Managing your mortgage and household bills wisely

Opening the mailbox is a bittersweet experience for most of us. Nowadays, it seems that we only receive bills, bills and more bills through the post as opposed to birthday cards, love letters or gifts. It’s easy to get snowed under with the details of what needs paying and when, and before long you could be faced with the prospect of going into arrears.



Juggling the demands of running a house, keeping down a regular job and generally looking after yourself, family members and loved ones is tricky act to maintain. However, be pragmatic and it’ll become easier to keep on top of your outgoings. You may even be able to reduce some of them, which would in turn make life in general that little bit more comfortable.

When it comes to prioritizing your monthly bills, keeping a roof over your head is imperative, especially if you’re a homeowner. You risk having your home repossessed if you fail to keep up with mortgage payments, and chances are high that you’ll also be rejected if you try and borrow money in the future because your credit rating will be poor.

Being turned out onto the street may just be the start of a downward spiral that could ultimately have disastrous consequences, so it’s important to be aware (if you’re not already) of the worst-case scenarios in order to motivate yourself to stay out of financial difficulties.

Budgeting is essential. Evaluate your income carefully and compare it with where your money is being spent on a daily, weekly, monthly and even yearly basis. This will highlight whether or not you’re living beyond your means, and if it turns out that you are, you can start saving almost immediately.

Saving and cutting down on any ‘luxury’ items, like cable TV and dining out, will really make a difference, so if you can realistically live without them then do so. Food bills can also be lowered if you have the time and space to grow your own fruit and vegetables. It’s cheap to do and immensely rewarding. Being forward thinking and responsible with your finances may mean making sacrifices like this along the way, so be prepared and always keep in mind your end goal and how you’ll feel when you reach it.

You can also make savings by ringing around and surfing the net to get discounts on any other big drains on your resources. Home insurance is one such expense that can be instantly slashed. Use a key phrase like ‘moneysupermarket best home insurance deals’ or something similar when you’re surfing the net for deals – it’s likely to save you hundreds of dollars every year.

If the reminders and final reminders continue to stack up despite making changes and cutbacks, then it’s almost inevitable that you’ll search for a quick-fix method, like loading up the credit card or taking out a loan. The perils and pitfalls of going down either of these high-APR routes are obvious, so make sure you avoid them at all costs. If you’re really struggling to pay the mortgage, talk to your lender – they’ll probably be much more sympathetic than you think.

Find Answers to Foreclosure Questions on Foreclosure Avoid

Nearly everyone I talk to has been affected by the real estate crisis in one way or another. From the very wealth to the extremely poor, everyone has been touched in some fashion. Even the commercial real estate market is now starting to get hit.


With so many businesses cutting back or closing their doors, more and more office spaces are sitting empty. Foreclosures seem to create more questions than they do answers.



While it's true that a few real estate investors are finding some great bargains on foreclosed homes, home owners are left out in the cold wondering how this happened and what the will do next. One site, Foreclosure Avoid, has put together foreclosure blog which helps home owners find answers to their questions about foreclosures. Do not miss to check this interesting video :

Mortgages and Homeownership: A Mixed Bag of Curses and Blessings in the Current Economy

Following is the guest post written by Michelle Studer from budgetpulse, an interactive, web-based budgeting utility. It reflects the rhythm and the flow of savings and spending goals.

Like other aspects of today’s economy, home ownership equals hardship for some and opportunity for others. On the one hand, the sub-prime mortgage mess was a major factor in last year’s economic meltdown and current foreclosure rates are through the roof. On the other, low selling prices and rock-bottom mortgage loan rates have created a fantastic market for potential home buyers. Courtesy of some recent industry data, here’s a closer look at both sides of the issue.

The Downside

The American Dream has always included the promise of home ownership, but for some the reality of owning a home has been nothing short of a nightmare. According to a recent Reuters article:

• 12 percent of U.S. homeowners paid late on their mortgage loans or were in the process of foreclosure during the first quarter of 2009.

• Data from Standard & Poor’s/Case-Schiller Indexes revealed that home prices have dropped 32 percent from their peak in 2006.

• Up to 40 percent of the houses with so-called “failing” mortgages are vacant homes, which seemingly indicates abandonment in many cases by homeowners unable to pay their mortgage bills.

