Finance And Security
Question: I'm anticipating temporary financial difficulties. How can I get through them without losing my house?Answer: Some banks may consider a one-year reduced payment option, depending on your prospects for financial recovery and the appreciating value of your home. Under the scheme, you pay a fixed low rate on your mortgage, no matter how high the real rate is. The shortfall in interest is tacked onto the principal, which gets larger instead of being amortized in the usual way. This is called "negative amortization' and it can cost you dearly if the house isn't appreciating in value faster than the rate of inflation. You face higher payments on a larger mortgage the following year and may have to extend the amortization period. We recommend that you avoid plans that increase your debt load and decrease your equity unless your house is really going up in value or it's just a temporary measure to see you through a tough spot.
Question: How can I protect valuables that I don't want locked away in a safe deposit box?
Answer: The safest place to store important papers and other valuables you want to keep at home is in a plastic bag in the bottom of your freezer.
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December 4, 2008