https://www.easyknock.com/blog/i-need-a-loan-but-keep-getting-declined

Do you keep applying to loans only to get denied? Read on to discover alternative options if you’re getting refused everywhere.

   Equity Release         Home   Equity       Home   equity line of credit       Reverse   Mortgage       easyknock   funding               equity   release mortgage    

Need A Loan But Keep Getting Declined? | EasyKnock

Need a loan but have been refused everywhere? Learn alternative options below.

Rejection hurts. And when you've been rejected multiple times for a loan you really need ... well, let's just say it's easy to get discouraged.

You're not alone. In 2018, LendEDU released data showing that 76 percent of personal loan applicants get declined. But there are ways to get your finances in order and apply again, not to mention other sources of funding. If you keep getting turned down for loans or have bad credit, read on to find out why it keeps happening, and what your options are.

"I need a loan but keep getting declined! Why?"

Possibility #1: High debt-to-income ratio 

If you need a loan but have been refused everywhere, it may be due to a high debt-to-income ratio. Your debt-to-income ratio is the relationship between your monthly debt-related payments and your gross monthly earnings. Only debt payments, such as your credit card and any loans, count toward this number – things like your utility bills and grocery budget aren't included.  

Example: You earn $5,000 a month. You pay $1,500 toward your mortgage, $500 for your car loan, and $300 toward paying off your credit cards. Your DTI is (1,500+500+300) divided by 5,000, or 46 percent.

If you're applying for a mortgage (or second mortgage), lenders usually want to see a DTI of no more than 43 percent. In general, though, you want to keep your DTI under 36 percent. If you want to learn how to get a loan with high debt-to-income ratio, reach out to EasyKnock for further information.

If you're young or you haven't taken on much debt, a direct lender doesn’t have information or credit history that they can plug into their algorithms and find out whether you're a responsible borrower and a reliable client for loan repayment and loan approval. You might have a good salary and no credit card balances, but if the lender can't prove that you pay on time, he or she might reject your application for things like a home loan, personal loan, or credit check loan.

Whether it's a short term loan, a secured loan, or an unsecured loan, not having a good credit rating is the most common reason why people have their loan application declined. LendEDU reported the average credit score of an approved borrower as 741, yet the average credit score nationwide is just 687. No wonder more than half of the applicants experience loan rejection– the average American doesn't even qualify.

Some lenders have higher minimum credit scores than others. According to LendingTree, USAA Bank requires borrowers to have a score of 700 or above, while Tower Federal Credit Union will take borrowers with a credit score of just 580.

2. "I know what the problem is, now how do I fix it?"

If you know why you were rejected for a loan, you can look into what it would take to fix the problem and increase the chances of loan approval.   

... you need to bring it down, either by increasing your income or reducing your debt.   

If increasing your income was easy, everyone would do it, but there are some ways to give yourself a boost. Consider taking on another job, seeking out freelance opportunities, or even requesting a salary increase. 

Remember, DTI is about monthly income and expenses, so one-shot earnings won't cut it. Don't go selling your furniture just yet. 

First, to reduce your debt, first figure out how much you can allocate to paying off your accounts. The two most popular methods are:

The snowball method: Pay off the minimum on all your debts and allocate whatever else you can to the smallest debt. This tends to reduce your number of debt accounts faster. 

The avalanche method: Pay the minimum on everything, but focus the rest on the highest-interest debt. With this method, you end up paying less overall because you're reducing your interest faster.

Need a Loan but Keep Getting Declined? Your Next Steps Forward

If your credit history is minimal or nonexistent ...     

Open a credit card. A secured credit card exists specifically for borrowers with no credit or poor credit. You need to make a deposit and fill out a credit application to open one, but they're great for building up your credit rating by borrowing responsibly.

First, make sure that your credit report doesn't contain errors. (It's more common than you'd think. According to the Federal Trade Commission, 25 percent of consumers have at least one error in their credit reports.)  If you find an error, file a dispute with the bureau that issued the erroneous credit report.

If your credit report is accurately poor, there are several ways to address that and get your low credit score back up again. For example:

Increase your credit limit on a card or two, and then don't use it. That way you're using a smaller percentage of your available credit. 

Open a card with a low-interest or zero-interest rate introductory offer. Transfer just as much of your outstanding balances as you can repay during the offer's active period, then pay it off before your rates go up. 

