Many home owners have been waiting too long before refinancing their mortgages to lower fixed interest rates and consolidating their debt. As the credit market continues to shrink, it has become apparent that the ability to use the equity in one’s home has also started to recede. Lenders have reduced the maximum cash out available to borrowers due to the continuing decrease in property values. Especially hard hit is the condominium market place.

Today’s economic climate has left many home owners with little or no cash reserves. Losses in investment portfolios have further deteriorated their ability to have ample monies for emergency needs. I have always recommended to my clients, that if possible, one should have a minimum of six months reserves to cover their mortgage payment, utilities and other fixed debt. This is not easily accomplished with the monies available in savings and checking accounts. Whereas, many people are unwilling or unable to liquidate their investments without taking severe losses at this time. Taking out a second mortgage on one’s home has virtually become a thing of the past, while home equity lines of credit are available to only a few people with credit scores in the mid to high 700 fico range.

Time is not on your side. It will be a number of years before home owners will see a loosening of lender guidelines. Now may be your best time to take advantage of today’s low fixed interest rates to consolidate debt, circle the wagons so to speak, and put money in the bank. Until the financial crisis we are facing takes an upturn for the better, we must take these steps in order to survive this recession. I am told that when your neighbor is out of work, it’s considered a recession, when you’re out of work it’s a depression.