Somewhere around 22% of approach individuals who are granted to gain access to from their 401 (k) have such a house loan at some point and half had used a mortgage strategy a seven-year skyline, the professionals of a Article just released, “The availableness and use of 401 (k) Loans”.

The chance of a mortgage follows a bell-shaped with admiration to age, seniority, stability, and income, according to Bob Beshears, a lecturer at the Stanford Scholar School of Business, Wayne J. Choi, a lecturer at the Yale School of Administration, Mark Laibson, a lecturer at Harvard and Brigitte C. Madrian, a lecturer at the School of Administration Bob F. Kennedy of Authorities at Harvard School, who co-wrote the newspaper.

Those likely to have a 401 (k) mortgage technique associates are in their 40s, with 10 to 20 years of service, generating $ 40 000 to $ 60,000 with $ 20,000 to $ 30,000 in their 401 (k ) strategy. In 2008, the normal quantity of these financial lending products was $ 4,000.

According to Mark Wray, Chief executive of the Gain Sharing/401 (k) of The united states and writer of “Take Control with Your 401 (k),” more latest reports recommend that one in four workers qualified for a financial mortgage gained choice, with a typical quantity of $ 8,800.

Some lend from their 401 (k) to buy a house or for renovations. Other get rid of charges or pay back financial lending products (sometimes the rate on a 401 (k) mortgage is lower than other, more conventional resources of credit). And others lend to pay for training, medical charges, weddings, divorce and vehicles. But whatever the reason, professionals say there are several things to consider before credit from your strategy.

Not without assets

According to Wray, there are two big benefits to a 401 (k) mortgage. One, if your strategy is a mortgage program, you have the protection of understanding that your cash is available “just in case,” said Wray.

“This means that you can perfectly make the responsibility highest possible factor to your strategy regardless if you might need the cash later,” he said.

And two financial lending products to help you prevent burning your pension benefits when a turmoil happens. “If your strategy provides financial lending products, you will be requested to take a first mortgage before you can take a submission because the cash is taken once as a submission, it can not be changed.”

Not without assets

According to Wray, there are two big advantages to a 401 (k) home loan. One, if your technique is a home loan strategy, you have the security of comprehension that your money is available “just in scenario,” said Wray.

“This indicates that you can completely make the liability maximum possible element to your technique regardless if you might need the money later,” he said.

And two economical credit items to help you avoid losing your retirement living advantages when a problems happens. “If your technique provides economical credit items, you will be expected to take a first home loan before you can take a distribution because the money is taken once as a distribution, it can not be modified.”

Inexpensive resource of credit

If you have already made your choice to spend a certain amount and the only question is how you will finance these expenses, a 401 (k) mortgage can be a reasonable resource of funding, said Choi, a co-author of report.

“A 401 (k) mortgage is almost always a better option than financial debt due to charges of the former is much cheaper,” he said. The amount on the 401 (k) mortgage is usually the prime amount plus 1%, but charges vary from one strategy to the.

Others agreed. According to Steve Utkus, a major with the Vanguard Center for Retirement Research, 401 (k) financial lending products are a relatively cheap resource of credit score, in comparison, for example, unsecured lines of credit cost playing cards or credit cost playing cards. Moreover, there is no credit score underwriting standards. “You’re borrowing from yourself – and therein lies the rub,” says Utkus.

By law, the total excellent major 401 (k) financial lending products can not go over 50% of the balance of a individual interested benefits account or $ 50 000. The experts of the 401 (k) study also noted that individuals are less likely to use financial lending products in the programs that cost an amount and financial lending products are smaller when the programs allow for financial lending products excellent less at the same time encourage a shorter maximum mortgage possible, or cost a cheaper amount.

In inclusion to being a resource of cheap credit score, Wray said there are other advantages to a 401 (k) mortgage. There is less documents when in comparison to other types of financial lending products. There are generally no constraints on how funds are used. Most programs allow you to borrow for any reason. It’s fast. You can get a mortgage in a few days, depending on how often you strategy processes deals. And the amount of repayment of your mortgage may be higher than the amount of return you get on your investment in fixed capital.