Write a letter of goodwill explaining your extenuating circumstances. Ask the lender or credit provider to remove the debt in exchange for repayment. 

Hire a credit repair service (and make sure it's reputable).

Remember that when you're in the process of fixing your credit, taking on a new loan isn't usually the best idea. And that's fine if you can wait to apply for a loan with a loan provider until your credit score is higher, but if you need money now, you might need to consider alternatives. 

Get the Money You Need and Fix Your Credit – Advice for Homeowners

If you have equity in your home, you might be able to use it to get the cash you need and bring your credit score up at the same time. And no, we're not talking about a home equity loan or HELOC. (Chances are good that you've already tried that anyway.)

You might be at the point where you've considered selling, which definitely would let you collect your equity. But even if you can afford to move, do you really want to go through the painful process of leaving your home? 

Thanks to our solutions at EasyKnock. You can sell your property to us and collect the equity you've built. But instead of moving, you stay on as a tenant and keep paying rent until you're ready to sell your home or move.   

It's a straightforward process that lets you convert your equity to cash without taking on the burden of another bank loan.

EasyKnock can help you go from “I need a loan but keep getting denied to “I've paid off my debts, and it feels great.” And it does that without adding more debt to your plate.   

It's time to say goodbye to letting your finances limit you. Contact EasyKnock today and find out how to get started.

This article is based on research and/or other relevant articles and contains trusted sources. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process.

https://finance.yahoo.com/news/reason-people-get-rejected-personal-loan-184003098.html?

https://www.thebalance.com/how-to-lower-your-debt-to-income-ratio-960847

https://smartasset.com/personal-loans/3-reasons-your-personal-loan-application-was-denied

Inc. Magazine Revealed that EasyKnock ranked no. 568 in the annual Inc. 5000 List of America’s Fastest-Growing Private Companies. 

EasyKnock Named to the 2021 Inc. 5000 List of America’s Fastest-Growing Private Companies 

NEW YORK, August 18, 2021 – EasyKnock, the leading residential sale-leaseback solution, today announced that it has ranked No. 568 on the 2021 Inc. 5000 list, the most prestigious ranking of the nation's fastest-growing private companies. 

“EasyKnock is thrilled to be recognized in the Inc. 5000 list. Being named alongside so many other successful companies is an honor for EasyKnock that wouldn’t have been possible without our endlessly supportive customers, partners, and employees,” said Jarred Kessler, CEO and founder of EasyKnock. “The award is a testament to the team’s hard work and of the innovative and flexible solutions EasyKnock is providing to American homeowners. 

EasyKnock, a residential sale-leaseback platform, enables American homeowners to convert their equity to cash by selling the property while remaining in the home they love as a renter. Personalized to customer needs, EasyKnock gives homeowners greater flexibility and control over their financial futures.

This year’s Inc. 5000 list has proved especially resilient and flexible given 2020’s unprecedented challenges. Among the 5,000, the average median three-year growth rate soared to 543 percent, and median revenue reached $11.1 million. Together, those companies added more than 610,000 jobs over the past three years.

Complete results of the Inc. 5000, including company profiles and an interactive database that can be sorted by industry, region, and other criteria, can be found at www.inc.com/inc5000. 

“The 2021 Inc. 5000 list feels like one of the most important rosters of companies ever compiled,” says Scott Omelianuk, editor-in-chief of Inc. “Building one of the fastest-growing companies in America in any year is a remarkable achievement. Building one in the crisis we’ve lived through is just plain amazing. This kind of accomplishment comes with hard work, smart pivots, great leadership, and the help of a whole lot of people.”

EasyKnock is the first technology-enabled residential sale-leaseback company in the U.S. Through its innovative products, EasyKnock provides American homeowners new, unique solutions to convert the equity in their home by selling their property while being able to stay in the home as a renter. EasyKnock’s programs offer flexibility and control, providing proceeds and time to help customers achieve their goals. Headquartered in New York City, EasyKnock currently provides its innovative financial products to homeowners across the U.S.

