Latest news with #EricCroak
CBS News
23-07-2025
- Business
- CBS News
Can't qualify for a HELOC? Here's what experts say to do now.
Home equity line of credit (HELOC) borrowing was on the rise at the end of 2024, continuing a trend that's been years in the making, according to Federal Reserve of New York data. HELOCs are a popular tool for homeowners thanks to their flexibility, not to mention the fact that homeowners are sitting on record amounts of tappable equity. "Home ownership can come with many unexpected and expensive repair and maintenance needs," says Amy Phelps, a branch manager at Tompkins Community Bank in Syracuse. "A HELOC provides a safety net for homeowners to tap into for emergencies, typically offering rates well below what most credit cards offer and allows for a higher limit than most credit cards as well." However, HELOCs are becoming more challenging for many borrowers to qualify for due to a few key economic and personal finance factors, including rising interest rates. While HELOC rates were falling just a few months ago, they're sitting a bit higher today. If you've been denied a HELOC or are worried about getting denied, now is the time to take action. We spoke with several lending and home equity experts to find out some common reasons for HELOC denials right now and what borrowers can do if they're denied. Start by checking your current HELOC eligibility here now. "If you are hitting a wall with approval, blame the trifecta: higher rates, tighter underwriting, and spooked lenders," says Eric Croak, CFP and President of Croak Capital. With HELOC rates sitting a bit higher in late July, borrowers' money isn't going as far. And if your debt-to-income ratio (DTI) is too high to support the new debt, that, combined with the increased interest rates, could make it challenging to get approved for the amount you want. Of course, other factors could be at play too. For example, many lenders won't let you exceed 80% LTV (short for loan-to-value ratio) on your home. That includes your mortgage, so if you owe too much on your home loan or any other home equity products, you may simply not have sufficient home equity to qualify. It's also worth considering whether your credit score is enough to qualify for a HELOC. While the requirements may vary from lender to lender, most want a credit score in the mid-600s or higher. "It's not personal, it's just math. Lenders do not want late payments when their funding costs are already up," says Croak. See what HELOC offers you may qualify for here. "If you're denied a HELOC, the first step is to ask your lender for the specific reasons behind the decision. That insight helps you understand what to work on, whether it's your credit score, income, or debt levels," says Dan Bauer, Head of Residential Lending at Alliant Credit Union. Knowing why your application was denied will give you the information you need to get your finances in better shape and apply again. However, if you haven't applied for a HELOC yet and want to give yourself the best shot at approval, you have the chance to be a bit more proactive. "Having a strong financial profile on paper is the best way to improve your chances of HELOC approval," says Bauer. "Checking your credit, reducing debt, and ensuring your finances are in order before you apply can boost your odds significantly." Your credit score will be a key factor with any lender, so make sure you review your credit report, have any errors removed, and work on boosting your credit score. While most lenders require a score in the mid-600s, you can improve your chances by getting yours even higher. Finally, don't assume all lenders and loan products have the same requirements. While you may have been denied a HELOC from one lender, you may be approved from another if you shop around. Additionally, there are other lending products you can use instead that may be a better fit for your financial situation. If you've been denied a HELOC or are worried about meeting the eligibility requirements, consider a different lending product that can fit your needs. A home equity loan also taps into your accumulated home equity. With their fixed interest rates and monthly payments, home equity loans make you less vulnerable to interest rate fluctuations. However, you'll be subject to similar credit and equity requirements. Another product our experts recommend to tap into your home equity is a cash-out refinance. In this instance, you'll take out a new mortgage and pay off the existing one, keeping the difference as cash for yourself. It may be a good option if your financial situation has improved since you borrowed your mortgage. But if you're currently locked in at a low interest rate — for example, if you got your mortgage in 2020 or 2021 — then a cash-out refinance will make your mortgage more expensive. You may also consider products that don't require you to borrow against your home equity, such as a personal loan. There are no home equity requirements, and there are personal loans with laxer credit requirements. However, expect to pay a higher interest rate. That said, not using your home as collateral, as you would with a home equity loan or HELOC, could be attractive. "Both cash-out refinances and personal loans can be used for many of the same expenses homeowners consider a HELOC for, like home improvements, debt consolidation, or unexpected costs," says Bauer. Another alternative worth considering, according to Jeffrey M. Ruben, the President of WSFS Mortgage at WSFS Bank, is a credit card, but only in select situations. "Credit cards can be useful for smaller projects, but interest rates can be high, and this is best for individuals who are disciplined enough to pay them back," says Ruben. A credit card may also be best suited to someone with good credit who can qualify for a 0% APR introductory rate and then pay off the card before that intro period ends. According to Ruben, home equity rates will almost always beat out personal loan or credit card rates, so that's the better place to start, if you qualify. HELOCs are still a great tool for homeowners who have seen their equity increase substantially over the past five years and who want to tap into it. But with lenders tightening their eligibility requirements, you may have a harder time qualifying. Whether you've already been denied a HELOC or you simply want to give yourself the best chance at approval, there are plenty of steps you can take, from increasing your credit score to paying off debt to freeing up more of your monthly budget. And if all else fails, consider one of the many alternative borrowing tools that might fit your needs.
