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| Government Offering Independent Foreclosure Review |
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| January 16, 2012 - Mortgages |
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(NAPSI)-Did you face foreclosure in 2009 or 2010? If so, the Office of the Comptroller of the Currency says you may be eligible for a free independent review of your case. Independent foreclosure reviews let borrowers who faced foreclosure on their primary residences between January 1, 2009 and December 31, 2010 request reviews of their cases if they believe they suffered financial injury as a result of errors in the foreclosure processes of these servicers: America's Servicing Company, Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Country-Wide, EMC, EverBank/Everhome, Freedom Financial, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City, PNC, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual, and Wells Fargo. The reviews will determine whether individuals suffered financial injury and should receive compensation or other remedies due to errors or other problems during their home foreclosure process. The reviews were ordered by the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve in April 2011 after the federal regulators found unsafe and unsound mortgage servicing and foreclosure practices among these large, federally regulated mortgage servicers. Situations that may have led to financial injury include, but are not limited to: ? The mortgage balance at the time of the foreclosure action was more than you actually owed. ? Fees charged or mortgage payments were inaccurately calculated, processed or applied. ? You were doing everything a modification agreement required but the foreclosure sale still happened. ? The foreclosure action occurred while you were protected by bankruptcy. ? A foreclosure proceeded on a military member in violation of Servicemembers Civil Relief Act protections. More than 4 million letters were mailed to potentially eligible borrowers with request-for-review forms and instructions on how to complete and return them. The form lets you describe what you think went wrong. Simply answer the questions to tell your story, include any additional documents you think relevant and return the form by April 30, 2012. If you believe you are eligible and have not received a form, you can request one from (888) 952-9105, Monday through Friday from 8 a.m. to 10 p.m. (ET) and Saturday from 8 a.m. to 5 p.m. (ET). For additional information and answers to basic questions about the review process, visit www.IndependentForeclosureReview.com. Reviews are conducted by independent consultants working under the direction of the federal regulators and may take several months to complete. You can learn more at www.occ.gov/independentforeclosurereview. |
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| Pros And Cons Of Modifying Your Mortgage |
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| November 02, 2011 - Mortgages |
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You may be thinking about modifying your mortgage because of the economic crisis these days. However, the last thing you want to do now is to make uniformed financial decisions. Mortgage modification is not an either-or issue. Mortgage modification may be good for some and bad for others. Is mortgage modification for you? Here are some things you may need to know before deciding.
Low Cost Processing
Processing a loan modification is not that costly or may even be processed without any cost at all. Modifying a mortgage would take about 30 to 180 days.
Extended Term
The shorter the terms in mortgage the more negative the amortization. Negative amortization is when the minimum monthly payments are so high, thereby making debt settlement difficult. Through loan modification, loan providers would initially extend the terms of the payment. A longer payment scheme lessens the amounts of monthly payments thus making loans more affordable.
Low Interest Rates
Mortgage modification basically reduces the rates to as much as 3 to 7 percent. Just refer to your loan provider for the rates, thus rates reduction would depend on your lenders.
The principal balance is the total amount that you have to pay. Mark down in the principal balance will also depend on your loan provider.
Like everything else, load modification also has its drawbacks. Some of its disadvantages include the following:
Eligibility Requirements -
To find out if you are eligible for mortgage modification, you will need to submit documents for financial evaluation. A thorough verification of the borrower?s status will be made to ensure that the borrowers are really eligible for the program.
Negative Effect On Credit History or Background -
Obviously, not everyone is eligible for home mortgage modification. Usually loan providers take precautions in choosing a borrower. They would prefer individuals with good credit background in the past or provide a higher credit limit to individuals with good credit standing. People modifying their mortgage would result to higher credit risk than those who don?t, since it would greatly affect your future borrowing abilities depending on how the loan was modified. Many borrowers would call off in modifying their loan, it?s because they want to maintain a good credit record which can be used as a future reference for upcoming loans, more so if they want a higher loan amount.
Scams -
Loan mortgage modification can be tempting and it is not unlikely to find individuals taking advantage of the program. It would be best to consult people who are knowledgeable of mortgage modification process before entering into an agreement with a third party. Just be cautious, for you might be scammed.
Modifying your mortgage is an option to consider when you are facing financial hardships. But before making your decision you have to weight the pros and cons of the program. You have to take into consideration the benefits that the program would give to you. It is best to consult a professional, who are knowledgeable on loan modification to ensure your security.
Check out more options online for your second home mortgage. Log on to http://www.homemortgageonline.org for the latest updates.
