Life After Bankruptcy
Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.
Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.
One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.
For many homeowners in the midst of this upside down cash flow, speaking to a qualified mortgage professional is a much better option. An experienced loan officer can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.
If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It’s that simple.
When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, the FBI, and the IRS.
Here are some additional steps you can take to make the bankruptcy process as painless as possible:
Save all paperwork regarding your bankruptcy, and keep it organized. This will prove beneficial after your bankruptcy as you now have all of the pertinent information in one place. Also, be sure to write down your discharge date. It’s surprising how many people forget to do this.
Establish a household budget. This can be accomplished in many ways, but there are several inexpensive computer programs available which do an excellent job.
Throughout the bankruptcy, do your best to not only live below your means, but to save as much cash as possible. You never know what you may need it for once the process is completed.
Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.
Tips for Rebuilding Credit:
If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive, used car, and try to get a loan for it. It’s a good idea to figure out what your budget allows in terms of a dollar amount first. This means obtaining financing prior to looking for a car.
Get a secured credit card. Secured credit cards allow for the cardholder to deposit a said amount of money into an account, thus establishing the spending limit of the card. Missed payments result in deductions from the account. Some of these cards will reward responsible borrowers by upping the limit without an additional deposit. Some will even convert the account into a traditional credit card. (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)
Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.
While it does take time, there is definitely life (and credit) after bankruptcy. Some mortgage lenders will even lend to you within a year or so after a bankruptcy. If you’re in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.
Monday, May 23, 2011
Home Loan Rate Trends
What is the Velocity of Money and How Does it Impact Home Loan Rates?
If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.
Here's why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money. With the job market still very sluggish, consumers aren't spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation remains subdued and that's good for home loan rates. That's because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen. While we certainly want to see better economic recovery news in the near future, we have to remember that there's an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.
Currently, home loan rates are at a historically low level, but that situation won’t last forever. That means now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact me.
If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.
Here's why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money. With the job market still very sluggish, consumers aren't spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation remains subdued and that's good for home loan rates. That's because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen. While we certainly want to see better economic recovery news in the near future, we have to remember that there's an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.
Currently, home loan rates are at a historically low level, but that situation won’t last forever. That means now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact me.
Friday, April 15, 2011
FIVE MAJOR TAX DEDUCTIONS THREATENED
Five major tax deductions are up for discussion for elimination, starting with mortgage interest:
•Mortgage interest deduction
•Charitable contributions
•State and local taxes
•Employer-provided health insurance
•Tax-deductible retirement plans
See full story at: http://www.usatoday.com/money/perfi/taxes/2011-04-14-tax-breaks-under-fire.htm
•Mortgage interest deduction
•Charitable contributions
•State and local taxes
•Employer-provided health insurance
•Tax-deductible retirement plans
See full story at: http://www.usatoday.com/money/perfi/taxes/2011-04-14-tax-breaks-under-fire.htm
Thursday, April 14, 2011
Realtor Bonuses Offered with Program
HomePath financing incentives are now available which allow up to 3 1/2% seller contribution to buyer's closing costs. This incentive is good through 6/30/2011.
Realtor Bonuses are offered through this program also. Call Taum for details - 480-967-8286 and hear a little bit more from Taum by clicking here:http://www.youtube.com/watch?v=faAv9B1KnWg
Wednesday, March 16, 2011
Mortgages Now More Expensive, Harder to Get, Take Longer....That's Government in Action Again...
Real Estate Industry News
Mortgage Proposals Could Cost Borrowers, Some Say
Mortgage loans could get more expensive, and harder to get, under proposals presented by the Obama administration to reform Fannie Mae and Freddie Mac, some consumer groups said recently.
The administration's proposals suggest varying levels of government support for mortgages. But only one of those proposals would maintain a strong role by the government for consumers in the mortgage market, according to the Consumer Federation of America, a nonprofit advocacy group.
Plans to rely heavily on banks and investors to provide mortgages, without much federal support, could lead to fewer long-term, fixed-rate mortgages, higher prices and less access to secondary markets for small banks and credit unions, the CFA and others said.
"The administration has laid out a series of options that could lead to the abandonment of a nearly 70-year commitment to affordable homeownership for working American families," said Barry Zigas, CFA's director of housing policy, in a news release.
Other administration proposals that might affect borrowers:
³Raising the minimum down payment for a Fannie- or Freddie-backed home loan to 10%
³Reducing the maximum mortgage amount that can be financed or insured by Fannie, Freddie or the Federal Housing Administration
³Increasing the fees charged by Fannie, Freddie and the FHA
It's important to note that the proposals are just a starting point for what is sure to be a lengthy discussion about the future of mortgage finance in America.
The Mortgage Bankers Association's chairman called the release of the administration's proposals "another important milestone on the road to stabilizing the mortgage market."
One of the concepts outlined by the administration resembles a previous MBA proposal, said Michael D. Berman, chairman of the MBA.
"Our proposal envisions an explicit, but limited, government guarantee of lower-risk mortgage-backed securities. The guarantee would be paid for by fees used to build a fund to protect taxpayers," Berman said in a news release. "This is the most prudent approach, one that places the primary risk on private investors and ensures sufficient liquidity during times of economic stress in order to provide affordable mortgage finance in all types of mortgage markets."
