There’s been a lot of talk lately about where the economy is going. Short version for many people would be along the lines of “in the tank”.

That is, things are getting rather rough for a lot of people. Foreclosures, companies downsizing, debts out of control. It’s getting to be a rough time for a lot of families.

I should know. My own husband was just downsized. My income alone isn’t enough to support our family, although I’m working to change that. It’d be nice, you know?

When you have debts added to a sudden decrease in your family’s income, you have to do some fast thinking. You don’t want things to get more out of control than they already are. You also want to lose as little as possible.

And you’d better believe that you want to avoid bankruptcy. Sometimes that may feel like the easiest solution, but it’s not as easy as it once was, and the long term impact on your credit is serious.

The issue people are most aware of right now is what is going on with housing and people’s mortgages. The government has been talking bailout because so many people signed on to mortgages that they really shouldn’t have, and the impact is now showing in a big way. Foreclosures are way, way up.

But whether your money problems are due to miscalculating what you could afford in a mortgage, the sudden loss of a job or some other reason, you need to act fast to minimize the damage.

Your first step should be to look at what you can afford right now. If your mortgage is now out of your range, what are you going to do about it?

With housing prices dropping, this is a tough one indeed. Some people owe more on their mortgages than their homes are now worth.

The ideal, of course, is to start bringing in enough money to be able to afford everything. Finding a second job may be your best way to cope with mortgage problems. This is not an easy step to take, since it greatly limits your free time and family time. But if it’s better than the alternatives I strongly recommend thinking about what you could do.

Of course, if your money problems relate more to being laid off, you are probably already hunting just to get that one new job you need. I really like something a friend told me once about job hunting. She said that movie stars and baseball players had agents, and she wanted the same advantage when she needed a job.

In other words, get help in your job hunt. It may cost some money that you don’t feel you have (and don’t spend more than you can afford!), but if it pays off in a better paying job, that’s an investment. You should at the very least network and be unashamed to tell everyone you know that you’re hunting for a new job. It really can help.

Cutting back is another good plan. Anything you can spend less money on means you have more to put towards debts and mortgages. This can mean living without cable television or internet access for a time. It can mean dropping the cell phone if you’re not trapped by a contract, or your land line phone if you can get by with just your cell phone. And of course there are many other areas you can cut back on, such as eating out.

You should also be willing to talk to your creditors before the problems become obvious. The sooner you can work things out, the better. You may be able to get lower rates on credit cards, do the occasional lower payment, and avoid paying late fees.

Bigger steps to take depend greatly on your family’s situation. Some may be able to get by on a single car rather than having two. With gas prices the way they are right now, even arranging regular carpools with coworkers who live in your area can be quite a help.

At times like this, you need to focus on keeping things from getting completely out of control. A financial downturn doesn’t have to be a complete catastrophe.

Yet I’d love to have a mortgage. Just to know that my money is going somewhere other than into the pit that is rent. It sounds nice.

Most important is that you get good mortgage advice. A big part of why there are so many foreclosures going on is that so many people have been getting bad mortgage advice. Taking on too big a mortgage, paying interest only and then being unable to cope when that ends… these are some of the more common mistakes people made because lenders told them they could do it.

Interest only mortgages can be interesting, but you need to know what you’re doing with it. I know some people feel that it’s simply unethical for banks to push them so hard because too many people don’t use them correctly. It’s not a good option for every situation.

I think the key to these is to look at where you plan on being at the end of the mortgage. If you’re hoping a jump in income will allow you to switch to a more traditional mortgage, you may be going interest only for the wrong reason. You need to know what you’re doing at the end, not just what you hope to do.

Get educated before you take on a mortgage. Don’t just rely on what lenders tell you; too many just want your business, not what will help you the most.The Truth About Mortgage.com website offers some good tips to help you make it happen.

When you buy a home, you buy the one that is closest to what you want in a home. That’s good enough at first, but over time you think of things you would like to do to improve your home. A home equity loan is a natural thought, since serious home improvements are beyond most families’ budget.

How much of a loan you can take out depends on the equity you have in your home. This is how much of the value of your home you do not owe on your current mortgage. The standard home equity loan has a term anywhere from 5-15 years.

If you choose a home equity loan, you will want to have a pretty good idea as to how much money you need to borrow. You will want to get enough to cover all the costs of your remodeling. Get estimates first, and don’t cut your budget so close that you cannot cope with changes.

If you’re not sure of what you will need, a home equity line of credit (HELOC) is another good option. Same kind of deal as a home equity loan, save that with a HELOC you can borrow just what you need when you need it. You only pay interest on that which you have actually borrowed already. This can be quite an advantage over the plain home equity loan, where you will be paying on the entire amount as soon as you take out the loan.

