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Press appointment on SB 94, accommodation modification protection
For more, visit democrats.sen.ca.gov The bill, SB 94, authored by Sen. Calderon, will prevent a person or a business from charging an upfront fee to a borrower for helping negotiate a loan modification on that borrowers behalf. Such services are free of charge from non-profit housing counselors.
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Family Fights Bank To Get Home Loan Modified
OCOEE, Fla. — Attorneys told Eyewitness News the same banks that took government bailout money are now turning their backs on families. The families have been fighting to get their loans modified so they don’t go into foreclosure, but they say the banks have stopped working with them. It is happening to hundreds of thousands of people across the country and a local family is just one of them. They moved to Central Florida because they loved the neighborhood, the house and the schools. Now they’re scared this will be their last Christmas spent in their home. Daniel and Denise Grebey moved into their Ocoee home in 2006 with their two children. “It wasn’t an investment home, this was our house that we didn’t plan on leaving,” Daniel Grebey said. But Daniels hours were cut at work, Denise lost her take-home car and their mortgage jumped $500. The couple called their lender and qualified for the Home Affordable Modification Program (HAMP). They say they met several criteria and thought they’d get their mortgage modified and reduced, but that never happened. “‘Your modification is going to be done. Our management is going to contact you,’” Daniel said. He says no one ever called back and now the Nationstar Mortgage is foreclosing on their home. “This particular lender thinks they have an option of backing out. They’re not right,” attorney Matt Englett said. Englett has 25 clients right now that qualified for HAMP, completed the trial process and never got a modification. He …
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18 Ways to Reduce Your Mortgage Loan
1. Skip the introductory rate (Honeymoon)
Beware of lenders bearing gifts! Introductory or honeymoon rates have long been an important marketing tool for lenders. You are initially offered a cheap rate on your loan to get you in the door but once the honeymoon period is over, the lender will switch you to a higher variable rate of interest. An example of this is an Adjustable Rate Mortgage (ARM).
There are two problems with this scenario. First, the variable rate is often higher than some of the lower basic loans available so you could end up paying more. Second, you need to clearly understand that a honeymoon rate applies only for the first year or two of the loan and is a minor consideration compared to the actual variable rate that will determine your repayments over the next 20 or so years.
You may also be hit with fairly steep exit penalties if you want to refinance in the first two or three years to a cheaper loan. So make sure you fully understand what you are letting yourself in before setting off on a “honeymoon” with your lender.
2. Pay it off quickly
Time is money. There are all sorts of strategies for paying less interest on your loan, but most of them boil down to one thing: Pay your loan off as fast as you can. For example, if take out a loan of $300,000 at 6.5 per cent for 30 years, your repayment will be about be about $1,896. This equates to a total repayment of $682,632 over the term of your loan.
If you pay the loan out over 15 years rather than 30, your monthly payment will be $2,613 a month (ouch!). But the total amount you will repay over the term of the loan will be only $470,397 – saving you a whopping $212,235
· Make repayments at a higher rate
A good way to get ahead of your mortgage commitments is to pay it off as if you have a higher rate of interest. Get a loan at the lowest interest rate you can and add 2 or 3 points to your repayment amount. So if you have a loan at about 6.5 percent and pay it off at 10 per cent, you won’t even notice if rates go up. Best of all, you’ll be paying off your loan quicker and saving yourself a packet.
· Make more frequent payments
The simple things in life are often the best. One of the simplest and best strategies for reducing the term and cost of your loan (and thus your exposure should interest rates rise) is to make your repayment on a fortnightly (bi-weekly) rather than monthly basis. How can this make a difference I hear you ask? It works like this:
Split your monthly payment in two and pay every fortnight. You’ll hardly feel the difference in terms of your disposable income, but it could make thousands of dollars and years difference over the term of your loan. The reason for this is that there are 26 fortnights in a year, but only 12 months. Paying fortnightly (bi-weekly) means that you will be effectively making 13 monthly payments every year. And this can make a big difference.
Using our example from above, by paying monthly, you will end uprepaying $682,632 over the term of your loan. But, by paying fortnightly (bi-weekly), you will save $87,254 in interest and 5.8 years off the loan. Zero pain to you, major benefit to your pocket.