CBS News
23-07-2025
- Business
- CBS News
Which type of debt relief could save you the most now? Here's what experts say.
It's no surprise that so many are struggling with debt. After all, rising costs over the past several years have pushed more families to rely on credit cards. And with credit card interest rates sitting above 21% on average, borrowers are struggling to catch up. Not to mention, when the federal government resumed collections on student loans, it created a whole new financial burden for many people. "Household debt in 2025 is climbing for two reasons: interest inertia and lifestyle creep," says Eric Croak, CFP and President of Croak Capital. "Folks locked into old spending habits can't adjust to higher borrowing costs. Add in student loans resuming and HELOC approvals tightening, no wonder households are scrambling. People are not really over-consuming; they are overcharged for existing needs." If you're among those struggling to repay their debt, there are solutions available. We spoke with several debt and personal finance experts to find the types of debt relief that can save you the most money in 2025. See which debt relief strategy makes the most sense for your situation here. If you're struggling to pay off your debt, consider turning to some form of debt relief for help. While there's no set definition of debt relief, it could include anything that helps you reduce the amount of debt you owe or better manage your current debt burden. If done right, debt relief can lead to significant cost savings. In some cases, it can help you lower your debt interest rate or free up money in your budget to put toward debt, lowering your total costs in the long run. In other cases, you may actually be able to lower the amount you owe. Because most types of debt relief come with some risks and downsides, it's essential to analyze your unique situation to determine the best next steps. Here are five types that could save you significant sums of money, starting this year: Many people are looking for a magic pill to help them get out of debt, but many experts agree that the best debt solution is simply strategic debt repayment, whatever that looks like for you. Many financial experts recommend the debt snowball or avalanche to help repay your debt in a more organized way. While both have some advantages, the debt avalanche, in particular, can help lower your interest costs the most over the long run. "Prioritize the accounts by interest rate, and then focus your available cash on the most expensive debt while paying the minimum payment to the others," says Erica Sandberg, consumer finance and debt expert. "When that account is at zero, add what you were sending to the next on your list." Sandberg recommends using an app or other digital tool to help you stay organized while you're repaying your debt, noting that there are many free options available. Explore your top debt relief options online now. If you want to make your debt more affordable while you're paying it off, debt consolidation may be a good option for you. Debt consolidation involves refinancing multiple debts into one new debt. You get to simplify your finances since you're trading in multiple monthly payments for one. And if you can lower your debt's interest rate, you can also save money. You can consolidate your debt with a personal loan or by using your home equity, such as with a home equity loan or home equity line of credit (HELOC). And in the case of credit card debt, you can consolidate your debt using a balance transfer credit card. "These cards offer up to 21 months with no interest accruing on the balance you move from your old card to the new account," says Andrea Woroch, a consumer and money-saving expert. That will result in paying more toward the balance than the interest. The best debt consolidation options are generally reserved for those with good or excellent credit. Many balance transfer cards require good credit. And while you might get a debt consolidation personal loan with subpar credit, you won't be eligible for the best rates. You can work with a credit counselor to create a debt management plan (DMP). Under a DMP, your credit counselor