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DEMOCRATS PROTECT SOCIAL SECURITY BENEFITS FOR AFRICAN-AMERICAN SENIORS

Remodeling? Here's How To Find The Money
by Liz Pulliam Weston, MSN Money Expert (NAPSI)-Houses can be costly beasts, and not everyone has a pile of cash sitting in a checking account to pay for repairs and improvements. But if you need to borrow money to pay for major home fix-ups, you should know that there are smart ways and stupid ways to get money:

    The smart ways ensure you pay as little interest as possible, get a tax deduction for what you do pay and don't end up compromising your financial health.

      The stupid ways can leave you house poor-or even homeless.

      To figure out the right financing, you'll need to take a look at your budget, the equity you have in your home, the nature of your project and how long it will take you to pay the money back. Among the questions you should ask:

      1. How much will this project cost? Use contractor bids as your basic estimate, then add 10 to 20 percent for potential overruns.

      2. Can I afford this? If you can barely afford the minimum payments on the loan, you're getting yourself in over your head. If the project itself isn't an emergency, you may want to put it off until your finances are in better shape.

      3. What are my other financial obligations? Before you schedule any non-essential home project, make sure your other financial bases are covered.

      4. Will this project add value? Repairs don't add value-they simply preserve what you've got. Many home improvements add some value, although you generally won't recoup more than 50 to 75 percent of what you spend.

      5. Can I pay back the loan quickly or will I need several years? The bigger the project, the more likely you'll need years, if not decades, to repay the loan.

      6. What's the worst that could happen? If you're taking out an adjustable mortgage or a home equity line of credit with a variable rate, make sure you can afford the payments if rates rise to the maximum level allowed under the loan.

      Generally, borrowing against the equity in your home is the best way to go if you don't have sufficient cash to pay for your project. Your interest rate will be lower than with most other options, and your interest payments will be tax deductible if you itemize. The downside: if you fall behind on your payments, you could lose your home.

      Since not everyone has sufficient equity in their homes to borrow against them, there are some other options, including (in decreasing order of desirability): Title 1 loans, construction loans, credit cards, 401(k) loans, margin loans, personal loans and contractor financing.

      For more information on securing funding for home improvement projects, check out Microsoft Money's Budget Planner at www.money.msn.com.

      Before you start on home repairs, make sure your finances don't need fixing.



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