Companies on the 2021 Inc. 5000 are ranked according to percentage revenue growth from 2017 to 2020. To qualify, companies must have been founded and generating revenue by March 31, 2017. They must be U.S.-based, privately held, for-profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2020. (Since then, some on the list may have gone public or been acquired.) The minimum revenue required for 2017 is $100,000; the minimum for 2020 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons. Growth rates used to determine company rankings were calculated to three decimal places. There was one tie on this year’s Inc. 5000.  Companies on the Inc. 500 are featured in Inc.’s September issue. They represent the top tier of the Inc. 5000, which can be found at http://www.inc.com/inc5000.

The world’s most trusted business-media brand, Inc. offers entrepreneurs the knowledge, tools, connections, and community to build great companies. Its award-winning multiplatform content reaches more than 50 million people each month across a variety of channels including web sites, newsletters, social media, podcasts, and print. Its prestigious Inc. 5000 list, produced every year since 1982, analyzes company data to recognize the fastest-growing privately held businesses in the United States. The global recognition that comes with inclusion in the 5000 gives the founders of the best businesses an opportunity to engage with an exclusive community of their peers, and the credibility that helps them drive sales and recruit talent. The associated Inc. 5000 Vision Conference is part of a highly acclaimed portfolio of bespoke events produced by Inc. For more information, visit www.inc.com.

For more information on the Inc. 5000 Vision Conference, visit http://conference.inc.com/.

Need help getting a HELOC with bad credit? Read along for more information on how to get approved for this loan. 

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How to Get a HELOC With Bad Credit | EasyKnock

Need help getting a HELOC with bad credit? Keep reading to learn your options.

If you’re a homeowner looking to pay down high interest debt or finance home renovations, there are always options whether you are paying to a mortgage lender or non QM lenders. 

For example, you can convert some of your home equity into cash with the help of a home equity line of credit (HELOC). A HELOC can help you pay for ongoing expenses such as home renovations or monthly bills. However, those with poor credit history may worry about their options.

Check out our article on using HELOC to pay off mortgage and learn more about the process. 

If you’re wondering if you can get a HELOC with bad credit, there’s good news. It’s possible, although a little more challenging. 

Below, we’ll explain how you can boost your chances of getting a HELOC loan with bad credit. We’ll also discuss other ways you access cash through your home’s equity.

So, can you qualify for a HELOC? You may be able to, but it depends on a variety of factors. 

When you apply for a HELOC, your home equity lender will:

Review your credit score and credit history

As you can see, your credit score is a key part of the process, but it’s not the only factor that matters. 

What is the Minimum Credit Score for HELOC?

Most traditional lenders require you to have a credit score of 620 or above to qualify for a HELOC. Some lenders have credit score requirements as high as 680. 

If you have a low credit score, you may still be able to find a lender that’s willing to work with you. You’ll just need to shop around for a flexible home equity lender. 

You can increase your HELOC approval chances by ensuring the rest of your application is strong enough to make up for your poor credit score. 

To boost your chances of getting approved for a HELOC with bad credit, it helps to have:

A low debt-to-income ratio (well below the required 43% minimum)

A high-paying job that provides a reliable income

Even if you check all of these boxes, having a good credit score can make the application process much easier. It can also help you qualify for more favorable HELOC terms. 

For these reasons, you may want to wait a few months before you apply for a HELOC. During this time, you can do the following things to better your Vantage or FICO credit score, such as:

Disputing any errors on your credit report

Paying off debts that have gone to collection agencies

Holding off from applying for new credit for six to 12 months

Making all of your credit payments on time

If you have a friend or family member with excellent credit, you could also ask if they’re willing to add you as an authorized user on a credit account.

Even if you get approved for a HELOC with bad credit, the loan term may not be as great as you hoped. 

Borrowers with bad credit typically receive HELOCs with higher interest rates. If you’re pursuing a HELOC in hopes of securing a lower interest rate, you may be disappointed with your lender’s offerings. 

Additionally, you’ll have to take on the risk of potentially losing your home. A bad credit score often indicates that you’ve struggled to repay your debts on time in the past. When it comes to HELOCs, you don’t want to make this mistake. After all, defaulting on your HELOC payments can end in foreclosure. 

Fortunately, a HELOC isn’t your only option for borrowing money with bad credit. You can also look into:

Home equity loans – If you are wondering if you can access your home equity with bad credit, the answer is yes. A home equity loan lets you borrow money from your equity in a lump sum.  Home equity loans are a fixed rate option with a loan term of 10 to 20 years.