However, the HELOC has a big catch. Many are interest-only, and so you have a large payment due at the end of the term. Smart borrowers pay more than the minimum each month, but not everyone has that discipline.

Clearly, each has advantages and disadvantages. So how do you decide?

Step one is to think about how much flexibility you need. Do you have a solid estimate for everything? With a plain home equity loan, what you borrow is what you have available. You can’t have anything more.

Step two is to look at how you will be paying the contractors. Odds are you will pay some upfront, the balance when they finish. Are you comfortable borrowing all of the money right away, paying interest on money that hasn’t been paid out to the contractor yet? Or would you prefer to only pay on the money you’ve actually paid out already?

Step three is to consider how you plan on paying off your loan. Can you cope with paying more than the bill says is due? Can you cope with a balloon payment in a few years? Or is having a consistent amount due better for how you cope with money?

The interest rates matter too, of course. A plain home equity loan typically has a fixed rate, while HELOCs generally have variable rates. This can be a gamble, as your rate changes regularly.

Overall, however, one variety or another of home equity loan is your best bet for when you want to pay for home improvement. The rates are typically significantly lower than what a credit card would charge you. And there’s nothing like making your home exactly suit your needs.

Technorati Tags: remodeling, home loan, heloc, home equity line of credit

Mortgages on the whole are wonderful things. They allow people to own homes. And once some equity is built up, a remortgage can be a great idea too. It all allows homeowners to make sure they are getting the best deal on their home loans.

Mortgages are essentially secured loans. The intrinsic value of your home assures the bank that you will pay them back, or they get your home. But this means that if you can’t handle your mortgage you stand to lose quite a bit.

Before getting a mortgage, you need to be sure that you will be able to afford it. Do not just assume that the low payments you get on an interest only mortgage are safe and affordable. Think about where you will need to be at the end of that term.

If you’re getting an adjustable rate, make sure you think about how you will cope if/when rates go up. What if they go up sooner than you are able to get a new mortgage? You should have enough of a safety zone in your finances to cope.

One of the great things about owning a home is the equity you build into over time. It’s money you can’t easily touch, but when you really need it, it’s there.

Many homeowners will at one time or another consider getting a home equity loan. These are most commonly used for home improvements, as homeowners reach a point where they want to improve the place they live. But you have to be careful when you do so.

The two possible types you have to consider are the standard home equity loan and the home equity line of credit. You have to choose between them depending on your needs.

A home equity loan gives you all the money at once. This can be nice if you want to pay for your remodel job all at once, but it doesn’t leave you quite so much flexibility, and you start paying interest right away.

Choosing a home equity loan means you will want to know how much money you will need. The interest rates will be lower than you would pay if you put the same on most credit cards, of course, but if you aren’t paying for the entire job up front you’ll be paying interest on money you aren’t really taking advantage of yet.

A home equity line of credit gives you more flexibility, as you can pay out money as you need to, and only pay interest on what you have used so far. That can be useful in many circumstances.

In addition, many are interest-only loans, which mean lower monthly payments. However, that also means you have to make a balloon payment at the end, and that can be challenging for most people. The interest rate will probably be variable, rather than fixed, but once again likely still lower than your credit cards would charge.

There is another situation, however, in which people decide to use their home equity. Some people like to use it to consolidate their credit card debts when these get too high. Unfortunately, for many this turns out to be a really bad idea.

The trouble with this idea is that it doesn’t generally address the problem that caused high credit card bills in the first place. And with the cards paid off, many people charge them right back up again. Soon they can’t make those payments or the payments on their home equity loans and they’re in trouble. At risk of losing their home.

In this situation, it is far smarter to figure out how to address the spending issues before touching your home equity. You have to commit yourself to living within your means, or you risk losing too much.

In the right situation, however, a home equity loan can help you to do wonderful things, whether it’s to fix up your home or to fix up your finances. But if you aren’t careful it can destroy all you’ve worked for and cost you your home.

Technorati Tags: home equity loans, home equity line of credit, heloc, remodeling, credit

It sounds like such a great idea, but is it really? That depends on how you use your money. If you don’t change the habits that got you into credit card debt already, you might just be digging a bigger hole for yourself.

The idea behind refinancing is that you can get your credit card debt to have a lower interest rate. However, what many people forget is that they are trading unsecured debt for secured – that is, risking their home to pay off their credit cards.

The danger in this is that many people go back and charge up the credit cards, restarting the cycle of credit card debt. Their debt load becomes higher and more difficult to be rid of.

If you want to refinance your home to cover your credit card debt, it may not be a bad idea, but review your spending habits first and put those credit cards somewhere that they won’t be such a temptation. Healthier spending habits will help you and your family tremendously in the long run.