· Hit the principal early
Over the first few years of your mortgage, it may seem that you are only paying interest and the principal isn’t reducing at all. Unfortunately, you’re probably right, as this is one of the unfortunate effects of compound interest. So you need to try everything you can to get some of the principal repaid early and you’ll notice the difference.
Every dollar you put into your mortgage above your repayment amount attacks the capital, which means down the track you’ll be paying interest on a smaller amount. Extra lump sums or regular additional repayments will help you cut many years off the term of your loan.
· Forego those minor luxuries
This is the bit you don’t want to read. Once you have a mortgage, your life is likely to be luxury-free (or at least pretty close to it). Think of all the weight you will lose by giving up your favourite indulgent snack. For the sake of your health you should quit smoking and drink less anyway. Take your lunch from home and save on bad fast food. Trust me, your body will thank you for it.
If you’re still not convinced consider the following example. A typical day may include a pack of cigarettes ($10), a coffee and donut ($5), lunch ($12) and a couple of beers after work ($8). That’s $35 a day or $175 a week or $750 a month or $9,100 a year.
Assuming a mortgage of $300,000 at 6.5 per cent over 30 years, by making $750 in extra repayments each month, you’d save more than $216,000 in interest and be mortgage free in just over 14.5 years.
No one is saying you should live a convict existence but just cutting down a little on your expenses will see you reap huge financial benefits.
3. Get a package
Speak to your lender about the financial packages they have on offer. Common inclusions are discounted home insurance, fee-free credit cards, a free consultation with a financial adviser or even a fee-free transaction account. While these things may seem small beer compared to what you are paying on your home loan, every little bit counts and so you can use the little savings on other financial services to turn them into big savings on your home loan.
There are also “professional” packages on offer for amounts over a certain limit, which can be as little as $150,000. Some lenders offer discounts to specific professional groups or members of professional organizations. Ask your lender if your occupation qualifies you for any discount. You might be pleasantly surprised. There are all sorts of discounts and reductions attached to these packages so make sure you ask your lender about them.
4. Consolidate your debts
One of the best ways of ensuring you continue to pay off your loan quickly is to protect yourself against interest rate rises. If your home loan rate starts to rise, you can be absolutely positive about one thing – your personal loan rate will rise and so will your credit card rate and any hire purchase rate you may happen to have.
This is not a good thing as the interest rates on your credit cards and personal loans are much higher than the interest rate on your home loan. Many lenders will allow you to consolidate – re-finance – all of your debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at 7.32 per cent.
As always, any extra repayments or lump sums will benefit you in the long run.
5. Split your loan
Many borrowers worry about interest rates and whether they will go up but don’t want to be tied down by a fixed loan. A good compromise is a split loan, or combination loan as they are often known, which allows you to take part of your loan as fixed and part as variable. Essentially this allows you to hedge your bets as to whether interest rates are going to rise and by how much.
If interest rates rise you will have the security of knowing part of your loan is safely fixed and won’t move. However, if interest rates don’t go up (or if they rise only slightly or slowly) then you can use the flexibility of the variable portion of your loan and pay that part off more quickly.
6. Make your mortgage your key financial product
Mortgage products known as all-in-one loans, revolving line-of-credit or 100 percent offset loans allow you to use your mortgage as your key financial product. This means you have one account into which you can pay all of your income and draw from for your living expenses by using a credit card, EFTPOS or a checkbook, as well as making your mortgage repayments..
These types of accounts can make a huge difference to the speed at which you pay off your loan. Because your whole pay goes into your mortgage account you are reducing the principal on which interest is charged. Sure, you might take a couple of steps back as you withdraw living expenses but careful use of this sort of product can get you thousands of dollars ahead of where you’d be with a “plain vanilla, pay once a month” home loan.
These loans work well when you are able to make additional payments towards the loan. If you are only able to make the equivalent of the minimum repayment on your loan (and not put in any extra) you may be better off with a cheaper standard variable or basic variable loan. However, it’s not unusual for dedicated borrowers using these types of loans to cut the term of a 30 year-old loan to less than ten.
7. Use your equity
If you have already paid off some of your home, you are said to have equity. Equity is the difference between the current value of your property and the amount you owe the lender. For example, if you have a property worth $500,000 on which you owe $150,000, you are said to have home equity of $350,000, which you can re-borrow without having to go through the approval process by accessing it through your existing loan.