The credit score requirements for home equity loans are similar to those for HELOCs. If you have bad credit, some lenders may approve your application, but you’ll have to fulfill additional requirements.

Sale-leaseback programs – A great alternative for homeowners with bad credit is a sale-leaseback program. These programs let you access your home equity without filling out any loan applications, paying costly interest fees, or moving out of your home. All you have to do is sell your home and lease it back from the buyer.


Cash out refinancing – With a cash out refinance, you replace your current mortgage with a new mortgage for a larger amount. You can pocket the difference in cash to use towards personal expenses. 

To qualify for a cash-out refinance, you generally need at least 20% equity in your home and a credit score of 620 or above. However, the credit score requirements can be a little more flexible than with a home equity loan or HELOC. 
Just keep in mind that refinancing your mortgage will adjust all of its terms. You may end up with a much higher interest rate and monthly payment amount than you have right now due to your bad credit score. 

Unsecured personal loans – Unsecured personal loans let you borrow money without putting up any collateral.  They come with a shorter loan term or repayment period, fixed interest rate, and a smaller loan amountthan HELOCs.

Unsecured personal loans often have a higher interest rate than their equity-backed counterparts.
As with HELOCs, most lenders require you to have a good credit score to qualify for a personal loan, though some lenders create personal loans specifically for borrowers with bad credit. 

Reverse mortgages – If you're 62 or older and have over 50% equity in your home, you may qualify for a reverse mortgage loan. It lets you borrow money from your home equity in a lump sum, revolving line of credit, or monthly payment schedule. 

With this form of financing, you don’t need to repay any money you borrow until you sell your home or pass away. As a result, your mortgage balance will increase over time.
Fortunately, there’s no minimum credit score requirement to qualify for a reverse mortgage. However, a reverse mortgage may not be a viable option if you plan to move out of your home in the future or leave your home as an inheritance. 

When you need to borrow money, a bad credit score can significantly limit your options. Even if you get approved for a HELOC with bad credit, it may not be the best choice for your financial health due to the less favorable terms you’ll receive.  

Whether it’s because you’re trying to access home improvement loans with bad credit or need a HELOC to pay off your credit card debt, EasyKnock doesn’t have any credit score requirements. Instead, our sale-leaseback solution helps you unlock your equity so that you can meet your financial goals, whether they entail buying a vacation home or enjoying your retirement. You sell us your home and lease it back for as long as you want, allowing you to convert your home’s equity to cash.

Can You Get a Bridging Loan With Bad Credit?

This article is published for education and informational purposes only. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process.

Bankrate. What to know before your HELOC draw period ends. 
https://www.bankrate.com/home-equity/heloc-refinance-draw-period-ends/

Bankrate. Home Equity Line of Credit (HELOC) Rates in June 2021. 
https://www.bankrate.com/home-equity/heloc-rates/

U.S. News. Average Credit Card APR. 
https://creditcards.usnews.com/articles/average-apr

Bankrate. Requirements for a home equity loan or HELOC in 2021. 
https://www.bankrate.com/home-equity/requirements-to-borrow-from-home-equity/

Experian. Is a Reverse Mortgage Right for You?
https://www.experian.com/blogs/ask-experian/how-does-a-reverse-mortgage-work/

As a homeowner, you make your monthly mortgage payments and maintain your property, just like you’re supposed to. But what does equity really mean? Read about where your money is going and how you're benefitting in the long run. 

So you’re officially a homeowner. You make your monthly mortgage payments and maintain your property, just like you’re supposed to. But what does that all really mean? Where is your money going and how are you benefitting from this in the long run? 

All of it comes down to equity. It’s a term everyone may know and may think they understand. But let’s break it down further. How do you determine how much equity you have? What does it do for you? How do you get more or use what you have to your advantage? 

To put it simply, equity is the difference between what you owe on your mortgage and what your home is currently worth. 

For example, if you purchase a home worth $200,000 with a 20% down payment and a mortgage covering the remaining $160,000, that means you still owe $160,000 on your mortgage but have that you have $40,000 in equity. If the house’s market value remains constant over the next two years, and you make $5,000 of mortgage payments, you would have $45,000 in home equity at the end of the two years.

Maybe your home’s value jumped up to $210,000 in those two years. That would mean you now have even more equity as $210,000 minus $160,000 is $50,000. Meaning your equity increased to $50,000. 