Article kindly provided by UberArticles.com
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| FHA Loan Limits Could Effect Buyers and Sellers |
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| August 29, 2011 - Mortgages |
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Fewer People May Be Able To Get FHA Loans | | (NAPSI)-For generations, the Federal Housing Administration's (FHA) single- and multifamily mortgage insurance programs have provided safe, affordable financing to millions of homeowners. Many first-time buyers rely on FHA-insured loans to purchase a home; in fact, one-third of recent buyers bought their houses with an FHA-insured mortgage. Currently, however, lawmakers are discussing changes to the FHA that could have a significant effect on home buyers and sellers, as well as the future of the real estate market. Proposed changes to FHA include reducing current loan limits. Current limits range from $271,050 to $729,750, based on 125 percent of the local area median home price. These limits are set to expire on September 30 and revert to formulas based on 115 percent of an area's median home price, but some public policymakers have proposed allowing those limits to fall even further. "Reducing the current loan limits means that fewer people would have access to mortgage loans, and the loans that would be available would be more expensive," said National Association of Realtors® (NAR) President Ron Phipps. "The FHA mortgage loan limits are critical to providing liquidity in today's housing market, especially since the private market has yet to return. These programs are vital to our housing recovery." NAR estimates that reverting to lower loan limits will mean an average loan limit reduction of more than $68,000 in many places. Home buyers aren't the only ones who would feel the effects of reduced loan limits. If FHA loan limits revert back, some owners could have a hard time selling their home because there would be fewer buyers who qualify to purchase homes. "Many people think this is solely a high-cost area issue but the reality is the change in the formula going from 125 percent of local area median home price to 115 percent has a much greater impact across the country," said Phipps. "Even with the higher limits, borrowers are finding it more difficult to find affordable mortgage options. Making FHA loan limits permanent at levels appropriate in all parts of the country will provide homeowners and buyers with safe, affordable financing and help stabilize local housing markets." Visit www.realtor.org/FHA for more information. |
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| What You Should Know About Strategic Default |
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| August 01, 2011 - Mortgages |
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(ARA) - Who would risk the negative impact of defaulting on a mortgage if they didn't really have to? About 17 percent of Americans who defaulted on their mortgages in the second quarter of 2010 did exactly that, according to a study by Experian, the leading global information services company.
"Strategic default" - choosing to stop paying on your mortgage even if you can afford the monthly payments - peaked at the end of 2008 during the height of the Great Recession. At that time, strategic defaults accounted for 20 percent of all mortgage defaults 60 or more days overdue, according to Experian.
And while the percentage of Americans taking this option has steadily declined since then, the credit risks for strategic defaulters remain unchanged.
"Not paying your mortgage will have a far-reaching, long-lasting impact on your ability to secure future credit, regardless of the reason for your default," says Charles Chung, Experian's president of Decision Analytics. "Experian's study indicates that many strategic defaulters continue to faithfully pay on their other debts. Some even purchase other homes for better terms before selectively defaulting on their upside-down mortgage."
If you owe more on your home than its current market value, you may feel tempted to walk away from a bad investment, even if you can afford to make the monthly mortgage payment. But when considering strategic default, you should keep several factors in mind:
* Defaulting on your mortgage is the second most damaging thing you can do to your credit, even if you continue to pay your other bills. Only bankruptcy will affect your credit score more adversely than foreclosure.
* Foreclosure remains on your credit report for seven years. During that time, securing other credit at reasonable terms and rates will be very difficult, if not impossible.
* Potential employers are looking at credit reports. In fact, 60 percent now check applicants' credit reports, according to an article in the Washington Times. By impacting your credit, a strategic default may affect your ability to get a job.
* Last year, Fannie Mae, the government-controlled mortgage giant, said it would implement a policy to prohibit strategic defaulters from getting a new Fannie Mae-backed mortgage for seven years from the date of foreclosure.
* Finally, in some cases, the debt that foreclosure "erases" may be recorded as income, which means you will have to pay taxes on it.
"Some may see strategic default as a way to get out of paying a bad debt," Chung says. "But its associated costs like a lower credit score, higher interest rates and less ability to secure future credits, can wipe out the financial benefit of no longer having a mortgage payment."
To learn more about credit management, credit reports, credit scores and the factors that affect them, visit www.Experian.com.
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What happens when you walk away from your mortgage commitment?
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| Tips To Pay Down Debt and Avoid Bankruptcy |
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| June 08, 2011 - Mortgages |
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Tips to pay down debt and avoid bankruptcy
(ARA) - There's good news: Unemployment is starting to slowly drop, and in some parts of the country, so have the record number of home foreclosures. But, bad news remains: Americans are still hurting from one of the greatest economic downturns in the nation's history.
As a result, more Americans than ever, including those in the middle class, are experiencing financial hardship, with many living paycheck to paycheck. In fact, an estimated 1.5 million Americans declared bankruptcy in 2010, up 9 percent from 2009. Since 2008, a total of more than 4 million Americans declared bankruptcy.
If you're struggling to pay your bills, or if you've been hit with an unexpected major expense, such as a large medical bill, it's critical to act quickly to avoid bankruptcy, according to FindLaw.com, the nation's leading online source of legal information. From cutting all unnecessary expenses to negotiating with creditors, the sooner you act, the better your chances to avoid bankruptcy, which can cripple your ability to obtain credit in the future, or even hinder future career opportunities.
Here are some tips from FindLaw.com on what you can do to avoid bankruptcy, and what to do if you find yourself with no other options:
1. Pay off existing debt.
Pay off existing debt as quickly as possible so you can get to a place where you can live within your means (not spending more than you bring home in income, after taxes). You may want to seek the help of a credit counselor to create a plan to cut your debt and reduce your spending. Cut non-essentials such as cable, landline phone service and other subscriptions. Sell assets such as furniture, electronics and other items on free websites such as Craigslist and eBay to earn some extra cash to pay for the most critical expenses in your life - food, shelter and medical insurance. If you think your job may be at risk, now is the time to stockpile cash to pay for essentials.