will work with your creditors to negotiate your payments, often aiming to lower your interest rate or extend your payment term, resulting in a lower payment. You'll then pivot from making a payment to each creditor to the credit counseling organization, which will distribute those as needed. "The DMP is unique among all of the debt relief options out there because it represents an actual collaboration between lenders and counseling organizations to help their mutual clients pay down debt safely and responsibly," says Martin Lynch, President of the Financial Counseling Association of America (FCAA). Lynch notes that, unlike some other debt relief solutions, a DMP doesn't require you to take out another loan. It also doesn't require you to stop making payments on your debt accounts (as is sometimes the case with other forms of debt relief), which can further harm your credit and open you up to lawsuits from your creditors. As another bonus, credit counselors don't solely work to address your debt. While a DMP is just one service they offer, they can also take a more holistic look at your finances to help you address the habits or problems that got you into debt in the first place. If the amount of debt you owe is truly unaffordable, debt settlement may be an option for you. The goal is to negotiate your existing balance down to an amount you can more easily afford to pay. You'll make one lump sum payment, and your creditors will forgive the remainder. The benefit of debt settlement is that you may only have to repay a portion of your debt. But there's no guarantee you'll be successful. And even if you are, you often end up harming your credit in the process, since many debt settlement companies recommend stopping payments on your debt until the settlement is complete. "Debt settlement is not a panacea for any debt," says Jason Pack, Chief Revenue Officer at Freedom Debt Relief. "It is an option for some people who are struggling to make even minimum required payments, often as a result of suffering a financial hardship, such as divorce, the death of a spouse, job loss, or major unexpected medical expenses." Unfortunately, there are plenty of debt settlement companies that mislead customers or charge exorbitant fees, leaving you in a worse place than when you started. If you decide to work with a debt settlement company, it's critical that you properly vet them to make sure they're legitimate and trustworthy. While bankruptcy may be the most drastic debt relief solution, it can seem like the only option for some borrowers. Chapter 7 bankruptcy, known as liquidation bankruptcy, is the most common type of bankruptcy. It requires you to liquidate many of your assets to pay off your creditors. And any debt that can't be repaid through the liquidation is typically discharged, leaving you with a fresh start. Chapter 13 bankruptcy, also known as the wage-earners plan, won't leave you with quite as much of a clean slate. You'll keep your assets and go on a repayment plan over three to five years. Once you've made all of the payments required by your plan, the remainder of your debt will be discharged. "Bankruptcy also stops collection calls, but it will have a serious impact on credit ratings for at least seven years, which comes with a financial cost," says Michael Sullivan, a personal finance consultant with Take Charge America. "In addition, there are legal and administrative fees required, which often run into the thousands of dollars. Bankruptcy is sometimes required but should never be chosen lightly." There's no one debt relief solution that's right for every borrower. The right form of debt relief depends on a variety of personal factors. But there's one thing that rings true for everyone: The more proactive you are and the earlier you start addressing your debt problem, the better off you'll be. And if you don't feel comfortable going it alone, consider turning to a professional, whether it's a credit counselor, financial counselor, or someone else, who can advise you on your debt situation.
Yahoo
08-07-2025
- Business
- Yahoo
Robinhood has rolled out 'tokenized' stocks and ETFs. Here's what to know about the crypto-like assets.