Many lenders will allow you to borrow using your equity as collateral. Most lenders will allow you to borrow up to about 80 per cent of the loan-to-value ratio (LVR) of your available equity. If you are careful, you can use this equity to your advantage and help to pay off your home loan sooner.
Using an equity loan to improve your property could be a good way to ensure that your home increases in value over time. But larger expenses such as cars and holidays that would have been paid by credit card are more affordable on the lower rate of your home loan.
8. Switch to a lender with a lower rate (But do your sums)
It may sound like a simple idea but switching out of your current loan and taking out a loan at a lower rate can mean the difference of years and thousands of dollars. If you have a loan that is tricked up with all the features, or even if you have a standard variable loan, you might find that you could get a no frills rate that is as much as a percentage point cheaper than your current loan.
However, before you jump the gun, check out what it will cost you to switch loans. For example, there may be exit fees payable on your old loan and establishment fees and stamp duty on your new loan. Work it all out and if it makes sense, go for it.
9. Stay informed – don’t forget about your mortgage
Visit Mortgage Loan Hints.comWith any long-term commitment, there is always the temptation to let your mortgage roll along, make your repayments as they fall due and think as little about it as possible. As long as you keep up the repayments, there’s not much else you need to do, right?
This attitude can be a big mistake. Keep yourself up to date with what’s happening in the marketplace. You might find that there’s an opportunity to put yourself well ahead of the game. Rates change, new products and changes in the market itself may allow you to seize an opportunity or negotiate a better deal.
Stay informed and stay ahead of the game.
10. Get a cheap rate and invest the difference
When interest rates are low, like now, it is usually safe to say that inflation is also low. Thus, bricks and mortar may not be the best place to invest. Try getting the cheapest home loan you can find and make the minimum repayment. This allows you to use the extra cash to invest in other, more profitable areas.
You may find that the return you get on shares or some other type of investment means that you have created a nice little nest egg which you can use to pay off a bigger chunk of your home loan than you might otherwise have been able to do.
But beware – high returns often mean high risks. Before undertaking any investment, invest in a consultation with a qualified financial adviser.
11. Run an offset account
Instead of earning interest, any money you have in your offset account works to offset the interest you are paying on your home loan. For example you may have a mortgage of $300,000 at 6.5 percent and an offset account with $50,000 in it earning 3 percent.
This means that $250,000 of your loan is accruing interest at 6.5 percent but the rest is accruing interest at just over 3.5 percent (6.5 percent on your loan less the 3 percent the $50,000 in your offset account is earning). Imagine how much you can save!
Of course, the best sort of offset account pays the same rate as your loan (100 per cent offset).
12. Pay all your mortgage fees and charges up front
Some lenders allow you to add to the amount you borrow instead of coming up with cash for your upfront costs. While this can seem a blessing try to avoid doing this. Consider the following example:
Borrower A borrows $300,000 over 30 years at 6.5 percent. Her upfront costs are $1,000 but she has enough cash to make sure she can cover these. Her total repayment over 30 years will be $682,632
Borrower B takes out the same loan but doesn’t have enough cash to cover the upfront costs. So he borrows $301,000, at the same rate. Her total repayment over 30 years will be $684,907.
Two thousand odd-dollars might not sound like a huge amount but what could you buy with it if it stayed in your pocket?
13. Pay your first instalment before it’s due
With most new loans, the first instalment may not become due for a month after settlement. If you can manage it (and your lender will let you), pay the first instalment on the settlement date. If you do this, you will be one step ahead of the lender for the term of your loan. Every little bit counts.
14. Shop around and make sure your lender knows it
One of the most powerful tools you can have in the search for the best home loan is information. Make sure you have rung half a dozen lenders and brokers (as well done some internet research) before you start talking to your preferred lender about getting a new loan or refinancing your existing loan.
Make sure you know what rates and features are offered by each of your lender’s competitors on comparable products. Be ready to tell the lender what you are looking for and don’t be afraid to ask for extras. If they want your business, and know you know what you are talking about, they may be prepared to work that little bit harder to get your business.
Don’t be afraid to walk out if you aren’t getting the best possible deal you can.
15. Make sure your loan is portable
If there is any chance that you will move house during the course of your loan (and let’s face it, there is a strong chance), make sure that your lender will allow you to transfer your loan to a new property and that it won’t charge you the earth for the privilege.