2. Get another job.
Take a part-time job to raise additional cash, or find a new full-time job that offers a higher salary and/or better benefits than your current job, including discounts on essentials or better health and dental insurance benefits.
3. Carefully consider going into debt.
Realize that going into debt is a choice, not a necessity. Instead of taking out student loans to pay for college, you can work while going to school or save enough before enrolling to pay for a semester of tuition. You could rent instead of buying a home. Take public transportation instead of leasing or financing a car. College students should give this careful consideration. The average college graduate enters the workforce with more than $24,000 in student loan debt, according to The Project on Student Debt. Entering the workplace with massive debt is not only stressful, but could also prevent you from taking career chances because you must bring in a paycheck to make student loan payments.
4. Don't cut medical insurance.
Even before the Great Recession, a major medical expense was cited in more than half of bankruptcy cases as the leading reason for the filer's financial trouble, according to a Harvard study. Because many households live paycheck to paycheck, it's often an unexpected event, such as a sudden illness or injury, that sends a household spiraling toward bankruptcy.
5. Be upfront with your creditors.
Let creditors know if you've lost your job or are struggling to pay your debts. They may be open to restructuring your debt payments. And, many credit card companies and banks have specific programs to help people experiencing financial hardships to pay off their debts.
6. Consider debt settlement or consolidation.
Some households, out of desperation, may turn to a third-party debt consolidation or settlement firm to help them deal with creditors. What a debt settlement or consolidation firms does is take charge of your debt, for you, for a fee, which can be expensive. Then, each month, you pay the debt consolidation firm, which takes its fee first and then pays your creditors with the rest. In debt settlement, the firm withholds payments to your creditors in order to force your creditors to settle for an amount less than your total debt. Because many debt consolidation and settlement firms are unregulated, consumers must be very careful in selecting a reputable firm, as this industry is notorious for scammers. To find a debt management firm, contact the National Foundation for Credit Counseling, which can connect you with a NFCC member firm.
7. Filing for bankruptcy.
Don't turn to bankruptcy until you've exhausted all of your possible options. But if it's absolutely necessary, FindLaw.com recommends that you hire a lawyer who specializes in this field to see if you are eligible to declare bankruptcy, based on the latest changes in the law passed by Congress in 2005. The new law was passed to prevent people from taking advantage of the bankruptcy system. It requires credit counseling, and more documentation, and places greater responsibility on the attorney in representing the person declaring bankruptcy. In working with a credit counselor and an attorney, you'll determine which type of bankruptcy - Chapter 7 bankruptcy (liquidation) or Chapter 13 bankruptcy (reorganization of your debts) - is the best option for you.
8. Understand the consequences.
Realize that if you do file for bankruptcy, you may lose your house and many other possessions. In addition, there are certain debts that will continue to follow you regardless of whether you declare bankruptcy, such as student loans and child support payments. Bankruptcy is not to be taken lightly. It will remain on your credit reports for up to 10 years, making it more difficult for you to qualify for car loans, a mortgage and other forms of credit in the future.
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If you're struggling to pay your bills it's critical to act quickly to avoid bankruptcy,
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| Three Steps to Ensure You Get the Best Deal When Buying a House |
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| February 28, 2011 - Mortgages |
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(ARA) - Ample inventory, low mortgage rates and motivated sellers - all these key elements are present in real estate markets across the country, indicating it's still a great time to buy a house. If you're thinking of buying a house - whether it's new or existing, your first home or your fifth - you can help ensure you get the best possible deal by doing a few things before you get down to serious shopping.
1. Check your credit
You might think that getting pre-approved for a mortgage is your first step in home-shopping, and it is an important one. But before you talk to a potential lender, you should check your credit report and score - because the mortgage company certainly will. Your credit score is a reflection of your credit status, and one that potential lenders will consider when assessing your credit worthiness. Knowing your credit standing can make you better prepared to secure the best possible conditions and rates for a home loan.
It's a good idea to monitor your credit for a while before making a move to apply for a mortgage. Websites like freecreditscore.com allow you to access your credit score when you enroll in credit monitoring. By monitoring your credit, you'll be able to see how changes in your credit report can affect your score, and you'll receive credit score alerts whenever your score changes.
2. Capitalize on lender competition
When it's time to apply for a mortgage, many people turn to the banks they're used to dealing with on a regular basis. While banks are definitely a familiar source of home financing, they're not the only one. Even after the mortgage crisis, you'll still find many companies in the home loan field. Wading through the plethora of claims from lending companies can be time consuming - but well worth it.
Despite the credit crunch - or perhaps because of it - competition is fierce among lenders to work with the best-qualified buyers. That means if your credit score and report are good, you could be in a position to snag the loan terms and interest rates reserved for the most-desirable borrowers. But you'll still have to compare rates and offers from a number of companies.
Be sure to thoroughly investigate any lender you're considering applying with; the Internet is a great resource. Check out the Better Business Bureau website to see if the lender has any complaints against them, and type the name into your search engine to see if they've made the news - in a good or bad way.
3. Leverage a Realtor relationship
It's true that many would-be homebuyers are now using the Internet to facilitate their search. Yet 79 percent of all buyers last year purchased their home through a real estate agent or broker, according to the National Association of Realtors.