Robinhood stock surged last week on news that the brokerage would offer tokenized stocks to users in Europe. Tokenization is the act of creating a digital representation of an asset on the blockchain. The technology could allow for more seamless trading, but investors should be aware of unique risks. Robinhood stock surged last week after the company announced that users in Europe would be able to trade "tokenized" versions of popular US stocks and ETFs, including shares of private companies like SpaceX and OpenAI. OpenAI ultimately responded by issuing a warning that it doesn't endorse the move and wasn't involved in issuing any equity to back these tokenized shares. Still, the excitement for the blockchain-enabled assets remains high, and Robinhood CEO Vlad Tenev brushed off OpenAI's concerns on Tuesday, adding that the firm is in talks with European regulators to start offering tokenized shares to users of its platform. Here's what to know about the crypto-like assets. "Tokenization" isn't a term many people outside the crypto community are probably familiar with. It's essentially the process of turning something into a digital token and securing it to the blockchain, which is the super-secure digital ledger that can track ownership or transactions and cannot be tampered with. It's the digital infrastructure that underpins bitcoin. Tokenization, the thinking goes, allows for faster trading and settlement, and allows for assets to be traded outside of normal exchange hours. Many things can be tokenized, in theory. If you recall the NFT craze, those were basically tokenized representations of digital artwork. For stocks, a tokenized version would be backed by the real thing. However, investors should be aware that the tokens might not necessarily be precisely correlated with the price of the underlying asset. Eric Croak, CFP, President of Croak Capital, noted that despite the terminology, tokenized shares of OpenAI and SpaceX are not equity by any standard legal definition. "You do not get ownership rights. You do not vote. You do not get a dividend," he stated. "In most cases, these tokens are just synthetic exposure, i.e., someone else owns the real thing and issues you a digital claim that tracks the price they assign. It's more like a futures contract dressed up as equity." Johnny Gabriele, head analyst of Blockchain Economics and AI Integration at The Lifted Initiative, provided further context on the move to tokenized private shares. "They don't need permission to tokenize an asset they already own," he noted. "However, that does make that a derivative of a private stock, which is very, very different from owning an equity that trades on the New York Stock Exchange." They're not available to everyone. Robinhood's rollout of tokenized stocks was extended to European users of its platform, and for the most part, US investors cannot trade them. Some firms are experimenting with tokenized assets on their own proprietary blockchains, but tokenized stock trading is mainly available to offshore investors. Simply putting something on the blockchain doesn't make it a safe investment. While OpenAI and SpaceX are two of the world's most valuable privately held companies, they aren't subject to the same financial disclosure requirements as public companies. Assessing whether investing in tokenized shares of private companies is a good idea can quickly become complicated. "Just because it's on a blockchain does not mean there is someone on the other side of the trade. Investors assume they can get out whenever they want, but many of these platforms have restrictions, lockups, or limits on how much you can sell at once." Ian Kane, founder and CEO of blockchain infrastructure firm Firepan, noted the opacity and legal ambiguity risks that come with owning tokenized shares. He described the dynamic as having economic exposure rather than an ownership stake. "Investors should scrutinize who's issuing the token, what legal rights are embedded, and how pricing is determined. If you can't get a clear answer in five minutes, walk away as it's either too complicated or too opaque for retail capital," he said. Regulation is also a challenge. Tokenization is a new frontier of finance, and the rules of the road are still being set. If a platform violates local regulations, investors could lose access to their accounts. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
08-07-2025
- Business
- Business Insider
Robinhood has rolled out 'tokenized' stocks and ETFs. Here's what to know about the crypto-like assets.
Robinhood stock surged last week after the company announced that users in Europe would be able to trade "tokenized" versions of popular US stocks and ETFs, including shares of private companies like SpaceX and OpenAI. OpenAI ultimately responded by issuing a warning that it doesn't endorse the move and wasn't involved in issuing any equity to back these tokenized shares. Still, the excitement for the blockchain-enabled assets remains high, and Robinhood CEO Vlad Tenev brushed off OpenAI's concerns on Tuesday, adding that the firm is in talks with European regulators to start offering tokenized shares to users of its platform. Here's what to know about the crypto-like assets. What are tokenized stocks? "Tokenization" isn't a term many people outside the crypto community are probably familiar with. It's essentially the process of turning something into a digital token and securing it to the blockchain, which is the super-secure digital ledger that can track ownership or transactions and cannot be tampered with. It's the digital infrastructure that underpins bitcoin. Tokenization, the thinking goes, allows for faster trading and settlement, and allows for assets to be traded outside of normal exchange hours. Many things can be tokenized, in theory. If you recall the NFT craze, those were basically tokenized representations of digital artwork. For stocks, a tokenized version would be backed by the real thing. However, investors should be aware that the tokens might not necessarily be precisely correlated with the price of the underlying asset. Eric Croak, CFP, President of Croak Capital, noted that despite