In just a few short hours, La Cabaña, the Mexican restaurant and nearby motel that Garcia’s parents opened in 1992, was not only flooded, but also much of the land on his property was washed away. All told, Garcia estimates, the hurricane damage cost him between $80,000 and $100,000, and insurance covered only $18,000.

Like many business owners who don’t operate in flood-prone areas, Garcia didn’t have flood insurance. He could collect insurance money only to fix the wind-damaged restaurant roof. He applied to the federal government for additional assistance and received $23,000, which he used to replace some furniture and make repairs to the motel unit where his mother lives.

“I’m at a loss for words,” says Garcia. “We never expected any flooding. Up here, we were really caught off guard; no one knew until it was too late.”

Many other businesses were similarly disrupted this year. In 2011, the U.S. logged 97 major disaster declarations, according to the Federal Emergency Management Agency. In 2006, the year Hurricane Katrina devastated New Orleans, FEMA recorded just 52 major disaster declarations. Such declarations can come from the President based on FEMA recommendations. The Small Business Administration also can make its own disaster declaration when at least 25 homes and/or businesses sustain property damage and at least 40 percent isn’t covered by insurance.

Although the federal government helped with Garcia’s losses, not every business will be eligible for such aid when disaster strikes. Preparation for the unexpected is critical. Here are four steps you can take to get ready:

Create a backup plan.
A backup plan, or what’s known in biz-speak as a “business continuity plan,” is a written document outlining how your company will respond to a disaster. You’ll want to ask yourself and key employees some basic questions: How will we keep filling and tracking orders? How will we communicate with suppliers if we’re not at the office? If vendors aren’t operating, do we have a backup? What if employees can’t make it to work?

The questions, of course, will vary depending on your business and its needs, but to get started, you can use a template at Entrepreneur.com for guidance. The Insurance Institute for Business & Home Safety, or IBHS, an association of property insurance companies based in Tampa, Fla., also offers a free series of eight planning sessions accompanied by assignments. By the end of the sessions, you should be able to complete your plan.

Get insured.
Plenty of businesses have insurance in case of a fire or a burst water pipe, but chances are most aren’t protected in the event of an earthquakes or flood — especially if they aren’t located near fault lines or floodplains, says Gail Moraton, a business resiliency manager for IBHS. Although such disasters are rare, businesses should note that many standard policies don’t even cover wind damage from a hurricane or utility disruptions from a storm, Moraton says. She suggests carefully reading your policy’s fine print to understand your coverage.

You may want to consider adding a rider or a separate policy to cover losses from severe weather that aren’t included in your existing insurance policy. The average flood insurance policy is about $600 a year, according to the National Flood Insurance Program. The average rate for a policy purchased through the California Earthquake Authority, which offers California residents catastrophic earthquake insurance, is about $700 a year. Note that the cost of coverage will vary widely depending on how much insurance you buy, what it covers and your property’s risks, Moraton says. Extra coverage should be available in all 50 U.S. states.

Mitigate risks.
As much as possible, try to anticipate risks and mitigate them. For instance, if you need a server to operate your business’s website, have an alternate you can switch to. The same goes for electricity: Keep a generator handy.

If you know a storm is coming and you can’t easily transport your office or retail shop to higher ground, try to protect as much merchandise, inventory and equipment as possible. Moraton suggests moving computer towers and other essential, valuable equipment off the floor and placing as much inventory as possible on higher shelves or in other more protected spots. Also, digitally back up all of your business’s vital financial documents or keep copies in another location.

Seek assistance.
The Small Business Administration can provide some financial help. Through the agency’s Office of Disaster Assistance, business owners can apply for low-rate, long-term loans for physical damage caused by a declared disaster. Currently, eligible small businesses may borrow up to $2 million for up to 30 years to repair and replace real property, machinery and inventory at a 4 percent interest rate, according to a SBA spokeswoman.

The SBA also offers an economic injury disaster loan that provides working capital up to $2 million. It can be used for operating expenses the business could have paid if the disaster hadn’t occurred, even if there isn’t any physical damage. The current rate for a loan of up to 30 years is 4 percent.

Fears over the economy have replaced anger at tough bank lending policies as the main reason why small firms are not borrowing to expand, a key survey shows.

