Noel Stiller

Production Manager | NMLS 374167
Phone | Fax:
516 S Front St, Mankato, MN 56001

Mortgage lending is more than selling loans. It’s about helping people achieve their homeownership goals. Whether that’s helping them reach a better financial position or connecting them to the home of their dreams, it’s about guiding them to the finish line.

My industry experience has taught me to take the time to understand my customers: What’s their story? How can I help them in their pursuit of a home? When I see my customers as real people with real goals, needs, and dreams, I get to match them with the best loan product and create a truly seamless lending experience.

Everyone has a story to tell. What they need is a Loan Originator who will listen, customize a loan to meet their needs, and guide them every step of the way.

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We can help you make the choice between a HELOC vs. cash-out refinance.

If you’re like most Americans, there’s no bigger purchase you’ll make in your lifetime than buying a home. A home is an investment, and there’s a return on that investment in the form of equity. Yet many homeowners won’t be able to access that equity unless and until they sell their home. So what if you don’t want to sell your home? That’s your equity—shouldn’t you be able to use it?

Since selling your house isn’t a viable solution for everyone, lenders have come up with ways to help homeowners access their home equity so that they can pay for all kinds of things: home renovations, investing in real estate, vacations, car and student loans, and even credit card debt. Your home equity is a precious resource. It’s a wonderful thing to have, and when you find a mortgage lender that can help you tap into it and use at your discretion, it can open up a world of possibilities that has been stored up for the years you’ve been owning your home.

But you know what they say: with great power comes great responsibility. And home equity is not only a precious resource, it’s a powerful resource. So while tapping into your hard-earned home equity sounds like a great way to fund your plans and dreams, it should be handled with care.

There are some methods to using your home equity that are better than others. Of course, this depends on your particular needs. Ask yourself what’s your purpose for using your equity and you’ll be off to a great start. Because without a clear, defined purpose for the funds, access to cash like that can be tempting to blow on petty expenses.

Homeowners who tapped into their home equity (some as much as 100% of their home value) during the housing bubble learned their lesson the hard way. Without limitations on how much they could access, and without giving careful thought as to what they wanted to use it for, many homeowners found themselves upside-down on their mortgages when the bubble burst and home values plummeted.

Thankfully, limitations have been put in place to keep such disaster from happening again. To help you avoid the pitfalls and decide the best way to access your home equity, we’re going to look at two different methods: home equity line of credit (HELOC) and cash-out refinance.

Your home equity is not only a precious resource, it’s a powerful resource.


A HELOC is a type of loan that allows you to borrow against your home equity and, like a revolving line of credit, you can use that cash how you want as long as you pay it back. (Imagine it like a credit card that’s connected to your home equity rather than your bank account.) A HELOC is another loan in addition to your mortgage, meaning you’d have another monthly payment.

Even though many homeowners benefit from this kind of loan, HELOCs have a number of disadvantages. While their closing costs may be lower than that of other loans, you may face several different types of fees imposed upon you throughout its course, such as an annual fee or an inactivity fee. HELOCs also tend to come with an adjustable interest rate, which can be problematic for a few reasons: no fixed payments, budgeting can be more difficult, and the rate fluctuates with the market (and we know the market can be unpredictable).

HELOCs do offer the option of interest-only payments for a period of time, but when you’re not required to pay down the principal, you run the risk of making payments for a lot longer than you need to. Speaking of interest, the good news with HELOCs is that the interest paid may be tax deductible. However, since the tax bill that passed in 2017, borrowers can only deduct the interest on a HELOC if they used the money to build on or improve the home that secures the loan.

Since the tax bill that passed in 2017, borrowers can only deduct the interest on a HELOC if they used the money to build on or improve the home that secures the loan.

Another drawback? Draw periods. Lenders allow only a specific time period where the borrower can access the money, and they usually enforce a minimum draw requirement—you have to take out their minimum required amount even if it’s more than what you need at the time.

Here’s where the going gets tough: a HELOC is a loan secured by your home. If you’re unable to make payments on your HELOC, you could lose your home. This is one of the many sticky situations some homeowners found themselves in when the housing bubble burst. By essentially using cheaper debt to pay off more expensive debt, they were funding lifestyles they couldn’t afford.

Living outside your means for too long tends to end in disaster. Putting your home on the line makes it even worse. Thus, HELOCs probably aren’t the most stable choice for homeowners who want to spend their home equity. Good thing Cardinal offers a different solution: cash-out refinances.

Living outside your means for too long tends to end in disaster. Putting your home on the line makes it even worse.

cash-out refinance basics

A cash-out refinance is when a borrower refinances their mortgage for more than the amount they currently owe and receives the difference in cash. Put another way, it allows you to borrow against your home equity and spend the proceeds like you would cash.