While it is possible to buy a home without the aid of a Realtor, working with one has several benefits. Realtors strive to be experts about the communities they work in, so a Realtor can provide you with valuable advice on home prices, schools, recreation and businesses, as well as other information about the area you're interested in. Another bonus - as a buyer, you pay the Realtor nothing. He or she will share a percentage of the commission the home sellers pay to their Realtor.
Buying a house is a big investment - the biggest most people make in their lives - but with some preparation and smart negotiations, you can ensure you're well positioned to take advantage of the current buyers' market |
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How to ensure you're well positioned to take advantage of the current buyers' market.
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| What You Need To Know About Getting A Mortgage |
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| February 02, 2011 - Mortgages |
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(NAPSI)-If you're planning to buy a home or refinance the one you own, prepare yourself for the challenges of getting a mortgage today. These days, more than one in every three home buyers who apply for a mortgage fail to get one, many because they don't meet new, tough lending standards. In 2006 and 2007, lax lending standards enabled hundreds of thousands of borrowers to qualify for loans they couldn't afford, causing them to lose their homes and their lenders to lose billions of dollars. Now the pendulum has swung to the other extreme. New rules on income and debt make getting a mortgage harder today. In addition to a good credit score, your house payment should not exceed approximately 36 percent of your income before taxes. Furthermore, your monthly payment plus your minimum monthly revolving and installment debt should be less than 42 percent of your gross monthly income. Finally, you may need to document virtually every aspect of your financial picture: income, employment, assets, debt and obligations such as alimony and child payments. Here's some advice from Sue Stewart, a mortgage expert from MortgageMatch.com, a new web- site designed to make it easier to find and apply for the right loan. 1. Take Charge of Your Credit. Your credit scores and credit history are more important to lenders than ever. Check out your credit history at each of the credit-rating services: Experian, TransUnion and Equifax. Go over them carefully and take steps to correct errors. 2. Know How Much You Can Afford Before You Shop. Don't let yourself fall in love with a house you can't afford. With today's online mortgage tools, you can find out what you can afford in terms of down payment, closing costs and monthly costs that include principal, interest, taxes and insurance. Decide what your limit is and stick to it. 3. Get Your Documents in Order. Don't wait until you've put a contract on a house to get organized. It may take you some time to get all your documentation in hand. Find out from your lender or your real estate agent what you will need and be ready to submit everything with your application. The good news about buying a home or refinancing these days is that interest rates are at historic lows. To take advantage of the "buyers' market," make it easy for your lender to approve the financing you need so you can house hunt with confidence. A new mortgage website gives borrowers a complete estimate of their costs of ownership before they apply for a loan. |
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New rules make securing a mortgage more challenging.
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| Ten Important Questions To Ask Your Mortgage Broker |
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| January 03, 2011 - Mortgages |
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When looking for a mortgage in todays market you are swapped with information, products and deals. This can make the whole process very daunting and confusing. For this reason it is good to be prepared with a set of questions to ask your mortgage broker, so that you do not get ripped off and you know where you stand.
1. What are different types of mortgages and in what way do they work? -
There are a mass of different types of mortgage products on the market, so make sure that your broker explains the differences between the different types of mortgages and how they can benefit you. For example may lender these days offer fixed rates, discounts and cashback over a number of terms. Also make sure that you get an outline of the varying ways of paying the capital off. This at first might seem to be a complicated area, but once you have the basics explained everything will become a lot clearer and you will start to see how different products will suit your personal circumstances better than others.
2. What is the Annual Percentage Rate (APR)?-
In accordance to regulations the APR is meant to appear in all adverts alongside the headline mortgage rate. The APR is used to provide customers with the true cost of loans and empower them to be able to compare different deals. Do remember that APR is unreliable and is no substitute for personal prepared quote that outlines all upfront and ongoing costs.
3. What is the interest rate that I will be charged? -
In the cases of fixed, capped or discount rate then your broker should tell you what the initial rate you will paying and how long you will be on that rate for.
4. So what happens at the end of the fixed or discount rate period?
It is important to know what will happen when your fixed or discount rate period ends. Will you be switched on to the standard variable rate or will the lender offer you another discounted or fixed rate deal. Also remember remortgaging is a good option.
5. Standard Variable Rate. What is that?
Because house prices are at a record high many people (probably including yourself) are now thinking of their mortgages in the long term as well as the upfront rate. For this reason it is worth knowing what current customers are paying. It is highly unlikely that when you come to the end of your fixed or discount rate period you will be on the same SVR as current customers. But you can use the information to see how the lender compares against others in the market.
6. What are the Early Redemption Charges or Early Repayment Charges attached to the product?
Most mortgage deals will involve some kind of repayment charge. So you will have to a fee to the lender if you repay your mortgage early or switch to another lender within a set time period. Make sure you find out precisely what you will have to pay and what would happen if you moved home during the mortgages term.
7. What will my monthly payments be at the quoted interest rate?
Your broker should tell you exactly what your monthly payments are going to be. They should also tell you what you would be paying at the SVR as to give you an indication of what you will be paying after your products term comes to an end. Get the broker to work out the payments on interest rates of up to 11% as well. This way if the interest rates rise substantially you will be able to see if you can afford the mortgage.