The bank-funded quarterly Business Monitor, which is being watched closely by the Government, also found that banks were eight times as likely to reject loan applications and four times for overdraft applications as they had been in before the credit crisis in 2007, despite pledges by the high street banks to help those applying for credit to find suitable forms of finance.

Some 95pc of those rejected for a loan were not offered an alternative, the bank-funded quarterly Business Monitor reported.

The independent survey showed that of the 2pc of all small and medium-sized enterprises (SME) looking for credit during the period, some 70,000 small firms did not get the overdraft finance they required and 54,000 were rejected for loans.

The tough stance has hit new businesses the hardest, with just over a third of first time applicants for overdrafts proving successful, compared with 96pc of those renewing facilities.

A further 150,000 were discouraged from even asking. The main factor was the economy, followed by the belief that banks would turn them away.

Even fewer firms are planning to borrow in the run up to Christmas, with just 13pc saying they intended to approach their bank compared with almost two in ten earlier in the year.

The Bank of England reported that the main high street banks missed their small business Merlin agreement lending targets by £1bn for the third quarter and pressure is building on the Chancellor to counter concerns over the economy in his autumn statement on November

Labour said the fall in business confidence over the economy was “worrying”. Toby Perkins, the Shadow minister for small business, said: “We need more people setting up, growing and working in businesses, but all too often small firms are not able to get the finance they need to start up and expand and business owners are forced to rely on personal finance, which is completely unacceptable”.

More than one in ten of small businesses with loans or overdrafts said they had been told by their banks that their credit lines would change or be cancelled.

A third of all businesses around 1.5m fund themselves from cash flow and have no plans to ever borrow from a bank.

The survey found that on average overdraft margins were 3.9pc over Bank base rates for overdrafts and 3.6pc for variable loans. Banks typically charged 6.2pc for fixed term loans.

The British Bankers’ Association said with 63pc of firms securing the loans they were looking the survey showed the “myth” behind claims that banks automatically turn down credit applications.

Chief executive Angela Knight said: “Most SMEs are able to get the credit they need from their bank, though the majority of SMEs are happy to operate without external finance.

She added: “Unsurprisingly, although banks were able to help most applicants, smaller, high risk new businesses with no successful track record of borrowing found it more difficult to raise cash.”

However Marc Fecher, corporate finance partner at accountants Kingston Smith, warned that banks were making it more difficult to obtain overdrafts, used by many small firms to help them cope with fluctuations in cash flow.

“The danger to SMEs is that they could find themselves in a situation where, unless they are able to provide some form of security by way of assets, they may find overdraft funding increasingly difficult to obtain,” he said.

“There is a danger that SMEs, particularly those which are smaller and newer, could be further discouraged from applying for funding as the downward trend in overdrafts continues, as it is more difficult for them to meet the criteria for loan applications, which is again, a barrier to growth.”

Obama plans to accelerate a plan to cap student loan payments at 10 percent of income, bringing it forward to start in 2012 instead of 2014.

“Steps like these won’t take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference,” he said in a statement.

The loans initiative will be the third such move by Obama in as many days, following action to aid homeowners and boost hiring of military veterans. The White House wants to show he is an activist president battling a “do-nothing” Congress.

The loan changes do not require approval by Congress.

Republican lawmakers blocked a $447 billion jobs plan put forward by Obama last month because it raises some taxes.

Students helped push Obama into the White House in 2008. As he campaigns for reelection in 2012, Obama’s public approval ratings have fallen near 40 percent, the low of his presidency, because of discontent with his economic stewardship.

Americans owe more on student loans than on outstanding credit card debt, and total loans outstanding are slated to exceed $1 trillion this year, according to the Federal Reserve Bank of New York.

The rise in private student lending and growing debt defaults have also been highlighted by the Occupy Wall Street protesters.

Obama will announce the student loan measure in Denver on Wednesday as he wraps up a swing through western states that will be vital to his re-election campaign in 2012.

The White House estimates the loan changes could cut monthly payments for 1.6 million graduates.

Student debt will also be forgiven after 20 years, compared with 25 years under current law.

More than 36 million Americans have federal student loan debt, but only 450,000 have so far taken advantage of the existing income-based repayment program.

