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Show Volume II , Issue I The OGDEN VALLEY NEWS Page 19 October 1999 Home Equity Loans The economy is escalating. Is your debt doing the same? Believe it or not, this year the official household savings rate fell to the lowest level since the Great Depression. But with households gaining so much real estate equity, debt may be more manageable than most people realize. The secret is to form many debts into one. Debt consolidation comes in many varieties with the possibility of a single payment, and a low interest rate that allows you to pay off your indebtedness in less time for less money—provided you adhere to sound financial practices. If you’ve got the equity, you have two options. 1) Home equity loans More than one third of all home equity loans are used for debt consolidation. To make home equity loans work as a debt consolidation tool, take the following advice to heart: Change your spending habits. Before you apply for a loan, practice living on a lower income. Save the difference. Don’t take on additional debts while the equity loan is outstanding. Choose a short payment period. Even with a low interest rate a 10 to 15 year home equity loan can be expensive. Prepay your loan in three to five years. The savings can be phenomenal. Consider this: If you transfer a $12,000 balance of just one 17 percent credit card to a 9 percent home equity loan and pay it off in five years, you’ll save more than $23,000. Avoid loans in excess of the value of your home. It’s common to find lenders willing to loan as much as 125% of your home’s value. If you fall into this trap, you not only can’t deduct all the interest, but you’ll also put your home at unnecessary risk for an expensive loan. Beware. Avoid high closing costs, low introductory or “teaser” rates, and credit cards tied to home equity lines of credit. They all defeat your reason for consolidating—to save money. Shop around for the lowest rate. Keep in mind lenders will “sell” you a low rate— which means your closing costs may likely add up to more than the lower rate saves you. 2) Refinanced Mortgages If your mortgage is a small portion of your home’s value, or if you are paying an 22 Years Ago WHEN EDEN WAS YOUNG - Recalling fond check out remains of a hay rake used in the days when memories of an earlier and slower life style, Catherine Eden was a pioneer settlement. Eden celebrated 100 years of history in June of 1977. Stallings, Grant Staples and Eph Storey (from left) Note: picture provided courtesy of the Standard Examiner. interest rate higher than prevailing rates, you could be a candidate for gaining equity through a refinanced first mortgage. With a refinanced mortgage, for the same mortgage payment or less than you make each month, you can pay off more expensive debts. But be smart. If you take out the loan for 30 years, you’ll borrow against more of your home equity for a longer period. That could be both risky and expensive, by putting your home in jeopardy for a longer period than the previous mortgage. Pay closing costs up front. If you have the cash, paying closing costs will save you on financed interest charges over the life of the loan. Don’t pay for more of a refinance than you can afford. In other words, don’t let a lender talk you into a 15-year refinance if you can’t make the payments. After refinancing, keep making the same monthly payments. If you’ve managed to make all the payments before consolidation, add that money to your monthly refinanced mortgage and save thousands. Negotiate. Fees Financial Services, Inc. and Points are negotiable, especially if lenders are in need Best Rates and Closing Costs - Guaranteed of customers. Check Stated Income & No Doc Loans points, rates, and fees with at least three 100% Loans lenders before signing Lot Loans on the dotted line. Alternate Transportation After getting off the bus, Valley students get a lift home each day. Jessie Evans, Erica Hauber and Jeanine Calloway. Comstock • • • • • • • • • Construction Loans Great to Not So Great Credit Debt Consolidation Purchase or Refinance Loans to $2,000,000 Free Consultation and Pre-Qualification Call JENNY GOOD 745-3778, 791-0881 Note: This article was submitted by Jenny Good at Comstock Financial Services, Inc. You can contact Jenny for your mortgage loan needs, at 745-3778 or 7910881. Tiffany Hauber, Becca Hauber, Carlie Huenke and Ashlii Evans. |