8. Are there any other conditions attached to the mortgage?
Different lenders will have different deals, incentives and clauses. Lenders will offer better discounts, fixed rates or cashbacks if you are prepared to take the lenders building and contents insurance. This is something that will be worth considering. Just make sure that you are informed about the terms and what would happen if you moved your insurance cover.
9. Are there any Higher Lending Charges?
With some lenders there may be a Higher Lending Charge (HLC) if you are borrowing more than a certain amount of the value of the property. Make sure you know what the charges are and how much the fees are. Some lenders will add HLC charge to the loan others will charge it upfront.
10. What are the arrangement or broker fees?
Your broker should tell you about every payment you will have to make to arrange your mortgage. This will give you an idea of the whole cost of the deal rather than just an upfront rate. This will also allow you to shop around and find the best deal.
So next time you are looking for a mortgage make sure you have these ten questions to hand.
James Copper enjoys writing on areas of mortgages and loans. He works for Adderson & Co. who are specialists in Secured Loans and the Bad Credit Remortgage.
Source: www.1starticles.info
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What to ask before you sign for a mortgage.
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| How to protect your credit score from holiday shopping pitfalls |
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| October 29, 2010 - Mortgages |
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| think twice before taking advantage of store incentive |
(ARA) - Holiday sales, coupons, discounts and deals -- wise use of special offers can help you save money on holiday shopping. But you might want to think twice before taking advantage of at least one type of incentive commonly offered by stores during the holidays.
Department stores, clothing retailers and other shops often offer a day's worth of discounts, free rewards points or some other gift to entice you to sign up for a credit card while you shop in their establishments. But before you sign up, you should be aware of how that new credit line could affect your credit score. Its impact could linger long after the holidays are over.
During the holidays, it may seem particularly tempting to fund holiday shopping by opening new credit accounts or maxing out current accounts. However, it's wise for consumers to educate themselves about how holiday shopping behaviors can affect their credit scores.
Here are a few tips for protecting your credit score through the holiday season:
Know your score
Smart holiday shoppers start out with a list and a budget. Credit-savvy shoppers check their credit score before starting their shopping list. Knowing your credit score and taking action to preserve a good score can help you secure better deals on larger-ticket holiday purchases. Plus, knowing your score can help you make informed decisions about how you will use credit throughout the holiday season.
Finding your score is easy since you can take advantage of products like freecreditscore.com. Signing up with freecreditscore.com also allows you to access your score throughout the year, receive alerts when your score changes, learn more about how your score works, and even plan ahead to see how major financial decisions may affect your score.
Decide carefully
Decisions about how you will use credit this holiday shopping season can affect your credit score well into next year. The number of open cards you have, as well as the amount of available credit on those cards, directly affects your credit score. And your credit score directly affects your ability to get more credit and to secure favorable rates from lenders. So holiday moves that lower your credit score now could affect your ability to get a good rate on a new car loan next spring.
Holiday moves that could lower your credit score include:
* Missing a payment or making a payment late on a credit card, loan or any other type of debt.
* Maxing out your credit cards so that you are using 80 percent or more of your total available credit.
* Opening or applying for multiple new credit accounts in a short period of time.
* Carrying too much revolving debt.
* Transferring a balance from one card to another. If you have to open a card to transfer the balance, or if you are transferring from a card with a higher limit to one with a lower limit, a balance transfer could affect your credit score.
To protect your credit score through the holidays, consider these steps:
* Continue to pay all your bills on time.
* Create a holiday budget and stick to it. Don't borrow money from other budget areas to pay for holiday shopping if it means you won't be able to make full payments on other bills.
* It's smart to use a credit card for big-ticket purchases or online shopping because of the extra layer of protection credit cards can offer versus using cash, but be sure to pay off those holiday items as quickly as possible.
To learn more about how you can protect your credit score through the holidays and all year long, visit www.freecreditscore.com.
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Before you sign up, you should be aware of how that new credit line could affect your credit score.
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| Mortgage Payments Sending You Reeling? |
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| August 30, 2010 - Mortgages |
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| Here's What to Do |
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The possibility of losing your home because you can't make the mortgage payments can be terrifying. Perhaps you're having trouble making ends meet because you or a family member lost a job, or you're having other financial problems. Or maybe you're one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate and you want to know what your payments will be and whether you'll be able to make them.
Regardless of the reason for your mortgage anxiety, the Federal Trade Commission (FTC), the nation's consumer protection agency, wants you to know how to help save your home, and how to recognize and avoid foreclosure scams.
Know Your Mortgage
Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can't tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.
Here are some examples of types of mortgages:
Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.
Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.
If you have a hybrid ARM or an ARM and the payments will increase and you have trouble making the increased payments, find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you're planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you're planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.
If You're Behind On Your Payments
If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.
Many loan servicers are expanding the options available to borrowers- it's worth calling your servicer even if your request has been turned down before. Servicers are getting lots of calls: Be patient, and be persistent if you don't reach your servicer on the first try.
You may qualify for a loan modification under the Making Home Affordable Modification Program (HAMP) if:
your home is your primary residence;
you owe less than $729,750 on your first mortgage;
you got your mortgage before January 1, 2009;
your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31 percent of your current gross income; and
you can't afford your mortgage payment because of a financial hardship, like a job loss or medical bills.