Like a rate/term refinance, a cash-out refinance exchanges your mortgage for a new one with new terms, but with the added bonus of giving you cash on hand. Unlike a HELOC, a cash-out refinance gives you one monthly payment and a fixed amount of money to be used for a specific purpose.

Lenders will limit how much cash you can take out, keeping you from tapping into 100% of your home equity. It’s like putting guardrails around your freedom, and we all know guardrails have been known to save lives.

A cash-out refinance allows you to borrow against your home equity and spend the proceeds like you would cash.

Cash-out refinances can be a great option for borrowers who want to refinance their mortgage and get cash from their equity at the same time. You have the ability to lock in a low fixed rate for the life of the loan, rather than one that’s variable based on the market, giving you fixed, predictable payments that make budgeting simple. Any fees associated with the cost to borrow are paid up front (like when you closed on your home purchase) so there are no surprises down the road. Sure, you can get a HELOC and shop around and compare other lenders’ fees, but have you thought about doing a cash-out refi with Cardinal?

Getting a cash-out refinance should feel a lot like when you first purchased your home. The processes are fairly similar. You have to meet a lot of the same requirements, like credit score, income and asset verification, and debt-to-income ratio. And, if you’re already a Cardinal customer, it’s worth it to stay a Cardinal customer. Since you’re already on file, we’d have to update your information, but the verification process should be much quicker.

If you want to explore your options and find out how much home equity you could tap into, we can help.

This blog post is intended for educational purposes only and is not to be taken as advice. We recommend you consult your financial advisor, legal counsel, and/or tax adviser before you make any financial decisions toward purchasing a home or applying for any kind of mortgage.

Did we convince you to do a cash-out refi? Get a free quote now and let’s get started.

Eligible homeowners who apply for the homestead credit can get property tax relief.

We’ve said it before, but it’s often cheaper to buy than rent. But once someone becomes a homeowner, they may come to find that there are some new things they have to pay for—things they didn’t have to worry about when they were renting. Like property taxes. But this added expense shouldn’t scare people away from buying a home just yet. There’s a little thing called a homestead credit that’s intended to lighten the burden of property tax payments.

It’s just another benefit that can help make homeownership affordable, and a homeowner who pays property taxes on their primary residence might want to consider taking advantage of this program. However, it’s important to note that not all homeowners are guaranteed to save money via the homestead credit program or to even be eligible for it. It’s best for a homeowner to start by contacting their local government and research the homestead credit rules specific to their individual situation.

The homestead credit is just another perk to homeowners and another benefit that can help make homeownership affordable.

let’s get down to the PITI-gritty

Before we get into the details of the program, let’s talk about PITI. A mortgage payment is essentially made up of four things: principal, interest, taxes, and insurance (abbreviated PITI). The principal and interest pieces of that equation concern the home loan. The insurance part, of course, is what’s paid to the borrower’s homeowners insurance company. Then there’s taxes. This part of a monthly mortgage payment goes toward property taxes—that’s where the homestead credit comes in.

homestead credit for dummies

“Homestead” is just an old-fashioned word for a home—more specifically, a homeowner’s primary owned residence. In the U.S., the homestead tax credit law is intended to limit the amount of tax assessment increase that can be imposed on homeowners. The program is currently available in 47 states, six of which have unlimited exemption, others limit it to a percentage or a fixed amount.

The homestead credit may protect at least some of a home’s value from creditors, property tax increases, and even life events like the death of a spouse by putting a cap on the assessment increase for a period of time. This credit (also called homestead tax credit or homestead tax exemption) can have a significant impact on how much homeowners save on property taxes, regardless of their property value or their income level.

home values and tax assessments

Let’s take a step back for a minute. The amount a homeowner pays for property taxes is based on factors that impact their home’s market value. When home values rise, property taxes usually do so too.

One major factor that can affect a home’s value is home renovations. And not just renovations a homeowner makes to their own home, but those their neighbors make to their homes too. Picture Homeowners A and B. If Homeowner A’s neighbor down the block Homeowner B builds an addition onto their home, it not only increases the value of Homeowner B’s home, but Homeowner A’s too, and that of the whole neighborhood. Additionally, while making improvements around the house can increase the home values in the surrounding neighborhood, it can increase the property taxes of the area as well.

Local demands can also affect home values and property taxes. Since property taxes often fund public services in the community like public schools or parks, homeowners in the area could pay higher property taxes to support these local establishments. Similarly, if there’s a lot of real estate investing going on in the area, homeowners might have to pay more in property taxes to help fund those initiatives.

Making improvements around the house can actually increase the value of the surrounding neighborhood.

Property taxes get assessed every so often. The frequency of this depends on a homeowner’s local government, but they can be reassessed annually, every five years, or only when the home is sold or refinanced. Property taxes are assessed based on an assessment rate (also called a mill levy) set by the state. But just what is evaluated when a piece of property is assessed for taxes?