In addition, the Wall Street Journal reports that the national average for foreclosures jumped 35 percent in the 12-month period between April 2008 and April 2009.

The Upside

Overwhelmingly, the economic news has been more bad than good this year. However, now is the perfect time to buy a house if you’ve managed to hang onto your money despite the recession. In fact, buying a home has become more affordable even in the priciest markets. One example of this is found in the WSJ’s coverage of First American CoreLogic’s LoanPerformance Home Price Index data, which reveals that home prices in the New York City metro area have fallen 10.6 percent within the past year. There are some additional upsides as well, such as:

• For existing homeowners, CNN Money reports there’s a “silver lining” when it comes to falling home value: lower property taxes.

• A few weeks ago, it was possible to get a mortgage loan at an interest rate of less than 5 percent. Since then, rates have started to inch up again, indicating that higher interest rates will become the norm again as the economy improves. However, there’s still no time like the present to take out a mortgage. Today's rates are below 6 percent, which will seem like a steal a few months from now.

• To sweeten the home-buying pot a bit more, the federal government offers a first-time home buyer tax credit of $8,000 that applies to any first-time home purchase made between April 9, 2008 and December 1, 2009.

Are You Aware of These Types of Mortgage Loans?

Mortgages can be categorized into various types in two different ways. To start with mortgages can be based on loan provider. As such there are two divisions - government and conventional loans. Second categorization is made based on type of interest rate - fixed or adjustable rate & their combinations.

a) Loan Provider

Government loans are like FHA and VA loans, Rural Housing Service Loan Programs and State & Local Housing Programs.

• FHA Loans: Federal Housing Administration administers many loan programs and these are easier to qualify for compared to conventional loans. They have lower down payment requirements but have statutory limits, meaning the loan amount cannot be more than the set limit.

• VA Loans: These are guaranteed by U.S. Dept. of Veterans Affairs. The veterans & service persons are able to get mortgage loans with suitable terms and usually without down payment requirement because of the VA guaranty.

• RHS Loans: Rural Housing Service guarantees mortgages for rural residents without requirement of any down payment and minimal closing costs.

• State & Local Housing Programs: In many states low to moderate housing finance programs, programs which are modeled specifically for first time buyers & down payment assistance programs are made available for borrowers. The advantage borrowers get is that these programs have lenient qualification guidelines & lower upfront fees.

Convention loans

These loans are further divided into two types; conforming and non-conforming.

Conforming loans have terms & conditions as set by Fannie Mae & Freddie Mac while non-conforming loans also called B/C loans are for borrowers who do not meet the credit requirements set by Fannie Mae & Freddie Mac. These loans are offered to borrowers who may have recently filed bankruptcy, had gone through foreclosure or have late payments on credit report.

b) Type of interest rate

Fixed rate mortgages

Fixed rate mortgage have fixed interest rates and monthly payments on the loan remain fixed for the full term of the loan. These loans are available for terms which can be 40, 30, 25, 20, 15 and 10 years.

Payments on these type of loans are calculated in a way that when the term of the loan ends the mortgage will get paid off in full and is also called as fully amortizing loan.

Adjustable Rate Mortgages

For adjustable/variable rate loans the interest rate as well as monthly payments change over the term of the loan. The interest rate adjusts according to changes that occur on an index on which the interest rate is based.

Hybrid Loans

These loans are combination of adjustable and fixed rate mortgages and have different variations:

• Fixed period ARMs

• Two-Step Mortgages

• Convertible ARMs

• Graduated Payment Mortgages

• Buydown Mortgages

With so many loan options selecting the right type can become difficult. The right type mainly depends on how long a person plans on staying in the house & amount of monthly payments he can comfortably afford.

Refinance Your Home Mortgage

A very common question is in the minds of homeowners, that is, whether they should refinance their mortgage loans or not? Those who were confused took the minimum affordable mortgage rates that required little or no payment. And now when they know the interest rates are adjusted higher they are running to refinance their home mortgages.



The lenders have become very smart these days. They don't like working with those homeowners who have got a poor credit and are trying to refinance so that their debt gets reduced. As a result of this most of the people got loans knowing that they wont be able to afford it. Lenders very easily trusted those homeowners and lend huge sum of money to them and are now suffering.