If you meet these qualifications, contact your servicer. You will need to provide documentation that may include:
information about the monthly gross (before tax) income of your household, including recent pay stubs.
your most recent income tax return.
information about your savings and other assets.
your monthly mortgage statement.
information about any second mortgage or home equity line of credit on your home.
account balances and minimum monthly payments due on your credit cards.
account balances and monthly payments on your other debts, like student loans or car loans.
a completed Hardship Affidavit describing the circumstances responsible for the decrease in your income or the increase in your expenses.
For more information, see www.makinghomeaffordable.gov/modification_eligibility.html
If you're interested in refinancing to take advantage of lower mortgage rates, but are afraid you won't qualify because your home value has decreased, you may want to ask if you qualify for the Home Affordable Refinance Program (HARP) or the HOPE for Homeowners (H4H) program. For more information, see www.hud.gov/foreclosure.
Avoiding Default and Foreclosure
If you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you've missed a small number of payments.
Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn't going to help you if you're in a home you can't afford.
Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.
Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you've reduced other expenses, your loan servicer may be more likely to negotiate with you.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can't satisfy their debts.
If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.
To learn more about Chapter 13, visit www.usdoj.gov/ust; it's the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.
If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about them.
Contacting Your Loan Servicer
Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan.
Then, write down the answers to the following questions:
What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?
What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?
Throughout the foreclosure prevention process:
Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.
Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, return receipt requested, so you can document what the servicer received. Keep copies of your letter and any enclosures.
Meet all deadlines the servicer gives you.
Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional 'workout' assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.
Housing and Credit Counseling
You don't have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.
While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.
When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn't be charging you high fees or making any guarantees. Take your business elsewhere.
Consider Giving Up Your Home Without Foreclosure
Not every situation can be resolved through your loan servicer's foreclosure prevention programs. If you're not able to keep your home, or if you don't want to keep it, consider:
Selling Your House: Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.
Short Sale: Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov, and consider consulting a financial advisor, accountant, or attorney.
Deed in Lieu of Foreclosure: You voluntarily transfer your property title to the servicers (with the servicer's agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, see www.irs.gov. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by your home.
Be Alert to Scams
Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
The foreclosure prevention specialist: The 'specialist' really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.
The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the 'rescuer' walks off with most or all of the equity.
The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don't know they've been scammed until they get an eviction notice.
For More Information
To learn more about mortgages and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government's portal to financial education.
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. |
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How to help save your home, and how to recognize and avoid foreclosure scams
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| Upside-Down In Your Mortgage? |
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| August 03, 2010 - Mortgages |
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| Weight the cost before you walk |
(ARA) - Owing more on your mortgage than your house is worth may seem like a bad investment. But the alternative - choosing to default on your mortgage even if you can afford the monthly payments - will take a significant toll on your credit rating.
"Strategically defaulting - deciding to stop paying your mortgage regardless of your ability to actually carry the debt - will have a far-reaching, long-lasting impact on your ability to secure future credit," says Maxine Sweet, vice president of public education for global information services company Experian, one of the three large credit reporting companies that receive and update consumer credit histories which are scored to help predict risk. "It's by no means a move to be undertaken lightly."
About 355,000 borrowers strategically defaulted in the first half of 2009, according to research conducted as part of the Experian-Oliver Wyman Market Intelligence Reports. Interestingly, Experian and Oliver Wyman found that the homeowners most likely to strategically default were also those with the highest credit scores.
While it may seem like a good move to simply stop paying and walk away from a bad investment, keep several factors in mind when you consider strategic default:
* It's very final. Strategic default will lead to foreclosure by the lender. Foreclosure will negatively impact your credit report and scores. In fact, only bankruptcy will affect your scores more adversely than foreclosure.
For more information on just how severe the impact can be, VantageScore LLC recently completed a study that evaluates the effect that foreclosures, bankruptcies, short sales, and various mortgage programs have on consumers' VantageScore credit scores.
* The default will remain on your credit report for seven years. Since credit scores are based on information in your credit report, the foreclosure will greatly impact your credit scores during those seven years. Securing other credit at reasonable terms and rates will be very difficult, if not impossible, during that time.
* Potential lenders aren't the only ones looking at credit reports these days. Insurers, employers and even cell phone companies are considering the creditworthiness of those who want to do business with them. By impacting your credit report, a strategic default may affect your ability to get a job, secure insurance and enter into important service contracts.
* Fannie Mae, the government-controlled mortgage giant, announced on June 23 policy changes that will make you ineligible for a new Fannie-Mae-backed mortgage if you walk away from a current mortgage that you actually could afford to pay. The ineligibility will last for seven years from the date of foreclosure.
* Finally, in some cases, the debt that foreclosure "erases" may be recorded as income, which means you will have to pay taxes on it.
"Strategic default may seem like 'walking away' from a bad debt, but it's really anything but," Sweet says. "While you will no longer have to pay the actual debt, you'll almost certainly 'pay' in other ways, in the form of lowered credit scores and a drastically curtailed ability to secure future credit for the next seven years. Higher interest rates and unfavorable terms could end up costing you more in the long run than continuing to pay on an upside-down mortgage."
To learn more about credit management, credit reports, credit scores and the factors that affect them, visit www.Experian.com.
