For a few months now I have been warning that inflation, and probably a heafty amount of inflation, is just around the corner. Well, based on today’s Producer Price Index numbers, it’s here! Here is a Yahoo article about the inflationary numbers.
And with big-time inflation just beginning to take hold, my suggestion has been to consolidate debt, if you have the ability, and to maximize cash-flow to your household through that consolidation, through cutting back on expenses and by creating extra income, if necessary.
And, if you are considering a debt consolidation loan – rolling non-preferred debt such as credit card debt or car loans into your home mortgage at a very low rate – then you should act quickly. The urgency is created by Fannie Mae and Freddie Mac’s new rate adjustments for ‘cash-out’ refinances, beginning April 1, 2009.
They have already implemented increases to rate, or to discount points, for cash-out refinances; but as of April 1 those costs will increase to the point where it may not make sense to do a debt consolidation loan.
You will still have FHA cash-out refinance loans if your home qualifies (for a maximum loan amount of $320,850 in metro Atlanta). But, even there if you do a cash-out loan over 85% of your home’s value, you will need two appraisals now.
Things are still getting tighter. Are you prepared?
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