We all know that mortgage rates are something which will never be lower. At this point of time it is advisable to refinance loans like student loans, debt consolidation loans, company loans etc. It is very important for the homeowners to decide how long they will be staying in their current home before applying for refinance. Though there are many factors that decide this, the most important is that you have to stay in your home for atleast 10 years to refinance your mortgages.

Make your family feel proud of you by refinancing your home mortgage on time

The two type of home loans, the one with adjustable rate and the other with fixed rate have very good features. The first one have high interest rate on the mortgages and are very cheap in the early stages but as the time pass by they start becoming expensive. Other one, the fixed rate, the interest rate is same of the duration of the loan. These loans are not so risky as the adjustable ones. These loans have got no impact on the changing market conditions.

However, homeowners have got one special benefit and that is they can swift from adjustable rate to the fixed rate at any point of time and vice-versa. I would personally suggest everyone to take help of mortgage calculators while refinancing your mortgages. These calculators will help the homeowners to decide on the various payment methods depending upon the credibility of the homeowners.

Take help from professional Mortgage Advisers only

Take help of mortgage advisers and follow their step at each and every point of making a decision. Always choose the best mortgage broker, they will charge some commission from you but they will provide you the best class of services. As refinancing depends entirely the amount of finances you have, so taking a help from financial advisers is the sound advice too.

Do not forget to check this amazing short video on refinancing home mortgages :

Are You Eligible for Obama's New Loan Modification Program?

It was good to see that now million of borrowers will get help from Obama's New Loan Modification Program that aims to help them staying in their homes and avoiding foreclosure. Lots of borrowers are still confused that whether this step from the President would help them or not. People are confused that this new refinancing program is for whom? Lots of question still running in their mind. This post is for all those people who are still scratching their head regarding the broad decision made by President Obama.



What is the new Loan Modification Program all about ?

This plan was made keeping in mind two groups of people:

1. People who were unable to qualify for Refinancing though they were able to pay their mortgages on time. This was happening because they owe more on their current home than it was a worth of.

2. People who are at extreme risk level because of high foreclosure.

This new home affordable program plans to allocate around $75 billion for those borrowers so that they can stay in their homes without any added disturbances. The only thing to be kept in mind is that not everybody will qualify for this program. Then Who will Qualify?

1. A person should live in the same house which must be his/her primary residence.
2. Second Mortgages should not be included under this plan at any cost.
3. A person should prove his income.
4. The current house payment should be equal to or more than 31 % of a person's Gross Monthly Income.
5. There should be no charge to apply for free loan modification program.


How to apply for New Loan Modification Program?

The most important thing to do here is to complete the paper work as soon as possible and completing the required loan modification documents . Secondly, the borrower should prove that he/she is passing by financial crisis, they have to submit their income and expenses details completely.

Which banks are helping with this new Loan Modification Program?

It is good to see that the Federal Government is offering monetary incentives to the lenders because this program is entirely on the voluntary basis. As a result of this most banks will offer this plan to their qualified borrowers.

How will the new Affordable Plan work?

With new interest rate and payment this program will run on 3 months trial period. If the payments are made on time the lenders will automatically convert the plan to permanent modification agreement. After this the plan will continue till 5 years at a very low interest rate and payments.

During this 5 year period homeowners will receive $ 1000 per year which is directly applied with the loan balance. As soon as the 5th year is completed the rate is bound to go up by 1% until it reaches to the maximum point which had been signed in the agreement. It is important for the homeowners to learn about their debt ratio.

What are the important features of new Loan Modification Program?

This new program is not at all similar to loans. The best part is government is paying incentives to the lenders who are participating in this program. Previously no new loan was written that was more than 80%, now with the drop of prices these changes are normal. Many people can easily take advantage of current low mortgage interest rates.



I am ending this post by stating that though I have provided my readers with information regarding qualification of new loan modification program, that doesn't mean that I am favoring or I am against this program. I just believe that it will not help us to come out of the mess in which we are right now. This post is written only to provide general information to you and so that EACH one of you reading this can come with your own conclusions.

Tips to Cut Costs in Refinancing

If you are thinking of refinancing your mortgage, you should get in touch with a good mortgage broker or find a local loan officer to get you a new deal for yourself. Go to this worldwide mortgage directory to find one in your area. Before you try and get a profitable deal, read the tips below to help you save money using these cost-cutting strategies:

1.) If you don’t already notice it, a big portion of your monthly mortgage payment goes towards the interest. People who refinance usually do so because they found offers with attractive low interest rate. But you should also know that you can save even more money if you shorten the payback term. However, shorter payback term usually means bigger monthly installments. To make sure you get the best deal, compare refinance rates from several mortgage lenders before making any decisions.