Courtesy of ARAcontent
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Choosing to default on your mortgage will take a significant toll on your credit rating
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| Save Thousands On Your Mortgage |
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| July 02, 2010 - Mortgages |
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| by David Berky |
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Interest on the average home mortgage will cost the
homeowner nearly TWO TIMES the cost of the home.
If you were to purchase a $150,000 home with a $120,000
mortgage (80%), and you paid an interest rate of 9% for 30
years, you will have paid over $227,500 just in interest (in
addition to the original $120,000). That's nearly two times
the cost of the home!
A credit card debt of $7000 (now the average) at 18% being
paid at the rate of $20 principal plus interest each month
will take over 29 YEARS to pay off, almost as long as a home
mortgage. Interest charged on this credit card debt will
top $18,400, more than 2.6 TIMES the original debt!
If you work for a living, you know that when you are not
working, you are not getting paid. But interest never gets
sick, never takes a vacation and never sleeps. It is
working against you 24 hours a day, seven days a week, each
and every day of the year.
So what can you do?
You may not be able to pay off your debts or mortgage now.
You may not have enough equity in your home for a loan. You
may not be able to afford the refinancing costs or home
equity loan costs. You may not be able to lower your credit
card interest rates.
But you can make additional or extra payments.
So how does making an extra payment help lower your interest
charges? Is it going to make next month's bill smaller?
You can't scrape together too much for an extra payment so
how is just $10 going to help when you owe tens of
thousands?
The secret is in making early and consistent extra payments.
For example, on the home mortgage shown above, if you pay an
additional $100 each month you will save over $82,000 in
interest payments. Not only that, but you will also have
your home paid off nine years and two months earlier. You
knock nearly 10 years off your mortgage just by paying an
extra $100 a month.
How does that work?
Well, that $100 extra you pay the first month would have
cost you about $270 in interest to borrow for 30 years.
Since you have paid it already, you can reduce your last
mortgage payment by $270. The next month's extra payment
will reduce your last mortgage payment by $268. Each month
as you pay that extra $100, your final mortgage payment will
be reduced until you won't need to make a final payment,
then the second to last payment, then third to last and so
forth. Soon you will have shaved years and thousands of
dollars in interest charges off your mortgage.
That's great, but maybe you can't spare $100 each month.
How about $50, $25, or even $10? An additional payment of
$50 each month will save you five years and seven months and
about $52,000 dollars. $25 each month will cut your time by
three years and three months saving you about $30,000. Just
$10 a month will reduce your time by one year and three
months and save you over $13,500.
Every little bit helps. Some months you may only be able to
add $10 to your payment; some months you may be able to add
$200. And this applies to interest on credit card payments
or any other kind of debt repayment. Paying down as much of
the principal (or amount you owe) each month will help
reduce the interest you are charged and the length of time
it takes to pay off the debt.
So why don't the credit card companies charge you more of
the principal each month?
How would you like to be making 18% on an investment?
Wouldn't you want this investment to last as long as
possible? Of course! So do the credit card companies.
They are happy for you to pay off your balance, but even
more excited for you to keep paying them that 18% interest.
There are some other interest tips and tricks.
- One trick your mortgage company may have played on you is
to include a prepayment penalty in your mortgage. If you
try to pay off your mortgage early they may actually charge
you for doing so. Or they may only apply part of your
payment to the principal and take the rest as a "service
charge."
- Make sure when you make an additional payment that you
send a check separate from your monthly mortgage payment
with instructions that the amount is to be applied toward
the principal of your loan. Otherwise they may just apply
it towards next month's payment and still charge you the
interest.
- Generally you will not have this problem with credit card
companies. But watch out for late payments or going over
your credit limit. They may then use these "rule
infractions" as cause to raise your rate to over 25%!
- If you are looking to refinance your mortgage, look for a
mortgage that lets you pay on a bi-weekly basis. Since many
people receive a bi-weekly paycheck this also makes it
easier to budget your money. If you are paying every two
weeks you will make an additional monthly payment each year
(26 bi-weekly payments vs. 12 monthly payments). Also,
because you are paying the principal down every two weeks
rather than every month your interest charges will be
reduced.
You CAN take control of your interest charges. Make those
extra monthly payments. The feeling of being debt-free will
far outweigh the temporary pleasure of that burger, movie or
new DVD-player.
************************************************************
© Simple Joe, Inc.
David Berky is president of Simple Joe,
Inc. a marketing company that sells simple software under
the brand name of Simple Joe. One of Simple Joe's best
selling products is Simple
Joe's Money Tools - a collection of 14 personal finance and
investment calculators.
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Interest on the average home mortgage will cost the
homeowner nearly TWO TIMES the cost of the home.
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| Avoiding Default and Foreclosure |
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| June 02, 2010 - Mortgages |
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If you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you?ve missed a small number of payments.
Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn?t going to help you if you?re in a home you can?t afford.
Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.
Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you?ve reduced other expenses, your loan servicer may be more likely to negotiate with you.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can?t satisfy their debts.
If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.
To learn more about Chapter 13, visit www.usdoj.gov/ust; it?s the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.
If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about them. |
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Consider discussing the following prevention options with your loan servicer
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| Everything You Need To Know About A Remortgage |
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| April 07, 2010 - Mortgages |
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When looking to remortgage, your aim is to switch to a deal that is more beneficial to you and saves you money/increases flexibility etc, whether this be sticking with your present lender or changing to another.
