With the holidays coming, you'll probably be spending more. Where will the money come from?
People who don't have enough cash to cover holiday spending often turn to credit cards that usually have double-digit interest rates. And some end up paying off the debt at 17 percent interest for the rest of the year or for years to come, adding new charges along the way.A less costly alternative for home owners who have good fiscal discipline might be a home equity line of credit. In financially competitive areas you can probably find one with an interest rate under 8 percent and a three-year term.
If you borrowed $10,000 at 7.75 percent for three years, your payments would be $312 a month and the total interest just more than $1,200. You might be able to get rid of your other bills with this home equity line, too.
If you're having trouble finding a house to buy in a seller's market, have sympathy for the poor renters who are having an even harder time, especially those with limited incomes.
"The sad truth is that more and more people working at low-wage jobs, as well as older Americans living on a fixed income, are being priced out of the housing market," said Housing and Urban Development Secretary Andrew Cuomo.
With the economy booming, the number of affordable housing units declined by almost 20 percent between 1996 and 1998, according to government figures.
Looking for a house but have no money for a down payment? Countrywide, a national lender, says it will give you a mortgage anyway and cover most of your closing costs, too, if you have good credit.
To qualify for this loan, you must have a modest income -- no higher than 120 percent of the median in your area and you must be buying a single-family house.
Of course, all this comes at a price. According to Countrywide's consumer line, if you want to roll the closing costs into the mortgage, the mortgage amount won't change but the interest rate will be higher to cover the costs.
For example, if the house costs $100,000, you won't have to pay $102,000 to cover the closing costs. Instead, your mortgage rate would be about 8.5 percent compared with the average rate Countrywide is charging now, 7.85 percent with no points.
For more information, call 800-570-9888. Ask about the CashSaver loan.
The down payment is only $500 and no monthly cash reserves are required. You don't have to pay private mortgage insurance and your debts, including the mortgage, can come to 43 percent of your income.
But you do pay in other ways for such favorable terms. A call to the 800 number got a quote of 9.25 percent, about 1.25 percent above the average mortgage rate for regular borrowers.
For more information, call GMAC at 800-888-4622. Ask about the GEM (GMAC Mortgage Emerging Markets.)
Pamela Reeves writes this column weekly for Scripps Howard News Service.