2.) Mortgage lenders usually charge a higher interest to borrowers with bad credit report. So before you even try to apply for a refinancing, do everything you can to fix your credit. Closing your open credit cards is one option. If you choose to do so, make sure that your new credit report states that your accounts were closed because of your own request and not because of your credit history.

3.) Paying “points” can also lower the interest rate significantly. In the long run, doing this will save you thousands of dollars. But if you are planning to move only in a few years, do not opt for this kind of strategy.

4.) Another way to save money on refinancing is to stay clear from Private Mortgage Insurance. Insurance policies such as these will cost you hundreds of dollars every year. It saves more money by paying more initially in down payment and/ or borrowing less than 80% of your home’s value.

5) Analyze the fees that your mortgage lender is asking you to pay. Refer to the list of standard fees issued by the Department of Housing and Urban Development.

Thus, using a few simple tactics, you can ignite a lot of money for yourself over a long term. If you follow the above strategies sincerely, let me assure you that you will be able to save enough to free yourself from all debts and also have your own house in future.

Real estate investment: why you should do it and how you can do it

It is always said that if we do any things rightly it takes a good shape in the future. Same goes for the real estate investment too. It can really prove beneficial if it is rightly done. But there are many risks involved in this business and only an intelligent player can win the race. If you really want to win the real estate race then you should have a clear vision about why you are trying to invest in real estate.

Why you should invest in real estate?

• Appreciation of Value: With inflation, the value of the real estate properties are appreciated. So, after a considerable period of time, one can easily reap out the advantages from the real estate investment. As soon as the value increase you can sell your property and can earn easy incomes.

• Yielding Rentals: One can achieve rental yields only when you buy a real estate property and put it on rent. After deducting the taxes and the insurance expenses and dividing that figure with the cost, the real figures of rental yield is evaluated. So, you have an added advantage here in the sense after paying taxes you are gaining from the real estate investments.

• Positive effects of Inflation: You can get higher rent for your properties when the inflation increases. But, keep in mind that your monthly payments for the mortgage remains the same. That means you earn profit with the increase in income, expenses remaining unchanged.
  

Prospect of real estate investing is increasing day by day. You can get good returns if you actually know how to invest in real estate.

How to invest in Real Estate?

• Check your Affordability: Always keep this in mind that real estate investing takes times in procuring returns. That implies that you need money not only for buying the real estate properties but also for maintaining it. You can buy the property with the help of mortgage loan only if you are ready to repay the amount according to the terms and conditions of the mortgage loan. So, it is advisable to check whether you can actually afford such a long term investment.

• Choose the property type wisely: There are two types of properties. Prime and non-prime type. The prime properties are always the expensive ones but carry chances of high returns. Non-prime properties might be profitable only if the demand is increasing. So, take a wise decision.

• Keep an eye on latest market trends: Though the real estate investment is always made on the long term basis, you should always keep an eye on the latest market trends. In order to secure substantial returns, you have to choose the right time to invest.

• Keep in mind about the taxes: Wealth tax comes into the picture only if you become the owner of two residential houses. If you buy a real estate property and put it on rent, you will be liable to pay income tax on your rental income. So, it is better to think about the taxes before you take any firm decision.

If you really liked the inputs on " real estate investment ", then don't forget to put your valuable feedback. All the comments will be accepted with honor.

Its the Best Time to Buy New Home

Everyone has a desire to have his/her own home. But when it’s come to buying a home then home buyers always become very curious to know that when is the best time to put forward their step towards buying a home or is this the best time to grab a home. Well if I need to answer this question then I would say that the decision of buying a home should be made after reviewing the market very carefully. Like you need to know the trend of home prices, whether it is upward or downward, what will be the mortgage rate, will you be able to afford the monthly mortgage payments or not etc.....