An official tax assessor will compare the market value of the home to similar properties in the area. The home’s worth will then be determined by the amount that those similar, nearby properties were recently appraised or sold for. If home renovations and local demands are on the rise, the property taxes of one home, as well as those of similar homes in the area, could go up. This is where the homestead credit program can come in and cap the property assessment increase for a period of time to give the homeowner a financial break.

The homestead credit can cap the property assessment increase for a period of time to give the homeowner a financial break.

homeownership has its perks

Homeowners across the country save money and benefit from the homestead credit. There is an application process which helps verify that the property owners only receive the benefit of this credit on their one principal residence. In addition, once a person submits the application, homestead credit eligibility stays in place as long as the home for which they’re applying remains their primary residence.

While there are different rules and processes for every state, the overall benefit remains the same: homeownership has its perks. And saving money on property taxes using the homestead credit is one of them. If there’s money to be saved, it can’t hurt to do some research and consider filling out an application. Savings via the homestead credit is not guaranteed to every homeowner, so it’s important to talk to your local government or visit your state’s .gov website to find out if you’re eligible and where to apply.

This blog post is intended for educational purposes only and is not to be taken as advice or as a guarantee of savings. We recommend you consult your financial advisor or legal counsel before you make any financial decisions toward purchasing a home or applying for the homestead credit.

Did you learn something new about the homestead credit from this blog post? Give us a shout-out on social media!

Can being your own boss hurt your chances at a mortgage?

When it comes to getting a mortgage, credit and employment history play a huge part in a lender’s decision on whether to give you a loan. Many traditional lenders want to see stable employment with one employer and a consistent flow of income. So what does that mean for self-employed and freelancing borrowers who don’t fit the conventional mold for an ideal borrowing candidate? Good news! Securing a mortgage as a self-employed or freelancing borrower shouldn’t be a problem if you go about it the right way. There may be some bumps in the road that may make it a little tougher on you than a salaried employee, but with the right preparation and attitude, you should be fine! Here are a few things you can do to ensure you’ll get approved for a mortgage if you’re working as your own boss.

Securing a mortgage as a self-employed or freelancing borrower shouldn’t be a problem if you go about it the right way.

1. Put down a large down payment

Putting down a large down payment almost always results in an easier mortgage process. This case is no different. A larger down payment can do several things for your application. It shows the lender that you’re serious (as you have more skin and the game), and it also reduces the lender’s risk since you’ll be financing a smaller portion of the total cost of the house.

Another positive to putting down a larger down payment is that your monthly payments are likely to be lower. If you can put down more than 20%, you’ll avoid paying mortgage insurance which is another huge pro of shelling out the extra cash for a larger down payment. Needless to say, if you can afford it, put as much down as you can and save yourself the trouble in the present and future.

2. Have your paperwork together

Like with any mortgage, your lender will request a lot of documentation in order to properly assess your total financial picture. The industry standard for salaried employees or those employed by someone else is typically six to 12 months of personal tax returns. Unfortunately, it’s a little tougher if you’re self-employed. Typically, self-employed borrowers need to have documentation of at least two years of their entire financial history. This typically means two years of your federal tax returns and proof of your assets. Business owners may also need a profit and loss statement or a 1099 form, but it isn’t always the case if your business has been well-established for five years or more, especially if you’ve shown an upward trend in income over the past two years.

It’s especially important to have these documents organized simply because you’ll have more of them to submit. Disorganization can be the cause of a lot of hang-ups in the mortgage process, and that’s the last thing you’ll want when it comes down to it.

3. Separate business and personal

On a similar note, be careful not to comingle your business expenses with your personal expenses. It may be tempting for you to charge a work item on your personal credit card or vice versa, but it will only complicate how a lender sees your liabilities. Be sure to use separate credit accounts for business and personal purchases so there’s no financial confusion during the approval process.

4. mind your credit

Regardless of your financial success following starting your own business, a bad credit score can still tank your prospects of getting a good rate on a mortgage. Checking your credit score should be one of the first things you do before you start applying. Since mortgage rates are mostly based on credit, DTI ratio, and your down payment, it’s a good idea to pay off all outstanding debts before you get approved by a lender.

5. Keep your head up

Buying a home while self-employed can be tougher than it would be if you were working for someone else, but you shouldn’t let it keep you from your goal of homeownership. If you get turned down for a mortgage, try again! Your lender may have overlooked something. Plus, you can always consider another lender who may be more understanding and experienced working with people in your situation.

At Cardinal, we pride ourselves on our wide range of experience with all sorts of clients and our ability to approach each unique situation individually. Keep your head up, and the same stick-to-itiveness that made your business a success will get you the home of your dreams in no time!

Do you have experience buying a home while self-employed? We’d love for you to share your experience with our followers on social media!

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