the terminology, tokenized shares of OpenAI and SpaceX are not equity by any standard legal definition. "You do not get ownership rights. You do not vote. You do not get a dividend," he stated. "In most cases, these tokens are just synthetic exposure, i.e., someone else owns the real thing and issues you a digital claim that tracks the price they assign. It's more like a futures contract dressed up as equity." Johnny Gabriele, head analyst of Blockchain Economics and AI Integration at The Lifted Initiative, provided further context on the move to tokenized private shares. "They don't need permission to tokenize an asset they already own," he noted. "However, that does make that a derivative of a private stock, which is very, very different from owning an equity that trades on the New York Stock Exchange." Who can trade these assets? They're not available to everyone. Robinhood's rollout of tokenized stocks was extended to European users of its platform, and for the most part, US investors cannot trade them. Some firms are experimenting with tokenized assets on their own proprietary blockchains, but tokenized stock trading is mainly available to offshore investors. How should investors think about owning tokenized stocks vs. the real thing? Simply putting something on the blockchain doesn't make it a safe investment. While OpenAI and SpaceX are two of the world's most valuable privately held companies, they aren't subject to the same financial disclosure requirements as public companies. Assessing whether investing in tokenized shares of private companies is a good idea can quickly become complicated. "Just because it's on a blockchain does not mean there is someone on the other side of the trade. Investors assume they can get out whenever they want, but many of these platforms have restrictions, lockups, or limits on how much you can sell at once." Ian Kane, founder and CEO of blockchain infrastructure firm Firepan, noted the opacity and legal ambiguity risks that come with owning tokenized shares. He described the dynamic as having economic exposure rather than an ownership stake. "Investors should scrutinize who's issuing the token, what legal rights are embedded, and how pricing is determined. If you can't get a clear answer in five minutes, walk away as it's either too complicated or too opaque for retail capital," he said. Regulation is also a challenge. Tokenization is a new frontier of finance, and the rules of the road are still being set. If a platform violates local regulations, investors could lose access to their accounts.
Yahoo
25-06-2025
- Business
- Yahoo
5 Ways Tariffs Could Affect the Upper-Middle Class
While the upper middle class is more insulated than lower-income groups from ever-changing tariff policies, they can still expect some pain on the horizon. Be Aware: Find Out: Watch out for these five ways tariffs could affect the upper middle class — and plan accordingly. Inflation has remained more muted than expected, as importers rushed to stockpile inventories in the first quarter of 2025. But those inventories are already dwindling, and the third quarter could see inflation heat up again. 'Tariffs will impact the upper-middle class's buying power as both core material and discretionary materials increase in costs,' explains Babak Hafezi, founder of Hafezi Capital and professor of international business at American University. 'Items like electronics, clothing, household products and cars will be impacted.' Read More: That loss of purchasing power will prevent the upper-middle class from buying the brands and small luxuries they enjoy. In some cases, it will become harder or even impossible to find some imported goods. That could mean certain wines doubling in price, or no longer imported at all. Or French cheeses, or perfumes, or fast fashion lines that are no longer affordable enough to justify their low-build quality. The June Blue Chip Economic Indicators survey by Wolters Kluwer shows economists projecting slower growth in both 2025 and 2026. As recently as February, economists projected GDP growth of 2.2% for 2025 and 2.0% for 2026. By June, the consensus forecast for both dropped to an anemic 1.4%. Recession risk also remains elevated. The survey of economists forecasts a 41% chance of recession in the US over the next 12 months. Slow or negative GDP growth adds to the risk of job loss for the upper-middle class just like everyone else. Or, more likely, the risk of reduced income or no rise in income — even as inflation drives up costs. Again, that could leave many in the upper-middle class with less purchasing power. Stagnating economic growth certainly doesn't do investment portfolios any favors. From 2015 to 2024, the S&P 500 has delivered an average annual return of 14.1%, according to data from The Motley Fool. The next decade may not prove so fruitful for investors. 'Upper-middle-class investors hold ETFs and mutual funds packed with global manufacturers and importers,' notes Eric Croak, the certified financial planner (CFP) behind Croak Capital. 'Tariffs squeeze margins on those companies. Dividends shrink, share prices dip, future earnings soften. These investors could find themselves stuck between cashflow drag and asset underperformance.' Many upper-middle class families want to cover college costs for their children. Expect that to get harder, between tuition, books and housing inflation, combined with weaker income and investment growth. But higher education also stands to become more expensive due to less subsidization by foreign students. 'Many colleges and universities depend on foreign students who pay full tuition as a means to subsidize other students' grants and scholarships,' added Hafezi. 'Less money for scholarships and grants, combined with higher costs and inflation, will drive up costs for American families.' More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 8 Common Mistakes Retirees Make With Their Social Security Checks How Much Money Is Needed To Be Considered Middle Class in Your State? This article originally appeared on 5 Ways Tariffs Could Affect the Upper-Middle Class Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
