Tuesday, September 16, 2008

2 Ways Your Home Can Help in Tough Times

Wow! Yesterday was one scary day in the financial world. With the Stock Market plunge in wake of Lehman Bros. demise, trouble at AIG, the sale of Merrill and WAMU's downgrade to junk status. If it wasn't clear before it certainly should be everyone's priority now to protect your assets. All the old standard advice applies: cut expenses, continue savings, and work to eliminate debt. But I've also got a few ideas for you if you currently own a home and aren't in danger of foreclosure.

#1 Now is the time to refinance. Loan rates have fallen and they'll continue to fall. I'm not attempting to predict the future, but indications are that the economy will continue to slide and take more financial institutions down with it. (Your credit union is doing fine, btw.) But loans may not be easy to come by as credit lending becomes tighter. So to wait for rates to fall even more is a gamble. Refinance your loan now to start saving your personal money. Sock away the savings by contributing it to your IRA or opening a higher paying savings account. Consider CDs which pay a bit more and try to go for terms that are less than 5 years. That way you're funds will be easier to get.

#2 Get a Home Equity Loan. Okay this might sound crazy since most talk right now is about saving money and here I am telling you to get a loan. But here's the thing. We don't know what's around the corner. Home equity loans and lines-of-credit can be used as a bit of a safety net if you should need cash. Use it wisely and don't use for any old thing like buying new furniture or a vacation. Keep it in case things get really rough. But again, seek a home equity loan now, before credit lending gets tighter.

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