Let’s face it, the economy is down, and people are feeling the pressure. That’s why this is a great time to consult with your bank. Banks like National City can help you by offering tips on how to consolidate debt, and spend and save money wisely.

We spoke with Larry Elovitz, branch manager of the National City Bank in Thurber Village. Larry provided us with useful ways that homeowners can handle their money and assets.

First, we discussed Home Equity Installment Loans. As you make monthly house payments and pay down your mortgage, you gain equity in your home. This equity quietly sits there until you decide to use it. Installment Loans allow you to borrow money using that equity as collateral. Many people use Home Equity Installment Loans for big-ticket purchases (home improvements, debt consolidation, tuition, or even vacations or new car purchases). The amount of the borrowed loan is repaid over a set time with a specified monthly payment amount. The interest you pay may even be tax deductible. Installment Loans have the benefit of offering customers the security of a fixed rate and/or a fixed monthly payment. This makes payments easy to budget and allows customers to count down their payments to know when their obligation will be paid off.

Next, we discussed the Home Equity Line of Credit (HELOC). HELOC offers the flexibility of a low-interest revolving credit line, a type of credit that does not have a fixed number of payments, similar to a Visa or Mastercard arrangement. A HELOC also offers benefits provided by Installment Loans but the balance owed and the payment per month varies with the amount of usage... again, rather like a credit card. But unlike credit cards, the HELOC has the potential to provide tax advantages. Once National City approves your credit line, you can access the funds any time via HELOC checks or a HELOC credit card. For a small fee, customers can also lock certain balances at a fixed rate and repay the borrowed money in fixed payments. One additional benefit of HELOC: there are no associated closing costs.

Larry says, “It is a terrific time to set up either an Installment Loan or a HELOC because rates are low right now. Setting up a HELOC is a good idea because it offers security in case something unexpected happens and you need extra money.

The last topic Larry and I discussed was refinancing. When you refinance, you pay off an existing loan with money borrowed from a new loan with different terms. There are many reasons why you would refinance. Some of those reasons include taking advantage of better interest rates, extending a repayment time, reducing periodic payment obligations (sometimes by taking a longer-term loan), and/or reducing or altering risks (such as refinancing from a variable-rate to a fixed-rate loan). Ultimately, the more favorable conditions offered by the new loan will reduce the overall borrowing costs, but each person considering refinancing must weigh their advantages against their possible risks. Larry says, “Now is a great time to refinance for the same reasons that it’s a great time to set up an Installment Loan or a HELOC. Interest rates have been low for the past few months. Who knows what will happen in the future with interest rates.” With that, I asked the question on everyone’s lips: Are interest rates really at an all-time low. Larry says, “Interest rates have gone down over the past few months, but I would not say they are at an all-time low. However, they are the lowest they have been in the past couple years.”

The bottom line is that each homeowner’s situation is unique. Looking into Installment Loans, HELOCs, and refinancing options are all wise ideas for homeowners who are feeling the strain of a downturned economy. Larry and his staff at National City are great resources right here in our neighborhood. They have the know-how and, if you’re ready, they can handle your paperwork on the spot.

by Morgan Baughman

photos courtesy National City Bank