If your home value should decrease, however, then that could work against your equity. If after two years, your home is now worth only $195,000, that would mean you now only have $35,000 in equity. 

The only way to get an official home value is to have a real estate appraiser come into your house and determine what your home is worth in the current market. 

Otherwise, you can get an estimate of your home’s value by looking at home sales of comparable houses in your area. You can also check with online real estate sales that provide their own estimates. These valuations are not always reliable but can help give you a rough idea of your home’s worth.

Monthly mortgage payments are the sure-fire way to boost your equity. However, if you’re looking for a way to make a bigger impact in a quicker time, there are a number of ways you can do that.

Make a big down payment: Your down payment is your initial kick-off into your equity and the higher the amount you put down, the more equity you’re building. Be sure to take your savings and income into consideration when deciding on an amount so you’re not stretching yourself too thin financially.

Make higher payments: By paying a higher amount toward your mortgage, you’ll boost your equity faster than if you are only paying a minimum amount. You can do this by changing your payments to bi-weekly, increasing your monthly payment amounts, and/or by putting any extra funds you may come across into your mortgage payments when you have them.

Make home renovations: A great way to boost your home’s value is by making significant, positive changes to the property. Some options are adding an extra bedroom, updating a kitchen, adding a bathroom, or increasing the curb appeal with some landscaping.

Your equity can be used as your financial safety net. However, since home equity is not a liquid asset, converting it to cash to use for other things is often a costly and complex process that, until now, came in limited options. To access equity, homeowners generally have two options.

Costs are usually 7% of the home value. 

Strict requirements regarding credit score, job type, and debt to income 

Higher interest rates than the average mortgage

25% of Americans do not qualify for any option

Now there is a third option. EasyKnock now offers a way to convert home equity to cash so that it can work for them and their goals.

EasyKnock uses a solution called a sale-leaseback. This means you sell your home to EasyKnock, converting your equity into cash while staying in your home as a renter. You don’t have to worry about qualifying for a loan or moving out. Now you can pay off debts, afford costly home renovations, fund a business venture, and so much more by choosing EasyKnock. Here are a few benefits of choosing EasyKnock:

No hard income, credit, or DTI requirements

Personalized solutions based on your timeline and financial needs

EasyKnock is making home equity easy to understand and even easier to convert to cash to help you reach your goals without the stress of loans or moving.

Hoping to renovate your house but don't have the funds or the credit score to get a loan? Discover your options for bad credit home repair loans.

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How to Get Home Improvement Loans with Bad Credit | EasyKnock

Hoping to renovate your house but don't have the funds or the credit score to get a loan? Keep reading to discover your options for bad credit home repair loans.

Your home is your most significant investment—and repairs, maintenance, and renovations are an inevitable part of maintaining that asset. Renovating your home can help increase its value and improve your quality of life, too—but it can also be quite costly.

A potential solution is a home renovation loan, which alleviates monetary limitations for those who don’t have the cash on hand for an expensive project. However, one of the first things an online lender or any type of lender will look at for home improvement financing is your credit score. 

If you have bad credit, we have you covered. Read on to learn more about how to navigate home improvement loans with bad credit, as well as some of the alternative options available to you. 

The Challenge of Getting a Home Improvement Loan With Bad Credit

A bad credit score is typically considered to be below 670 on a scale of 300-850.

At least 42% of Americans have a credit score below 700, which means nearly half of the country may be labeled a “subprime borrower” by lenders, meaning they’re unlikely to repay loans due to bad credit and poor payment or credit history. As such, those with bad credit may have a difficult time obtaining loans.

For those who fall in the 42%, do not lose hope of financing a renovation—you can still consider a home improvement loan as a financing solution. But first, you must consider whether it’s the right solution for you and your specific financial situation.

A home improvement loan is a type of unsecured personal loan that typically must be paid back over a period of three to five years. Luckily, unlike a secured loan like a mortgage or reverse mortgage loan, home improvement loans do not require collateral, meaning you won’t have to put your home at risk when obtaining the loan. 

Home improvement loans for bad credit can be as little as $1,000 or as much as $50,000 depending on your ability to repay, which is determined by a lender after viewing your payment or credit history. The monthly payment will remain consistent over the payment period, assuming you do not encounter additional fees or penalties.

Loans can be a great way to manage the large cost of a repair or renovation project, but they do require borrowers to meet certain standards when they pull your credit report, including your credit score.