Be careful. If you sell up and buy a new house, you could find yourself down thousands in discharge costs on your old loan and establishment fees on your new one.
16. Avoid bridging finance
Someone once said bridging finance is so called because it allows you to “pylon” the debt. The joke’s appalling, but so is bridging finance. Unless you get your timing right you could find yourself with two home loans at the same time – with the bridging finance element costing you an extra couple of percent premium on the standard variable rate.
Consider using a deposit bond or selling before you buy, as it will be much more cost effective for you than another loan.
17. Choose the loan that suits your needs
Choosing a loan is about knowing what you want. Draw up a table of potential home loans and rank them. Make a list of all the features that are important to you and rank them according to importance. Give each feature a score out of 5 – one for unimportant right through to 5 for indispensable.
Use this technique for ranking the loans on offer and pretty soon you’ll see the one that’s right for you. Remember, different loans have different purposes so you need to match a loan to your need. Taking out an interest only loan suitable for investors if you are planning to live in the house is just foolish.
Ditching the features you don’t need can save you up to 1 per cent on the interest rate of your loan. Over 30 years that’s a whole lot of money you’ve just saved yourself.
18. Don’t be afraid of smaller lenders with cheap rates
Since the advent of the mortgage managers over the past five or six years there’s been a lot of talk about smaller and “non-traditional lenders” and how they have forced interest rates down. With the property boom, plenty of opportunities sprang up for smart lenders with low fees willing to take on traditional lenders and many have done very well indeed.
Some borrowers worry about what might happen if their lender gets into financial trouble. Keep in mind that you’ve got their money – so don’t worry too much. There are some smaller lenders whose names might not be readily familiar but whose rates might be enough reason to get in touch.
Be wary, however. Some of these smaller lenders can have huge hidden fees and charges. It is true that the interest rate might be much lower, but in many cases, they exit (or penalty) fees can be very high if you refinance or pay off your mortgage in the first couple of years. Of course, if you’re planning on staying with that lender for some time, then these fees will not impact your pocket at all.
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Real Estate Appraisal (2 of 6) Quicken Loans TV, Kitchen and Basement
Quicken Loans TV takes you through a full home appraisal inspection in this informative video – part 2 (kitchen appraisal and basement appraisal) of the Quicken Loans Appraisal series. A home appraisal is something youll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com
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TheRealDeal – “Tsunami” of foreclosures still to come
On CNBC this week, housing analyst Ivy Zelman, CEO of Zelman and Associates, said there is a “tsunami of foreclosures and short sales still to come” over the next several years because of Alt-A and Option ARM loans. Zelman said that the housing market in 2009 will be worse than 2008 because of an oversupply of distressed inventory with home values dropping between 20 and 30 percent. For more information please click the link provided: www.cnbc.com
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Shocking Facts – What Debt Settlement Companies Don’t Tell You
If you’re thinking about using a debt consolidation or debt settlement service to help you get out of debt faster and save money on your monthly payments, make sure you do your homework before choosing a company. There are definitely shams and scams out there.
First let me say that debt consolidation is *not* the same as debt settlement/negotiation, which most people don’t realize.
Debt settlement companies charge hundreds of dollars as an initial “admin fee” to set up your account, plus a monthly service fee. The fees vary depending on the company and the amount of your debts.
Such companies take your money every month, but don’t make monthly payments to your creditors! Instead, they put it in a trust account, negotiate your debts with your creditors, then make a lump-sum payment when there’s enough in your account to pay a creditor in full.
That can take *years* depending on the amount of debt you have with each creditor. Meanwhile, you can be sued by your creditors and your wages can be garnished! (Or just don’t make payments to your creditors. You’ll end up in the same spot without paying someone to help you get there!)
Settlement companies don’t ask your creditors to stop all interest, late fees and overlimit fees from accruing. That means while the negotiations are ongoing, your bills will continue to grow! So if you’re sued and a judgement is brought against you, you’ll owe more money than before!
And shoddy companies, which there are a lot of, don’t tell you *any* of this up front. I call it “getting permission by omission” because they simply don’t tell you how their program works *before* you sign an agreement with them. Or after, for that matter. But if you ask the right questions, eventually you’ll figure it out. (Or when the crap hits the fan. Whichever comes first.)
Let me give you an example of how debt settlement works.