What Are The Benefits Of Remortgaging?
Remortgaging is a chance to switch from an inadequate mortgage and take full advantage of current products available such as fixed rate, tracker or discount mortgages which can offer you more competitive rates. Choosing the right deal for you is just as important when remortgaging as it was the very first time. Consideration should be given on your prediction of future interest rates, your own risk assessment, your income and the balance of the loan outstanding. You will also need to weigh up your monetary needs and present circumstance.
Adverse Credit Remortgages also enables you to cut loose from a dissatisfactory lender as there is nothing to say you should stay with the same one.
Doing either of these things when remortgaging may considerably reduce your monthly out goings. This is just one benefit of deciding to remortgage.
Say for example you have a loan of 100,000 and are paying a rate of 7.5% interest; you then switch to another lender which has a rate of just 7% interest. This would mean you would be saving 31 each month, that's nearly 400 per annum.
Sometimes money tied up in the house could be put to better use else where. For an amount larger than what is needed to repay your original mortgage, remortgaging can release some of this equity to put towards investing in a new business venture or maybe even another property.
How Long Will The Process Take?
The process of remortgaging tends to be faster than that of a normal mortgage (but slower than adverse credit loans) as in this case you're not buying a property. The whole process without considering individual circumstances should take on average six weeks.
The Cost Of A Remortgage
As with your original mortgage, a survey to confirm the value of your property will need to be done as the first one will no longer be valid. Add onto this solicitor fees and administrative costs, however these will be lower than mortgaging for the first time and depending on your lender, they may be able to recommend certain people in association with them that could lower your costs.
There maybe early repayment charges on your existing mortgage. This is when there is a penalty if you redeem the mortgage within a fixed period of time after commencing. For example, this could be additional pay of three to six months or a percentage of the loan amount.
When looking at the cost of a remortgage you also have to look at the possible longer term benefits of the process and the money you could save.
Quick Action Plan
If still indecisive on whether remortgaging could work for you, run through the following points:
Communicate with your existing lender and ask for a redemption statement. This indicates any penalties you will be charged in the event of remortgaging. It also states the amount still left to pay on your current mortgage.
When looking at a remortgage deal be sure to look at all the small print and ask the lender to clearly show what your potential repayments would be. It is always useful to ask for something in writing to use as a reference.
Add up all costs payable with any new lender i.e., the arrangement and administrative fees. Legal fees should also be added on, these will vary depending on where you go and the value of your property.
Armed with these facts and figures you should then weigh up whether remortgaging will benefit you and whether the long term savings will outweigh the immediate costs of remortgaging.
James Copper enjoys writing on all aspects of finance. He works for Any Loans who specialise in the Adverse Credit Remortgage and Adverse Credit Mortgages. Source: 1starticles.info |
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Remortgaging is a chance to take full advantage of competitive rates.
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| Too Much House? |
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| January 26, 2010 - Mortgages |
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| By Dave Ramsey |
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First, let me tell you that mortgage debt is the only kind of debt I don't yell about. I don't borrow money - ever. But, I know most people won't do the "100% Down Plan" when it comes to buying a home. So what are your options?
For those of you who are in debt (which is most of you), let me tell you what Sharon and I did. Nearly 20 years ago my wife, Sharon, and I hit the financial bottom because of our debt. We did an unpopular thing to help turn things around. After years of marriage and owning hundreds of pieces of real estate, we became renters. Normal mindset is that you should buy and not rent but remember normal is broke. All these years later, I can see that that was probably THE best sacrifice we made. We were able to pay off our debts and save money for a house.
Although that's the smartest and safest route, if your heart is set on buying a home you can still do it wisely. But if you can't pay cash for a house in full, how do you figure how much house is too much?
Take some time to sit down and do the math. Your mortgage payment should not be more than 25% of your take-home pay and you should get a 15 year or less fixed rate mortgage. Notice I said a 15 year mortgage, not 30. Don't be tempted by the smaller monthly payments of a 30 year mortgage. The truth is 30 year mortgages are for people who enjoy being in debt so much they want to extend it for 15 more years and pay thousands of dollars more in interest for the privilege!
Now, you can probably qualify for a much larger loan than what 25% of your take-home pay would give you. But it's really not wise to spend more on a house because then you will be what I call "house poor." Too much of your income would be going out in payments, and it will put a strain on the rest of your budget so you wouldn't be saving and paying cash for furniture, cars and education.
The point is your house payments shouldn't take over your budget. Don't let your mortgage payments cause you major stress every month for years and years to come. Your dream home needs to be just that, a dream. You don't want it turning into a financial nightmare.
Dave Ramsey is a personal money management expert, an extremely popular national radio personality and best-selling author of The Total Money Makeover. Dave is changing the face of America by helping people get out of debt and build wealth. Ramsey exemplifies his life's work of teaching others how to be financially responsible, so they can acquire enough wealth to take care of loved ones, live prosperously into old age, and give generously to others. Read more of what Dave has to say about real estate at www.daveramsey.com (EZinearticles.com)
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How much house is too much? Your mortgage payment should not be more than 25% of your take-home pay. Do the math.
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Try one of our valued members