Me Myself N My Mortgage Theories

As we all know, the industry has been passing through credit crunch since the past few months and it has left it’s impact on consumer credit. There are people who still don’t know how to get rid of their credit problems, how to manage their mortgages and what to do so that the lender doesn’t foreclose. Often they aren’t even interested to preserve their home and simply wait to be evicted.

There are a lot of misconceptions as well. Most people in foreclosure tend to apply for a loan modification, short sale or deed-in-lieu. And most of them are confused as to whether they should pay tax on deficiency, or why they should receive a 1099c form.

Most of the people I’ve interacted with in the MF Forums are worried over the fact that they’ve received 1099c forms in spite of the Mortgage Forgiveness Act being effective. The fact remains not all mortgages qualify for forgiveness and the Act is yet to be enforced in all states; California is one such state which does not conform to this Act.

One more question which often comes up is, whether to file a bankruptcy when a foreclosure is being declared and almost 90% of the people believe bankruptcy will ruin their credit. Yes it will but there’s a silver lining too.

The fact remains that if you’re filing Chapter 13 bankruptcy, it gives you the chance to restructure your debt and start afresh. Moreover, it stops foreclosure and offers you a repayment plan which if followed will help you pay off the dues in mortgage within a short term of 3-5 years; as the plan ends, you can simply continue paying the balance as you’ve been doing so far.

Interested to know more? Please take a look at How Chapter 13 can be a far better option than foreclosure…

Technorati Tags: bankruptcy or foreclosure, chapter 13 or foreclosure

Foreclosure, deed-in-lieu, short sale – all these are terms we’ve been hearing since the past few months of mortgage crisis. What I find is, most people get worried when they default on their mortgages or when their lenders have filed foreclosure. And hardly do they even call up the lenders to find out work out options. You need to push them into doing that or else they would simpler let their homes go into foreclosure.

Let’s look at some figures. According to a report published by the Wall Street Journal a few days ago, only around 36,000 borrowers in the past 2 months have called up at the toll-free hotline announced by the President to help delinquent borrowers find a solution to their mortgage troubles. And, only one-third of those who called up have gone far enough for a conversation to get loan advice.

Borrowers are even not ready to answer calls made by lenders and that’s what the scenario is. Lenders complain that they’re reaching out to delinquent borrowers but the latter seem to sit and wait for being evicted. Some of them think of a short sale or a deed-in-lieu even without knowing about the consequences, tax ramifications etc. And then there are issues such as whether to pay taxes on canceled debt or not.

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President Bush has approved an Economic Stimulus package worth $160-170 billion with the aim to save the economy from an upcoming recession.

What does the Economic Stimulus package include?

The package includes tax rebates for all taxpayers including children too. Taxpayers who file individually will be getting tax rebate checks worth $600 whereas those filing jointly will receive double the amount.

In order to avail this rebate, individual taxpayers should be earning less than $75000 in adjusted gross income. But for married couple, the limit is $150,000. Besides taxpayers, every child will receive $300 in tax credit. The package also includes tax benefits for equipments purchased by businesses and payments to seniors and disabled veterans.

Can it help avoid recession?

It is expected that the Economic stimulus will put $120 billion into the hands of Americans so that they are able to spend it thereby boosting the economy.

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Investment Postcards from Cape Town is Dr Prieur du Plessis’s international investment blog. It consists of a wide range of topics dealing with the macro outlook for stock markets, bonds, currencies and commodities (including gold). This is a great site that is a storehouse of information. The posts are illustrated with graphs that make the whole presentation extremely comprehensible. Features also include index tickers, stock market polls, a translator and video clips.

Du Plessis is chairman of the Plexus group of companies that he founded in 1995, and with his 25 years’ experience in the investment industry is a renowned investment professional. He has had more than 1 000 articles published and also published a book “Financial Basics: Investment” in 2002.

The site has a delightful humor section with entertaining photographs and hilarious sketches reflecting issues across the world.

The Federal Reserve’s slashing Fed Funds Rate seems to be a boon for people who are willing to get out of their high rate adjustable mortgages (ARM). However, the Fed has cut down the Fed funds rates by 75 basis points in fear of a declining economy.

Since rates have dropped down, you will pay less when you borrow money. 30 year fixed mortgage rates have fallen to approx. 5.4% as the yields on 10 year Treasury Bonds have dropped from 4% to 3.4%. So, one can look forward to refinancing from an adjustable rate to a fixed rate loan (FRM) and also from fixed rate mortgage to an even lower rate FRM.

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Hi,

It’s New Year time and I hope you all are busy not with you work but celebrations, party and simply having fun with your friends. Well, I am too, but amidst the fun and excitement, I thought I’d wish you all a very Happy and Prosperous New Year.

Best wishes to all my readers and blogger friends from whom I’ve learnt a lot and will continue to do so.

Hi all,

Hope you’ve had a great Christmas!

Well, some of you may be enjoying your vacations and planning for some fun and excitement in the New Year eve. But here’s something that you shouldn’t avoid – how to save your hard earned money from going to the IRS, I mean how to increase your tax savings.

It may be a bit tough for you to actually sit down and start calculating the figures ..but this is something that can help you save thousands of dollars that you’ve earned through hard work. So, while you run the figures, take a look at the deductions/credits you can avail being a taxpayer.

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Hi all,

Here’s wishing you Merry Christmas!

It’s the day we’ve all geared up for since the past 1 month or so just to make most of the fun and enjoyment that we can have during these holidays.

While, I’ve started off with my plan to celebrate the Christmas, I thought I’d take a few mins and wish you all a happy Christmas.

Hope you enjoy and have lots of fun with your kids, friends and near ones.

May this Christmas be the biggest you’ve ever had!

Technorati Tags: merry christmas, biggest christmas

Finally the government has come up with a 5 year rate freeze plan for adjustable rate mortgages which are about to reset in the coming few months from lower “teaser” rates to higher rates of interest.

The purpose behind this is to help borrowers cope up with their payments on ARMS or else it would aggravate the foreclosure default rates and thereby extend the sub-prime mortgage crisis.

The fact is, within the next 2 years, around 2 million adjustable rate loans, that too, sub-prime, are about to reset to higher rates of interest from the teaser rates. Anticipating the fact that not many borrowers will be able to carry on with such loans, the government has planned for a rate–freeze.

Who all are applicable?

1. Borrowers whose mortgages will reset from Jan1, 2008 to July 31, 2010.
2. Those who have taken out loans between 2005 and July, 2006
3. Homeowners who will not be financially good enough to make payments once the rate resets.

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If you are the one looking for a happy and stress-free retirement life with no monetary problems or health hazards, then there are 12 financial solutions that you may watch out for.

1. Social Security Income:

This is a benefit which the Federal government offers to those who have paid taxes into Social Security. But to avail this benefit, you need to apply for a Social Security card and get a Social security Number even. Just browse through the Rules of getting Social Security.

2. Medicaid and Medicare:

These are health care programs offered to people so that they can pay for their health-care costs. The eligibility criteria for both the programs are slightly different. However, Medicaid caters to long-term care while Medicare offers assistance mostly for short-term care.

3. Reverse Mortgages:

This is an excellent tool for seniors wherein you don’t pay for the loan but the loan pays you. And, you can use it to serve a variety of purposes – be it paying off your debts, making a big purchase or consolidating your medical bills and the like. Know more…

Interested to get an overview on other financial solutions? Just have a look here.

Technorati Tags: senior financial solutions, reverse mortgage, stress-free retirement