But if I answer the question honestly depending upon the present scenario then for home buying the right time is in its way. Because the US housing market is having a declining trend and home prices are falling down like anything. However if you want then you can wait till the home price touches its lowest point or you can wait for the home price to fall a little bit more. But one more thing is there that you have to look into that is the rate of mortgage. Some buyers are not getting interested because of the high interest rates. So if you are okay with the current mortgage rate then the finest time to buy a home is knocking at your door. And in case of buyers who are worried about the high interest rates, a buy down might be helpful to work out their budget.

In other hand for home sellers who also wish to buy or move to a luxurious home than the present one they are having, the right time to sell is now. Because at present condition the more they wait, the lesser the home price they might get. So try and sell your property as early as possible and then wait for the price of your new home to fall a bit more. Or sellers who have their own alternative place to stay, they can go for selling their property right now and wait for sometime before buying a new one. However if you do both selling and buying at the same time then also you won’t be in loss. Because the diminution in price while purchasing will help you to recover the loss you already had while selling.

So the good strategy for sellers who also want to buy a new and much expensive home is to sell now doesn’t matter if they have to bear some loss, because they will have a fine chance to recuperate the loss they had while selling through the purchase of their new home.

Understand the Mortgage Points

Anyone who has ever shopped for quotes on a mortgage to find out just how much it might cost has likely heard about mortgage points. Though the term might seem abstract, the concept is actually quite simple. Mortgage Points are nothing but certain charges to be paid in order to obtain a mortgage on a home. Each mortgage point is a fee based on one percent of the total amount of the loan.

Let me be more clear to you. Mortgage Points is kind of a fee that is paid upfront when taking out a new loan or refinancing the existing mortgage. Mortgage points are of mainly two types, the first being the "discount points" and the other "origination point". Let us understand both of them clearly.

Discount Points is something that you pay the lender in exchange for lowering your mortgage rate. The decision to pay discount points should be made considering how long you plan on staying in your home and how long it will take you to recoup this expense. On the other hand, Origination Point is that you pay to the person arranging your loan. Since, Mortgage rates are at the lowest level these days so the homeowners should think long and hard before agreeing to pay discount points.

Mortgage Origination Points are bit difficult to understand as compared to discount points. This fee can range anywhere from zero to as much as five percent. When refinancing your mortgage you will be able to refinance paying only a flat one percent origination fee to the broker. This means there will be no markup of your mortgage rate for a commission which results in a higher monthly payment for as long as you keep the loan.

If you think i have missed out any point then please feel free to comment. All the comments are appreciated with honor.

Choose a Right Mortgage for your New Home

We all are very much aware that buying a home is one of the major and big dreams of our entire life and mortgage plays a vital role when we are up to buying a home. So while shopping for your new home you always got to know that which type of mortgage or home loan is perfect for you and match your affordability.

Because if the mortgage type you choose does not suit your affordability level then you might be into big risk with the interest rate and other stuffs. So find below few mortgage or home loan types which are normally best suited for everyone.

A. FRM (Fixed Rate Mortgage): The specialty of this particular type of mortgage loan is you will get a locked in or fixed rate of interest (for example: 6.0%) along with a set monthly installment scheme in this type of mortgage.

B. ARM (Adjustable Rate Mortgage): Adjustable Rate Mortgage is best suited for home buyers who have flexible funds or financial resources to pay off their mortgage. Because here in this mortgage type the rate of interest reacts with the ups and downs in the industry. Means you will have to accept the current rate of interest of the market. Does not matter whether it’s high or low.

C. Negative Amortization Mortgage: If you opt for this type of mortgage loan then you will be allowed to pay a monthly installment which will be not more than the total amount of interest. However the amount of interest which remains unpaid and the balance of the principal amount will rise in this specific type of mortgage loan.

D. Interest Only Mortgage: In this type of mortgage loan buyers generally pay for 5 to 10 years on the interest amount of mortgage loan.

Check out an interesting video by bloomberg on types of mortgages:

So the bottom line is while selecting a loan option for your new home the pros and cons or merits and demerits of that particular mortgage or home loan type needs to be taken into consideration. So that you will not find yourself in any kind of trouble while paying off the loan.

Do You Want To Eliminate Your PMI ?