Let’s say you have $20,000 in unsecured credit card debt. You owe $10,000 to one credit card company, $6,000 to another and $4,000 to a third. You agree to a 5 year plan where you pay $250 a month to the settlement company. (After all, $250 a month for 60 months is only $15,000, so you’re saving $5,000 and you’ll be debt-free in 5 years, right?)
The admin fee will cost you $750. Your first 3 monthly payments go towards that and nothing gets put into your trust account until your 4th month.
The settlement company keeps $50 of your $250 payment each month for the service fee. That means $200 a month is being added to your trust account.
Most debt settlement companies claim to be able to negotiate your debt for about 50% of what you owe. So let’s use the lowest credit card debt as an example.
If you owe $4,000 and your creditor agrees to accept $2,000 as payment in full, it will take 10 months at $200 per month to have enough in your trust account to pay off just that one credit card.
But remember, your first 3 payments to the settlement company only paid the admin fee. That means your first credit card settlement is 14 months *after* you started sending them money.
So what’s the problem? It’s simple. Your creditor won’t agree to accept half of your actual debt unless, or until, it can be paid in full. Otherwise, you’re expected to make your normal monthly payments.
Since you don’t have $2,000 in your trust account, and you won’t have it until more than a year after you stopped paying your creditor directly, they’ll probably take you to court and request that your wages be garnished long before you have that $2,000 built up.
And what about your other creditors? Well, they’ll be waiting even longer to get their money from the settlement company. The $6,000 debt will take 15 *more* months to pay off, assuming your creditor waits that long and agrees to 50%. And that $10,000 bill? You do the math.
On the other hand, if you signed up for a 3 year plan with the settlement company, your debts would be paid off sooner. But, the question is, will your creditors wait that long? Probably not.
The facts are, you can negotiate with your creditors yourself. Most will agree to take a smaller monthly payment from you and stop all interest and fees from accruing. And, of course, you’ll save thousands of dollars in fees to a settlement company.
Before signing up for any service, please be sure you check out the company thoroughly. And don’t let the words “non-profit” fool you either. A lot of debt settlement companies claim to be non-profit.
Going back to the example above, if you pay them $15,000 over a 5 year time frame and they settle your debts at half of what you owed, they’ll make $5,000 from you. I’d call that a profit, especially since they might not have actually helped you in any way.
Most companies will allow you to cancel your account and get a refund of what you’ve paid, less the non-refundable admin fee and the monthly service fees. If you feel you’ve been mislead about their program, don’t hesitate to argue til the cows come home. File a complaint with the Better Business Bureau or hire an attorney if you feel you’re getting nowhere.
You can visit the Better Business Bureau’s website (http://www.bbb.org) and find reports on hundreds of companies. Here’s a small listing of companies that have poor reputations with the BBB:
National Consumer Debt Council LLC – Irvine, CA (A.K.A. NCDC, United Consumer Law Group)
Financial Rescue Services – Burbank, CA
Debt Legal Services – Anaheim, CA
American Debt Relief – Los Angeles, CA (A.K.A. A M Debt, American Debts Relief, Debt Relief)
Please be very cautious when choosing a debt help company and ask lots of questions before agreeing to anything. If you find they’re evading your questions, run fast and run far. There are reputable companies out there, so keep looking until you find one.
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Why Eliot Spitzer was assassinated
Mortgaging America’s future for a quick buck! It’s one of the most amazing displays of journalistic incompetence and malpractice in recent memory. The US news media failed to draw the obvious connection between the bizarre federal law enforcement investigation and leak campaign about the private life of New York Governor Spitzer and Spitzer’s all out attack on the Bush administration for its collusion with predatory lenders. While the international credit system grinds to a halt because of a superabundance of bad mortgage loans made in the US, the news media failed to cover the details of Spitzer’s public charges against the White House. Yet when salacious details were leaked about alleged details of Spitzer’s private life, they took that information and made it the front page news for days. To the 9/11 fiasco, the Iraq War, the travesty of the federal response to Hurricane Katrina, and the shredding of the US Constitution, we can now add a deliberate and reckless undermining of the credit and banking system of the US to the list of Bush administration “accomplishments.” No external enemy, or group of external enemies, could have done as much harm to the nation as this group has in less than eight years. Hey, do you think it’s a coincidence that a Bush was involved the last time the US banking industry fell into a black whole because of White House-facilitated fraud?
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