Car loan louisiana refinance

Recession. Slowdown. Layoffs. These are words buzzing steadily through the air-waves and across the pages of the print media. They might conjure up some deep, dark beast gnawing away on the financial foundations painstakingly built by families. If not thoroughly terrifying, they at least leave an uneasy feeling.

However, unless you or a family member is directly affected by a layoff, there actually can be aspects to an economic slowdown that consumers can turn to their advantage. This is not to suggest that a decline in the recently booming growth rate is necessarily a good thing, but there are factors that can help your household finances.

Economists and market experts at Hibernia do not believe the United States is poised for a long or deep recession--if one statistically materializes at all. The economy must shrink, as measured by gross domestic product, for two consecutive quarters to be considered in recession. In fact, we believe the economy will build steam and begin growing by the second half of this year, preventing widespread disruption in employment.

The upside of this hopefully temporary slowdown is simply defined, but applies to many important areas of household finance: it's interest rates. The amounts consumers pay on everything from monthly mortgage notes to car loans to credit cards have fallen, significantly in the past several months as the economy has slowed and threats of inflation have eased.

This is a big opportunity for, homeowners to refinance their mortgages or buy that "dream home." With the current rate at about 7.000 percent (mortgage rates change daily) for a conventional 30-year fixed-rate mortgage with no discount points and a 1 percent origination fee, many homeowners can save hundreds or even thousands of dollars a year. Compare this to conventional mortgage rates of 8.125 percent in January 2000 and 8.625 percent last May.

Homeowners now: can refinance to their advantage when prevailing rates are only 0.5 percent below their existing mortgage, as banks have passed on their savings from streamlined products and technological advances. Over the past few months, homeowners have jumped at this chance to start saving right away in record numbers. In January, studies suggested that $1.2 trillion in outstanding mortgage debt, or 25 percent of the total, could be refinanced profitably.

We don't expect mortgage rates, to fall dramatically from here. In fact, the conventional 30-year rate has been below 7.000 percent for a total of about seven months in the past 10 years. If they haven't refinanced in the past six months, homeowners should strongly consider contacting their banker and locking in low rates now.

Homeowners also can help cut credit costs by taking out a home-equity loan. These loans are usually at lower rates than some other types of consumer borrowing, including credit cards. Home-equity loans often are used to pay off old debt, or they can be used to increase a property's value by remodeling. If the borrower lives in the property, home-equity loans also can have tax advantages. Borrowers need to consult an accountant or financial adviser for explanations of the tax implications.

There are two types of home-equity loans. One is a line of credit, where cash can be drawn when needed like a checking account or credit card. The other is a term loan, similar to a mortgage, where the homeowner pays back a set amount every month over a 10- to 15-year time frame.

Homeowners can borrow up to 90 percent of the value or their property, minus the amount remaining on their first mortgage, depending upon their credit standing.

Rates are generally low for these loans. For example, Hibernia's usual interest rate for line-of-credit loans is The Wall Street Journal's prime rate, plus 0 to 2 1/2 points, depending on the applicant's credit standing. The interest rate on a line moves with the prime rate, which in turn follows policy adjustments by the Federal Reserve.

For term loans, the interest rate is currently as low as 8.555 percent. Borrowers can save another half-point by having the monthly payments automatically deducted from their Hibernia checking account. For term loans, the interest rate is locked in when the loan is taken.

The line of credit can be more flexible, because a borrower can decide how much of it to use.

Let's look at an example: A couple opens a $30,000 line of credit to remodel a home. They then find that the work will only cost $20,000: They don't have to use the other $10,000, and they can pay off the $20,000 balance at the adjustable rate of the original line or "swap" it into a term loan to lock in a fixed interest rate. Of course, clients are charged interest only on the amount of cash actually used.

Consumers who don't own homes also can benefit from falling rates. Credit-card charges are lowered as the Fed cuts rates, which might continue. Car loans become cheaper. And renters can more easily consider buying a first home, the key building block to the asset base of most households.

Nobody takes pleasure in hearing about the economy losing momentum, companies cutting staff, profits sliding and stock prices falling. However, when the economy does turn sour, there still might be opportunities to squeeze some lemonade.

Rob Stuart is the Baton Rouge city president for Hibernia National Bank.

[Graph omitted]

RELATED ARTICLE: WHO QUALIFIES AS MIDDLE CLASS?

Though almost half of the U.S. population considers itself as belonging to the middle class, a report by Economy.com's the Dismal Scientist Suggests the numbers are actually much smaller.

Intrigued a survey conducted by the National Center for Opinion Research, which showed 45 percent of Americans view themselves middle class, the Dismal Scientist set out to develop a standard for truly making such a determination.

While admitting that other Indictors might arguably be added here what the Dismal Scientist determined was necessary to be a true-blue member of the middle class:

* Actual income: With the US. median household income at $40,816 those in the middle class must fall between 80 percent and 120 percent of that figure. Consequently, middle class families must have household income between $32,653 and $48,979. Using figures from the U.S. Census Bureau, the group said the range could reasonably be expanded to between $32,001 and $50,519.

* Net worth: Middle-class families must have assets beyond actual income Why? To provide economic security and to serve as a buffer during brief periods of hardship, Such assets may be Financial (stocks, bonds, transaction or retirement accounts) or tangible (vehicles, primary or secondary residences or business equity).

* Education attainment: Human capital also plays a role, and at least one of the household's earners should be a high school graduate. One is more comfortably middle class if at least one of the earners has some college education. Those expecting a bachelor's degree as the standard should realize that, according to census Bureau data, only 25 percent of Those over the age of 25 have earned a college sheepskin. The report suggests, however, that a college degree may be required in the future.

* Health insurance: This is a must, otherwise you're either too rich or one medical emergency away from financial ruin. More than 15 percent of the U.S. population lacks private or public health insurance.

* Credit card: Another part of the safety net is access to short-term credit, such as that available with a credit card. Credit card use is rapidly becoming a key part of middle-class life, with 72 percent of qualifiers in 1998 possessing one, according to the Survey of Consumer Finances. In 1970, just 14 percent had one.

* Perception of opportunity: Though this is impossible to quantify, at least one Income earner must have an opportunity to move up the economic ladder. Why? Because the possibility of increased income governs a litany of financial planning and investment decisions.

So if you're above the income standard for middle class, then where do you fall?

Interestingly enough, an article in the December issue of Money set out to define the "ultra middle class". It simply defined that group as earning 3.5 times the median family income, which corresponds to approximately the top 5 percent of U.S. households. Nationally, that figure is $142.021.

The magazine also gave a State-by-state breakdown. For Louisiana, to be considered member of the ultra middle class, annual household income must tally at least $114,443.

The lowest threshold for such status was in West Virginia ($103,016), with the high being in Maryland ($183,085).

Of course, the question for Baton Rouge residents is: If family income is above $50,000 (the middle-income high) but below the $114,000 needed for ultra middle-class status, what exactly do you call yourself? Slightly above average middle class?