Let us quickly understand first what is PMI? PMI or Private Mortgage Insurance is normally required when you buy a house with less than 20% down. Mortgage insurance is a type of guarantee that helps protect lenders against the costs of foreclosure. This insurance protection is provided by private mortgage-insurance companies. It enables lenders to accept lower down payments than they would normally accept. In effect, mortgage insurance provides what the equity of a higher down payment would provide to cover a lender's losses in the unfortunate event of foreclosure. Therefore, without mortgage insurance, you might not be able to buy a home without a 20% down payment.

The cost of PMI increases as your down payment decreases. Example: The cost of PMI on a 10% down payment is less than the cost of PMI on a 5% down payment. Your PMI premium is normally added to your monthly mortgage payment.

If you didn’t put down 20 percent in cash on your home, you’re probably paying private mortgage insurance. Now its upto you weather you want to cancel it or regain it. The decision on when to cancel the private insurance coverage does not depend solely on the degree of your equity in the home. The final say on terminating a private mortgage-insurance policy is reserved jointly for the lender and any investor who may have purchased an interest in the mortgage. However, in most cases, the lender will allow cancellation of mortgage insurance when the loan is paid down to 80% of the original property value. Some lenders may require that you pay PMI for one or two years before you may apply to remove it.

First start contacting your lenders. Ask if the lender has specific steps that must be followed when canceling PMI. Typically, you’ll need to jump through several hoops before they let you drop it. You’ll need to have your home appraised to make sure you’ve reached the magic 20 percent in equity. Expect to pay anywhere from $300 on up for that appraisal.

If you’ve built up the necessary equity, you’ll need to send your lender a letter formally requesting that they drop PMI, and reduce your monthly payment. A new law on the books requires lenders to automatically cancel your PMI once you’ve reached 22 percent equity based on your original home loan and sales price. Lenders typically make the process of dropping PMI more cumbersome than it needs to be. Just be tenacious, and keep a copy of all correspondence. Sooner or later, your persistence will pay off, and you’ll be able to start using your PMI savings to pre-pay your mortgage, or invest for your retirement.

Check out what our friend www.mateomortgage.com wants to tell you regarding PMI :



To cancel the PMI on your loan, contact your lender. In most cases, an appraisal will be required to determine the value of your property. You will probably also be required to pay for the cost of this appraisal. Another way of canceling the PMI on your loan is to refinance and to get a new loan without PMI.

Easy Steps for Buying a Home

A home of one’s own is like a dream come true. Buying a home could be a good investment if the market is on the rise. It gives you many benefits other than being an owner. There is reduction in income tax payments through tax deductions on mortgage payments and property taxes and along with that you get a steady source of cash flow with the growing equity in your home, not to mention the freedom and independence of your own home.

Buying a home should be planned carefully and this involves a step by step procedure.

Personal review: The first step is to determine your financial position and fix a budget accordingly. Your current income, monthly expenses, credit report, down payment that you are ready to put along with the closing costs will help you to do this calculation.

Finding a lender: This is one of the most important factors that should be considered. The lender is the best guide in determining things like how much mortgage you may get and give a pre-approval for the mortgage. Make sure to work with an honest and professional lender to avoid complications during the entire loan term. You may have to shop for a while for lenders, comparing costs and interest rates, and negotiating for a better offer.

Get a mortgage pre-approval: Only a mortgage pre-approval will give you an estimate of how much you may afford. A seller will always want to see a buyer who is financially ready for the purchase and in such cases the pre-approval gives you an added advantage.

Start searching for a home: It is always wise to take the help of an experienced real estate agent while looking for a home. The price of the house is essential for you to consider. Apart from this, the location of the house, the kind of house (new/ resale/ build new), its probable resale value are some of the other factors to be considered. Discuss with your real estate agent and make an offer to the seller. Remember to get a home inspection which tells you about the condition of the property.

Get the loan underway: As soon as the seller agrees to your offer, write a contract and start following through the loan. Contact your lender and ask him to start processing the loan as early as possible. If you have been pre-approved, most of the work is done and the loan will be processed quickly.

Get prepared for Closing: This is the final step in buying a home. On the closing date, the ownership of the house will be officially transferred to you. There would be several other up-front costs involved in the process which you have to pay at closing.

Find Below what our Financial Adviser, Mrs Martin wants to say regarding buying a home:

You should never hesitate to take necessary help from the real estate agent or your lender. If required you may also approach an attorney and consult him. You will feel comfortable about the transaction if you understand every step involved in the process as you are making a long term commitment and spending a major amount of money.