Obama will also make changes to allow 6 million students to bundle together certain federal loans to allow a single monthly payment, reducing the risk of default caused by juggling multiple debt obligations.

The option will be open from January and those that take it up will also get a 0.5 percentage point cut in the interest rate on some of their loans, lowering monthly payments and potentially saving them hundreds of dollars in interest.

“College graduates are entering one of the toughest job markets in recent memory, and we have a way to help them save money by consolidating their debt and capping their loan payments,” said Secretary of Education Arne Duncan.

But they may be ignoring the best weapons in their arsenal: straightforward strategies for managing money that, over time, boost returns.

“We’re on this incredible volatility roller-coaster ride,” said Andrew Lo, professor of finance at Massachusetts Institute of Technology and chief investment strategist at AlphaSimplex Group, a mutual-fund firm.

“For the next couple of years,” he added, “my guess is we’re going to have to spend more time thinking about managing losses than generating really attractive returns.”

This week is a painful case in point. On Wednesday and Thursday combined, the Dow Jones Industrial Average DJIA +0.74%fell 675 points or almost 6%, the largest two-day point drop since Nov. 20, 2008, and largest two-day percentage drop since Dec. 1, 2008.

Markets will go up again, Lo said, but there’s “so much macro instability, you’re going to get investors rushing to the left side of the moat together and then to the right side of the moat together. When you’ve got this coordinated herd mentality, you can get some wild swings in any investment.”

Key strategies to eke out a profit include minimizing costs and getting as much diversification “as you’re comfortable with,” Lo said.

Plus, he noted, you need an investment plan that will keep you focused, so you don’t panic “when markets start to dislocate, which they will.”

Here are some building blocks for your portfolio’s foundation:

1. Minimize taxes

High-tax-bracket investors lost an average of 2.4% of the value of their domestic equity mutual funds each year from 1981 through 2001, according to the Schwab Center for Financial Research.

That was before President George W. Bush’s tax cuts slashed rates on qualified dividends and long-term capital gains, but also before the current dismal outlook for market returns made it even more important to seek tax efficiency.

Tax-loss harvesting and using tax-advantaged and taxable accounts to their best advantage are the two main ways to manage the tax hit.

Typically, put taxable bonds, which yield ordinary income, in a tax-deferred account such as a 401(k) or IRA, while stocks go in a taxable account since long-term capital gains and dividends currently are taxed at a maximum of 15%.

One caveat: If you plan to hold the security for less than a year, consider your tax-deferred plan. Otherwise, if the stock’s a winner and you sell it in a taxable account, that short-term gain is taxed at ordinary income rates, said Mackey McNeill, president of Mackey Advisors, a financial planning firm in Covington, Ky.

Meanwhile, the ability to deduct losses on your tax return means risky assets are more appropriate for taxable accounts, said David Bruckman, New York-based managing partner with Citrin Cooperman Wealth Management, an investment advisory firm.

“Emerging-market stock, small-company stock, junk bonds, anything that’s very volatile or aggressive, generally you don’t want that in an IRA account, because you want to be able to realize a loss,” Bruckman said.

(If all of your invested money is in a tax-qualified plan such as a 401(k), it still may make sense to invest in risky asset classes to diversify your portfolio; you just don’t get the tax break on losses.)

Consider putting real-estate investment trusts in a tax-deferred plan, because those assets pay non-qualified dividends, said Jonathan Bergman, chief investment officer at Palisades Hudson Asset Management in Scarsdale, N.Y.

When tax-loss harvesting, don’t make the mistake of exiting the asset, McNeill said. Say you own the iShares S&P 500 Index ETF IVV +0.89% , and it drops 20%, so you sell. “As soon as that trade clears, use it to buy, say, the Russell 1000 index,” she said.

“You can improve your return by tax-loss harvesting and trading out for similar assets,” she said. Just don’t buy and sell the same asset; that’s a wash sale and the IRS won’t allow the loss.

2. Control costs

Given the prospect of lower average stock-market returns in the years ahead, the tried-and-true rule of minimizing expenses makes more sense than ever.

Harold Evensky, president of Evensky & Katz in Coral Gables, Fla., estimates the average annual return on a portfolio of 60% stocks and 40% bonds, after taxes, inflation and expenses, will be about 2.5% to 3% in the years ahead.

