Making your House work for you

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Learning & Life Columnist

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There are times when the debts seem to pile up faster than you can work to pay them off. You're not alone in this problem and the solution may be closer to home than you think. Maybe you can afford the things you want to buy and places you want to go.

The term family breadwinner has changed its meaning in today's economy. Very few families can survive the high cost of living with only one family member bringing home a paycheck. It's not at all unusual to find everyone but the family dog working to contribute to the budget. Even a multi-salary household often struggles to keep ahead of mounting financial obligations. Sometimes it feels like you are climbing a slippery glass mountain. Often all that's required is an injection of cash to relieve ongoing payment difficulties. If you're a home-owner, this could be a reality that's under your control.

Your house can take the financial strain

It is surprising how few families realize the extent to which the house they live in can be put to work to help improve family finances. If you've lived in your home for a long time, chances are it is worth far more than the original purchase price.

The difference between your existing mortgage and the current value is called equity. It is possible to receive a high percentage of this equity amount as a cash payout from suitable lenders. In addition to the lump sum of money made available to you, you may also find that the refinancing process can lower your monthly mortgage payments.

The joy of debt consolidation

One of the reasons given by many of the people who decide to refinance their homes and take out some portion of the home's equity in the form of cash, is to consolidate credit card debt. Today's households often have between three and six different credit cards. These include bank-issued cards, retail chain cards, automotive repair company cards, and gasoline cards. To top it all off, there may be car payments, medical bills, and numerous other small monthly disbursements. In addition to the stress of dealing with the many different creditors, you also pay interest fees with each bill you pay.

With the money received in a home equity loan transaction, you could pay off most, if not all, of these bills and high interest credit cards. You can then repay the loan with one monthly payment. Many lending and mortgage institutions understand and encourage this use of home equity cash. In fact, a number of them have debt consolidation advisors or counselors as part of their teams.

Debt repayment is not the only reason to search out extra money. Families need additional cash for other reasons, too. The funds you free up by tapping into the equity value of your house can be used for vacation travel, to pay for further education for yourself or your children, or to start a business.

Your home is an integral part of your everyday life; now you can use it to realize some of your dreams. There are lenders who will approve transactions of 100% of the value of the home or even 125%. The amount is made available either as a lump sum loan, or as an equity line of credit. A line of credit is money ready and waiting for your use, but held by the lender until you need it.

When credit ratings are weak

Naturally, it is easier to borrow money when your credit rating is strong. However, the struggles faced by real people in real life don't always allow credit ratings to go undamaged. Economic downturns and industrial failures have caused many people to fall behind in repaying debts. These problems are reflected in lowered credit scores.

The good news is that many modern lending institutions understand the issues. Banks and other lenders no longer turn their backs on people with credit problems. Some of them, such as Aames Financial, make special appeals to homeowners with sub par credit and provide special loan programs for those who have bad credit.

Capital release made easy

Surveys have shown that as many as 60% of eligible homeowners have not taken advantage of a refinancing process. It's quite possible that the complicated and often intimidating loan process is partly to blame. Some companies, such as Full Spectrum Lending, and Premier Equity, have turned the process into an easy and private online experience. The previously tedious and time-consuming processes of application and loan pre-approval are both done over a secure Internet connection.

When you are searching for funds for any reason, it's worth remembering that you may not have to look further than your own front door. Your house is a resource that tends to increase in value. All you have to do is release the capital that is locked up in the form of untapped equity. Funds currently confined to the bricks and mortar of your home could soon be in your bank account and available for use in any way you please.

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