Mortgage Rate Reduction
The first step of Mortgage Cycling is to secure a line of credit. Many people already have a line of credit tied to the equity in their home, called a Home Equity Line of Credit (HELOC). If you’re in this position, this is great. You’re ahead of the pack and you can start your Mortgage Credit Cycling plan right away.
I also understand that others may have no equity in their homes or have maxed out their home equity This is fine. Securing a line of credit isn’t as hard as it seems so don’t be intimidated. You can also use Mortgage Cycling to pay off your existing, maxed-out home equity credit line.
If the latter scenario sounds like your situation then you’ll need to find a bank that will open up a personal line of credit for you. There are dozens of organizations out there that offer credit lines to consumers. Try your own bank first. They know you and your history. If they won’t play ball, then go online. Some websites will allow you to apply for lines of credit at several lending institutions at once. Some lenders specialize in loans to people with less-than-perfect credit. If you are having difficulty finding a lender to grant you a line of credit, you may consider one of these. The drawback for most people with low credit is that you will be charged a higher interest rate. Be careful with this situation. As I highly recommend not using a cycling plan unless you can obtain a line of credit which is lower than your existing mortgage rate. The interest rate on your line of credit must be lower than your current mortgage rate in order for the cycling plan to work properly.
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