What Credit Score is Needed for a Home Improvement Loan?

When considering how to get a home improvement loan with poor credit, remember that major lenders typically give preference to borrowers with less risk, meaning those with high or excellent credit scores who have a consistent and proven record of paying back loans, whether it’s a mortgage loan or a credit card statement. Credit risk can also be assessed through income, education, and the unsecured loan term or conditions. 

It’s much easier for borrowers to secure a loan approval if they have a credit score of 700 or higher. However, some lenders will provide loans to individuals with a credit score as low as 580. These lenders specifically appeal to those with a fair or poor credit score, although these types of loans may have more limitations.

Can You Get a Home Improvement Loan With a 500 Credit Score?

The vast majority of private lenders will not provide a private loan to borrowers with a credit score of 500. 

However, there might still be another loan option for those in this situation: Instead of asking how to get a renovation loan with bad credit, think about how you could convert your existing home equity into cash for additional funding.

How to Get a Home Improvement Loan With Bad Credit

If you have bad credit and are unable to acquire a home improvement loan, you can explore another financing option where you might secure a loan approval, including:

Home equity loans – These types of loans allow homeowners to borrow a lump sum against the equity of their home. Borrowers will acquire fixed loan amounts, which must be paid with an equal monthly payment over a fixed repayment term or loan term. You’ll need a credit score of at least 620 to qualify for a home equity loan for remodel, though it may differ depending on the lender.


Home equity line of credit – Like a home equity loan, a line of credit allows a borrower to borrow against the equity of their home. However, unlike a home equity loan, borrowers will not receive a lump sum payment. Instead, borrowers can take out money against a credit limit and must make the repayments before taking out more. Most lenders with a HELOC loan offer require a credit score of 680 or more to qualify. If you are also seeking a HELOC with bad credit, a HECM might be a better option for you.


Reverse mortgage – A reverse mortgage loan is only accessible to borrowers who are 62 or older. Essentially, senior homeowners can convert their home equity into cash income without the need to make loan payments. A minimum credit score is not required to qualify for a reverse mortgage.


Sale-leaseback: If you’re looking for a unique financing option that eliminates the hassle of acquiring home improvement loans for poor credit, look no further. In a sale-leaseback arrangement, a homeowner sells their home to a company that leases it back to you in one transaction. The sale allows you to convert your home equity into cash while the lease allows you to remain in your home. Learn more about EasyKnock’s ReLease program and lease-to-own homes. 


The Smart Way to Fund Your Home Improvements

Acquiring a home improvement loan with bad credit can be difficult, although not impossible. If you find the correct lender, you and your home can both be the picture of abundance. However, there are also many alternative solutions to fund your home renovation.

If you have bad credit, one of the easiest alternatives to a home improvement loan is a sale-leaseback solution with EasyKnock. 

We buy your house. You get the money you need. With our program, you can pay off debt, avoid the hassle of moving, and pay off overdue credit card bills to work your way toward a better credit score. 

At Easyknock, we work with you to meet your unique financial and homeownership needs. 

Whether you have below-average credit or you are just looking for a financing solution with fewer restrictions, consider a sale-leaseback solution or use home equity with a low credit score from EasyKnock today! 

Credit.org. What’s a Good Credit Score? Credit Score Ranges Explained.
www.credit.org/blog/what-is-a-good-credit-score-infographic/

Statista. Home improvement market size in the United States from 2008 to 2024. 
www.statista.com/statistics/239753/total-sales-of-home-improvement-retailers-in-the-us/

As you’re looking to lower your mortgage payments, you may be weighing out the options of recasting or refinance. Which should you choose? Read on as we compare.

Mortgage Recast vs. Refinance: Which is Better? | EasyKnock

Are you wondering if a mortgage recast or refinance might be better for lowering your monthly payments? Read on as we compare.

As a homeowner, you’ve spent years building equity in your house, and now it’s time to work towards other financial goals. Whether you’re getting ready for retirement or paying for someone’s education, lowering your monthly mortgage payment can help get you there.

There are several options for lowering your interest payments, including mortgage recasting and refinancing. So, which is better?

It all depends on your available cash flow. While recasting always requires you have funds on hand, you don’t necessarily need to have other assets to refinance.