“If you can save 0.5% by managing expenses and taxes, that’s going to have a huge positive impact,” he said.

That means low-cost funds and a low-cost brokerage. Consider consolidating disparate accounts at one broker to reduce transaction costs — you also may get a break on account maintenance fees by aggregating accounts with one provider.

With mutual funds, watch for hidden trading costs that aren’t reflected in the expense ratio. Pore over the prospectus and ask the fund company for its “statement of additional information,” where commission information may be detailed, said Christine Benz, director of personal finance at investment research firm Morningstar Inc.

“In general, a fund with a very high turnover rate that’s trafficking in smaller-cap names is going to be the most vulnerable to hidden trading costs,” she said.

3. Diversify

Diversifying a portfolio among uniquely performing assets is trickier as financial markets have become much more complex.

“Investors now have access to many more strategies and investment styles than they did before,” said Lo, the MIT professor. As a result, “many of these investments have become crowded trades.”

That crowd can foil diversification — if investors pull out, it’s a broad-based sell off.

Investors now must work harder to find asset classes that diversify their portfolio without pushing them beyond their risk tolerance. That includes looking at real estate, commodities and currencies. Still, Lo and others caution: Focus on what you understand.

Morningstar’s Benz said she’s not that enthusiastic about some alternative investments, such as funds that employ short-selling strategies. “A lot of alternatives are overpriced and will probably deliver returns that fall somewhere between stocks and bonds,” Benz said.

Still, she said, commodities have a role in investors’ portfolios. They can provide a hedge against inflation, but there are dangers, too.

Most commodities-focused exchange-traded-funds, for instance, focus on the futures market so don’t perfectly track commodity prices. “Some professional money managers seem to be veering away from commodities as an asset class and instead are talking about buying just natural-resources stocks, so a T. Rowe Price New Era Fund PRNEX -0.05% , for example,” Benz said.

While alternative investments and tactical asset allocation are two strategies popular now to help investors weather the storms ahead, “I’m in favor of a more traditional approach,” Benz said. “If investors come up with a sane asset-allocation mix and adjust it gradually over time to make it more conservative, that is more than 90% of the battle.”

Others agreed. “You can be extremely well diversified with five or 10 holdings,” said Rick Miller, managing member of Sensible Financial Planning in Waltham, Mass. He suggested a portfolio with a total U.S. stock-market fund, international fund, emerging-markets fund, TIPS fund, total bond-market fund, and REIT. “For people doing this themselves, that’s great. It’s cheap, and it’s inexpensive to rebalance.”

But, he said, diversification is about averaging out security-specific risk. “Market risk is undiversifiable. You cannot get rid of it unless you don’t hold it.”

Bergman made a similar point: “Diversification still works. It’s just that when all hell breaks loose, correlations rise.”

For the equity portion of his clients’ portfolios, Bergman said he focuses on small- and large-cap stocks, international equities, natural resources, and real-estate securities. In extreme periods, the price movement among those asset classes is high. “That’s OK,” he said. “We don’t put any money that we need in the next five years into the stock market.”

Evensky said his firm employs a “core and satellite” approach, with 80% of the portfolio invested to capture market-based returns cost-efficiently and the other 20% for risk taking — assets that may be costlier and tax-inefficient but have potential returns to overcome those costs.

4. Rebalance

With market volatility as common these days as political gridlock, you may need to rebalance more often to stay true to your investment plan. That’s good and bad.

Rebalancing provides an opportunity to harvest losses for tax purposes, plus it forces you to buy low and sell high. But moving money comes with transaction costs.

To reduce expenses, keep your portfolio simple. “If you have a broker or a custodian that has competitive expenses and you have an efficient portfolio [with just five or 10 holdings] then it’s not going to cost you that much to rebalance,” Miller said.

Some suggest rebalancing about once a year. Bergman of Palisades Hudson said he rebalances when an asset moves more than 10% beyond its target weight in a portfolio. That disciplined approach helps his clients weather bad times, and outperform in good times. In fall of 2007, before the downturn, “we were selling stocks,” he said.

