Initial jobless claims rose unexpectedly to 419,000 for the week ending July 10, according to the U.S. Department of Labor on Thursday. This is about 20% higher than the 350,000 jobless claims forecasted by multiple economist surveys.
While initial jobless claims are still trending down over the past year, declining from more than 1.4 million in mid-july 2020 to 419,000 currently, economic recovery can be unpredictable. With more than 3.2 million Americans still unemployed, per the Labor Department, many are searching for ways to make ends meet.
If you're looking for ways to get by while on unemployment, you have several options at your disposal, such as tapping into your home equity or refinancing your debt to lower your monthly payments. Read more about your options below, and shop around for a variety of financial products on Credible's online marketplace.
Access a lump sum of cash by taking out a personal loan
Personal loans are cash loans that you repay in fixed monthly payments over a set period of time, typically a few years. Funding is fast and you might have access to cash the next business day after you're approved.
Most personal loans are unsecured, which means you don't have to put up collateral, like your car or home. But because they're not backed by an asset, personal loans have a stricter set of eligibility criteria when it comes to credit history.
Personal loan lenders determine your eligibility and set your interest rate based on your credit score and debt-to-income ratio. Because of this, it can be difficult to get a personal loan when you're unemployed or if you have a bad credit score. However, some lenders are more lenient than others and will let you use your unemployment benefits as proof of income.
Check out your potential personal loan interest rates by getting prequalified on Credible's online loan marketplace. Checking your rate won't impact your credit score.
Tap into your home's equity with a cash-out refinance
With home values at an all-time high, homeowners gained tens of thousands of dollars in equity over the past year. You may be able to tap into that home equity with a cash-out refinance.
Cash-out refinancing is when you take out a new home loan that's larger than your current mortgage, pocketing the difference to use as you see fit. This type of refinancing can potentially increase your monthly payments and your repayment term, but with mortgage rates at historic lows, your repayment plan may not actually change that much.
It can be difficult to refinance your mortgage while unemployed, though. Lenders will want to see that you have good credit and proof of income to ensure you can repay the mortgage loan, and they won't accept unemployment as a form of income. However, you may be able to refinance your mortgage if you have a cosigner who meets the eligibility requirements or if you have an alternative source of income, such as investments or freelance work.
Get in touch with a loan officer at Credible to see if cash-out refinancing is the best option for you.
Refinance your other debts to reduce your monthly payments
Interest rates are historically low for many types of loans, including mortgages and student loans. This makes it a great time to refinance your existing debt at a lower rate in order to lower your monthly payments so you have more wiggle room in your budget. Here are a few options you can consider:
- Mortgage refinancing: If you're a homeowner, your monthly mortgage payment is likely one of the largest expenses from month to month. Mortgage refinance rates are at all-time lows with the cancellation of a pandemic-era refinancing fee, which means you may be able to shave hundreds off your mortgage payments.
- Credit card refinancing: Credit card interest rates are notoriously high, and revolving credit debt is increasing at a faster rate as consumers exit the pandemic. Making the minimum credit card payment can be expensive if you have a high balance. Paying off your credit card debt with a personal loan may help you lower your monthly payments, thanks to lower interest rates.
- Student loan refinancing: If you have private student loans, consider refinancing while rates are hovering at record lows. Refinancing your private student loan debt can help you save money every month. Just keep in mind that refinancing your federal student loans makes you ineligible for federal benefits, such as COVID-19-related forbearance.
Loan refinancing can be a great way to reduce your monthly payments while still meeting your debt obligations but there are a few caveats. You want to make sure you're not taking out much more debt or extending your debt repayment for too long, or you risk overpaying in interest. Plus, it can be difficult to get favorable terms while refinancing if you have no alternative income.
Still, low interest rates won't last forever, so now is a good time to consider refinancing your debt for more favorable terms. See what kind of interest rates you qualify for on a variety of financial products on Credible.
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