In this short guide, we’ll explain the difference between recasting and refinancing along with other potential options for lowering your payments so you can enjoy life to the fullest.

Mortgage recasting is the method of paying a lump sum towards your mortgage principal to reduce your monthly payments.

If you come into an inheritance or have assets to liquidate, you could make a single large payment towards your mortgage. This would reduce the total amount you owe over the remaining mortgage term.

Because your principal is lower, you’ll also pay less interest per month. Likewise, if you’re currently paying for private mortgage insurance (PMI), you may be able to stop (assuming your payment gives you at least 20% equity in the home).

Say you have a remaining home loan balance of $350,000 with a 3.5% interest rate. If you put $100k towards your principal balance, your monthly payment could drop from $1,796 to $1,252

There are several benefits to a mortgage loan recast, including:

Staying with your current mortgage lender without shopping for  a new mortgage rate

However, there are some potential negatives:

Not all lenders offer mortgage recasting. In that case, a large sum would help you pay off your mortgage sooner, but it would not reduce your monthly payments.

Most people don’t have access to a large lump sum that would make a significant difference in their monthly mortgage payment. 

Mortgage loan recasting is not always possible. In that case, refinancing is another option.

nlike mortgage recasting, which allows you to keep your original loan term or amortization schedule, a mortgage refinance loan is one of the types of refinance options that replaces your existing mortgage with a new agreement.

Why refinance your home loan? The benefits of your new loan terms could include:

The ability to take cash out against your equity

And you don’t absolutely need cash on hand to enjoy these benefits

However, keep in mind the potential downsides of refinancing your existing loan. These include:

Closing costs – There are always closing costs associated with refinancing. These costs often exceed $6,000. As we noted, you don’t need this cash on hand, since you can often roll your closing costs into your new loan. Just keep in mind that will increase your overall debt load, and you’ll have to pay interest on that amount, too.

Little savings – If you take out cash, roll in your closing costs, or agree to a longer loan term, you might not actually pay much less over the life of your loan.

Inaccessibility – Refinancing can be a good option for people with a steady income and good credit. But if you attempt a mortgage refinance with bad credit and late payments, refinancing could be costly or even impossible.

Mortgage Recast vs Refinance: Which is Better?

Other Options for Lowering Your Monthly Payment

Refinancing and recasting aren’t always the best method for improving your financial health.

Whether you have a low credit score or you’re simply looking for more savings, consider the following options:

Loan modification – If you’re in danger of foreclosure due to late and missed payments, you can always discuss the situation with your mortgage lender. In some cases, they may be willing to agree to a lower interest rate, longer loan period, or another modification that makes your payments more affordable. To see how this loan option stacks up against refinancing, check out our comparison of a loan modification vs refinance.

Selling your home – You’ve built home equity, and you can use it to lower your monthly costs by selling and moving to a different property.

Sale-leaseback – It’s easy to assume that once you’ve sold your home, you have to move. But if you want to stay put, it might be possible to find a sale-leaseback who will let you stay and lease your home, potentially at a lower monthly payment rate. Curious to learn more? 

EasyKnock: A Better Way to Improve Your Finances

When it comes to a mortgage refinance vs recast, sometimes the best option is neither. While mortgage recasting can seem attractive, not everyone has cash on hand to lower their costs—and if you do, you might want to buy a vacation home instead. On the flip side, mortgage refinancing can result in some savings, but it can also increase your overall debt.

As a homeowner, your equity gives you other options.

At EasyKnock, we provide a solution that works for your unique goals. It works by you selling us your house. You get the cash you need and a lease to stay in your home as a renter until you’re ready to repurchase the house or move out. If you choose to move, EasyKnock will list the house on the open market. Once it sells, your lease terminates and you receive any appreciation on the sale. We work to develop solutions that meet your long-term financial and lifestyle goals. Get in touch today to learn more.

Forbes. Mortgage recasting. https://www.forbes.com/advisor/mortgages/mortgage-recasting/

Business Insider. Average mortgage closing costs. https://www.businessinsider.com/personal-finance/average-closing-costs

Whether you’re looking to make home repairs, consolidate debt, pay for college, or give your business more working capital, a cash-out refinance or home equity loan may be able to help. 

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Need a Loan but Keep Getting Declined? Your Next Steps Forward

Need a Loan but Keep Getting Declined? Your Next Steps Forward

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