5. Be proactive, but patient

Sticking to your investing goals means having a strategic plan in place that you revisit periodically. “It’s buy and manage,” Evensky said, as opposed to buy and hold.

In times like these, that plan is essential. “The biggest obstacle to long-term return for most people is their emotional state in a downturn,” McNeill said.

To create a plan, focus on goals — not return. That is, what do you want to do with your money? If the goal is to pay your kid’s college costs, decide how much money you need, and how much risk you’re willing to take to get there. If you don’t mind your student borrowing money in a worst-case scenario, then maybe it’s OK to take on risk with your invested dollars. If student debt is out of the question, don’t take that risk.

If you don’t have a financial planner, consider getting help online to develop your plan. Vanguard, Charles Schwab, Fidelity Investments and others offer research and tools on their sites. MarketRiders.com is an online portfolio manager. ESPlanner.com is a do-it-yourself planning tool that takes a holistic look at your financial picture.

The stock market is “like a rollercoaster,” Bergman said. “It’s going to move around quite a bit, but in the end it’s the best way to grow capital. There are two ways to approach that. One is to watch it minute by minute, day by day and make yourself nauseous.”

The other is “to create a plan with diversified investments, making sure you have your goals identified, making sure it fits within your risk tolerance, making sure your cash-flow needs are met,” Bergman said. “Then let it go.”

Yes, there are other types of phantom income that incur a tax despite the fact that you’ve gotten no cash. However, after 30 years as a tax lawyer, I’d rank COD income near the top of my list of little understood tax traps. The good news is that there are exceptions and exclusions that may keep you from having to write a check to the IRS. So you’re not caught off guard, here are 10 things you should know about COD income.

1. Loans forgiven as gifts aren’t taxable.

If your debt is canceled by a private lender–say a relative or friend–and the cancellation is intended as a gift, there is no income to you. While it’s not income to you, if the lender forgives more than $13,000 in a year (the gift tax annual exclusion), it may count against his or her own $1 million lifetime exemption from the gift tax, so it’s often best for these loans to be forgiven a little at a time. A debt canceled by a private lender’s will, upon his death, isn’t income to you either.

2. There’s an exception for the mortgage on your home.

In 2007, in response to the mortgage crisis, Congress exempted up to $2 million (per couple) in mortgage debt on a principal home, forgiven from 2007 through 2012, from income. This exemption applies if:

–You restructure “acquisition” debt on a principal residence–meaning debt you used to buy or improve a principal residence. If you used a home equity loan to buy a boat or play the stock market and the lender forgives that debt, it’s not covered by this provision. (But if you’re bankrupt or insolvent, it still might not be income. See Points 3 and 4 below)

–You lose your principal residence in a foreclosure (but be careful: You may have income to the extent the canceled debt does not relate to the purchase or improvement of your principal residence), or

–You sell your principal residence in a short sale, where the sales proceeds are less than you owe and the lender writes off the balance.

Not surprisingly, if your lender writes off some of your mortgage, you will have to reduce your basis in the residence by the amount of discharged debt not counted as income to you. Note that this special relief for forgiven mortgages isn’t automatic; to take advantage of it you must file IRS Form 982, with the intimidating title, “Reduction Of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment).” Get professional help.

3. Bankruptcy discharges aren’t taxable.

If your debt is discharged when you’re in bankruptcy, as part of a court-approved bankruptcy plan, it isn’t income to you. Again, the amount of the discharged debt goes to reduce certain tax attributes, such as net operating losses or the basis of property. Once again, the rules are complicated and Form 982 is required.

4. If you’re insolvent, you get a pass.

Even if you are not in bankruptcy, if you are “insolvent” when your debt is discharged, there is no tax. Insolvency is a simple test meaning your liabilities exceed your assets. To escape tax, your liabilities must exceed your assets by more than the amount of the debt discharged. Say you have $1,000 in assets and $2,000 in liabilities, so you’re underwater to the tune of $1,000. If your bank forgives a $500 debt, it’s not income because the amount forgiven is less than the amount of your insolvency.

5. Certain forgiven student loans aren’t income.

Another exception protects forgiveness of certain student loans. The student or former student escapes the tax hit if the loan is forgiven under a provision specifying that all or part of the debt is discharged if the individual works for a certain period of time in certain fields for a class of employers. So doctors, nurses and teachers agreeing to serve in rural or low-income areas in exchange for cancellation of their student loans won’t have income from the cancellation.

Then there’s the new federal income contingent student loan repayment program. If you work in the private sector, you must pay a certain percentage of your income for 25 years and any loan balance left after that is forgiven and counted as income to you. But if you work for the government, the balance is forgiven after 10 years of payment and doesn’t count as income.

6. There’s an exception for deductible interest.

There is no income from cancellation of deductible debt. That means if a lender cancels home mortgage interest (interest only, not the principal of the debt), and that interest could have been claimed as an itemized deduction on Schedule A to your Form 1040, there is no income.

7. You must account for Form 1099-Cs

No one likes IRS Forms 1099, but they’re a fact of life. Any government agency, financial institution or credit union forgiving a debt of $600 or more has to issue a Form 1099-C to you and send one to the IRS too. If you receive one and disagree with the amount shown, write the lender requesting that it issue a corrected Form 1099-C showing the proper amount of canceled debt. If you believe the canceled debt isn’t income to you because you’re insolvent or for any other reason, don’t ignore the 1099-C. Instead, fill out Form 982 explaining why it isn’t taxable.

8. A price adjustment isn’t income.

There is no income if an individual purchases property and the seller later reduces the price of the property. The purchaser’s basis in the property, however, is reduced by the amount of the adjustment. These days this exception can be particularly important. Say you bought a rental unit five years ago for $500,000 from the bank, and still owe the bank $400,000. The unit is now worth only $350,000. The bank agrees to reduce the debt by $50,000. If this is just debt discharge, it’s COD income. But if it is written as an adjustment to the purchase price, it’s not.

9. Certain farm and real business property debt gets special treatment.

Even if you are solvent, there are special rules for certain qualified farm debt. These rules apply only after you already apply the insolvency and bankruptcy rules. Similarly, a discharge of debt incurred to acquire or construct certain property used in a trade or business (“qualified real property business debt”) won’t trigger income (subject to limits). In both cases, the amount of forgiven debt excluded from gross income reduces your basis in property.

10. You can sometimes delay the tax hit.

Congress created yet another limited time rule allowing an individual or corporate taxpayer to delay the normal tax hit from reacquiring its own debt at a discount. The delay only applies if the debt was issued in connection with a trade or business and reacquired in 2009 or 2010. Debt that qualifies can be recognized over five years, beginning in 2014.

But easiest doesn’t always equal cheaper or better.

Because they are insured by the Federal Housing Administration, the mortgages allow down payments as low as 3.5 percent and have less stringent underwriting guidelines than conventional loans.

But they carry a price sometimes significantly higher than that of a conventional loan.

FHA interest rates may seem slightly lower than those of conventional loans, but they can end up being more expensive because mortgage insurance costs are included in the monthly mortgage payments.

Loans with less than 20 percent down generally have to carry mortgage insurance, but the insurance on FHA loans is more expensive than on conventional loans. In addition, FHA borrowers are charged an up-front fee of 1 percent of the total loan amount, often added to the total amount borrowed.

For buyers who don’t have at least 5 percent for a down payment or whose credit scores are not high enough to qualify for a conventional loan, an FHA loan may work.

Unlike with conventional loans, FHA allows borrowers to receive down payment money as a gift from a relative.

For a conventional loan, a borrower must demonstrate that at least 5 percent came from his own savings.

Those who went through bankruptcy or foreclosure between two and five years ago may benefit from an FHA loan, said Jack Guttentag, a finance professor emeritus at the University of Pennsylvania’s Wharton School. Conventional loans require a five-year wait, he said.

In general, a borrower with a credit score above 720 who can put down 20 percent should stick with a conventional loan, said Matt Hackett, underwriting manager at Equity Now, a direct mortgage lender in New York City.

A mortgage broker or loan officer should be able to provide a detailed comparison of an FHA loan and a conventional loan, including up-front fees, mortgage insurance costs, and monthly payment estimates.

We know that the biggest banks are making fewer Small Business Administration-backed loans. Perhaps, then, they are also making fewer traditional small-business loans as well. So The Agenda dove back into the Federal Deposit Insurance Corporation’s lending statistics — and discovered a surprise.

As of June 30, the nation had 7,522 insured banks, which The Agenda divided into three cohorts. The vast majority — 91 percent — have fewer than $1 billion in assets. A much smaller group has $1 billion to $10 billion in assets. The 107 institutions with more than $10 billion in assets –the conventional line between big and small banks — constitute just 1.4 percent of the industry but control 79 percent of all assets among American banks.

Here’s what we learned: though small banks are often said to have a propensity for small-business lending, total small-business portfolios fell by 1.6 percent in the last quarter in both of the two categories of smaller banks. Big banks — the ones that are supposedly gun-shy about small companies — actually increased their total small-business loan portfolio by 0.9 percent.

The Agenda dove a little deeper. Among the big banks, those with $10 billion to $100 billion in assets increased their small-business loan volume by 1.6 percent. And the very largest institutions — the 19 banks with more than $100 billion in assets — increased their small-business portfolio, too, though only by 0.4 percent. Of course, these numbers hardly suggest an open spigot of capital for the small-business borrower, or really for any borrower.

Responding to last week’s post about the decline in small-business lending, a commenter who identified himself as seltzerman suggested that the situation wasn’t as dire as the numbers made it seem. “There are other unmeasured events that are cushioning this blow,” he wrote last week.

“There is still lending (involuntarily) to underwater homeowners in the form of accumulated mortgage payments that have not been paid. There must be at least a couple entrepreneurs in that pool who have rented out rooms in their homes and are diverting a year or two of unpaid mortgages into some small business.”

We know that the biggest banks are making fewer Small Business Administration-backed loans. Perhaps, then, they are also making fewer traditional small-business loans as well. So The Agenda dove back into the Federal Deposit Insurance Corporation’s lending statistics — and discovered a surprise.

As of June 30, the nation had 7,522 insured banks, which The Agenda divided into three cohorts. The vast majority — 91 percent — have fewer than $1 billion in assets. A much smaller group has $1 billion to $10 billion in assets. The 107 institutions with more than $10 billion in assets –the conventional line between big and small banks — constitute just 1.4 percent of the industry but control 79 percent of all assets among American banks.

Here’s what we learned: though small banks are often said to have a propensity for small-business lending, total small-business portfolios fell by 1.6 percent in the last quarter in both of the two categories of smaller banks. Big banks — the ones that are supposedly gun-shy about small companies — actually increased their total small-business loan portfolio by 0.9 percent.

The Agenda dove a little deeper. Among the big banks, those with $10 billion to $100 billion in assets increased their small-business loan volume by 1.6 percent. And the very largest institutions — the 19 banks with more than $100 billion in assets — increased their small-business portfolio, too, though only by 0.4 percent. Of course, these numbers hardly suggest an open spigot of capital for the small-business borrower, or really for any borrower.

Responding to last week’s post about the decline in small-business lending, a commenter who identified himself as seltzerman suggested that the situation wasn’t as dire as the numbers made it seem. “There are other unmeasured events that are cushioning this blow,” he wrote last week.

“There is still lending (involuntarily) to underwater homeowners in the form of accumulated mortgage payments that have not been paid. There must be at least a couple entrepreneurs in that pool who have rented out rooms in their homes and are diverting a year or two of unpaid mortgages into some small business.”

Freddie Mac said 37 percent of those people off 30-year loans in a refinancing deal in the quarter chose a 15- or 20-year loan. It was the highest portion of borrowers choosing shorter loans since the third quarter of 2003.

In addition, 55 percent of refinancing homeowners in the quarter with adjustable rate mortgages chose to go with a fixed-rate contract, Freddie Mac said.

While the U.S. Federal Reserve continues to offer historically low interest rates, refinancing consumers are still trimming their expenses.

Fixed-rate loans accounted for about 95 percent of of all refinance loans in the second quarter. People with fixed-rate loans also tend to prefer them over adjustable-rate loans.

“Compared to a 30-year fixed-rate mortgage, the interest rate on 15-year fixed was about 0.8 percentage points lower during the second quarter. For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term,” said Frank Nothaft, Freddie Mac vice president and chief economist.