Reduced access to loans
For sure, if the government scales back Fannie and Freddie, and fees involved with government-backed mortgages rise, it will inevitably curtail the availability of affordable mortgage credit for some borrowers -- particularly people with marginal credit or little money to put down, said Greg McBride, senior financial analyst for Bankrate.com.
"The consequence of reining that in and expecting the private market to fill the void is that some consumers will find that credit isn't available -- and when it is, it will cost a good bit more," McBride said.
While broad changes to the government-sponsored entities could bring higher costs to consumers, mortgage costs have been going up already anyway, in the form of loan-level price adjustments from Fannie and Freddie and fee increases from the Federal Housing Administration, said Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage and consumer loan information.
And with a private mortgage market nearly non-existent today, it's far from clear exactly how -- and when -- policies will change, he said.
"This is a pretty broad framework," Gumbinger said of the administration's proposals. But, finally, people in the industry have a framework on the table to argue about, he added.
"Hopefully, we can preserve mortgage markets that existing players can profit in, and move away from the excesses and polices that pushed us to where the market went as far as it could and fell over," Gumbinger said.
For its part, the National Community Reinvestment Coalition said the proposed policies could lock working-class families out of homeownership.
"There is universal agreement with the principle that people who cannot afford homeownership shouldn't be put in an unsustainable loan," John Taylor, president and chief executive of NCRC, said in a news release.
"However, the administration's proposal may be overly narrowing the window of opportunity for many blue collar and low- and moderate-income people from realizing their dream of homeownership."
By: Amy Hoak, www.marketwatch.com
Mortgage Proposals Could Cost Borrowers, Some Say
Mortgage loans could get more expensive, and harder to get, under proposals presented by the Obama administration to reform Fannie Mae and Freddie Mac, some consumer groups said recently.
The administration's proposals suggest varying levels of government support for mortgages. But only one of those proposals would maintain a strong role by the government for consumers in the mortgage market, according to the Consumer Federation of America, a nonprofit advocacy group.
Plans to rely heavily on banks and investors to provide mortgages, without much federal support, could lead to fewer long-term, fixed-rate mortgages, higher prices and less access to secondary markets for small banks and credit unions, the CFA and others said.
"The administration has laid out a series of options that could lead to the abandonment of a nearly 70-year commitment to affordable homeownership for working American families," said Barry Zigas, CFA's director of housing policy, in a news release.
Other administration proposals that might affect borrowers:
³Raising the minimum down payment for a Fannie- or Freddie-backed home loan to 10%
³Reducing the maximum mortgage amount that can be financed or insured by Fannie, Freddie or the Federal Housing Administration
³Increasing the fees charged by Fannie, Freddie and the FHA
It's important to note that the proposals are just a starting point for what is sure to be a lengthy discussion about the future of mortgage finance in America.
The Mortgage Bankers Association's chairman called the release of the administration's proposals "another important milestone on the road to stabilizing the mortgage market."
One of the concepts outlined by the administration resembles a previous MBA proposal, said Michael D. Berman, chairman of the MBA.
"Our proposal envisions an explicit, but limited, government guarantee of lower-risk mortgage-backed securities. The guarantee would be paid for by fees used to build a fund to protect taxpayers," Berman said in a news release. "This is the most prudent approach, one that places the primary risk on private investors and ensures sufficient liquidity during times of economic stress in order to provide affordable mortgage finance in all types of mortgage markets."
Reduced access to loans
For sure, if the government scales back Fannie and Freddie, and fees involved with government-backed mortgages rise, it will inevitably curtail the availability of affordable mortgage credit for some borrowers -- particularly people with marginal credit or little money to put down, said Greg McBride, senior financial analyst for Bankrate.com.
"The consequence of reining that in and expecting the private market to fill the void is that some consumers will find that credit isn't available -- and when it is, it will cost a good bit more," McBride said.
While broad changes to the government-sponsored entities could bring higher costs to consumers, mortgage costs have been going up already anyway, in the form of loan-level price adjustments from Fannie and Freddie and fee increases from the Federal Housing Administration, said Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage and consumer loan information.
And with a private mortgage market nearly non-existent today, it's far from clear exactly how -- and when -- policies will change, he said.
"This is a pretty broad framework," Gumbinger said of the administration's proposals. But, finally, people in the industry have a framework on the table to argue about, he added.
"Hopefully, we can preserve mortgage markets that existing players can profit in, and move away from the excesses and polices that pushed us to where the market went as far as it could and fell over," Gumbinger said.
For its part, the National Community Reinvestment Coalition said the proposed policies could lock working-class families out of homeownership.
"There is universal agreement with the principle that people who cannot afford homeownership shouldn't be put in an unsustainable loan," John Taylor, president and chief executive of NCRC, said in a news release.
"However, the administration's proposal may be overly narrowing the window of opportunity for many blue collar and low- and moderate-income people from realizing their dream of homeownership."
By: Amy Hoak, www.marketwatch.com
Monday, February 28, 2011
FHA Announces Increase to Monthly Mortgage Insurance Premiums
How Will This Impact Buying a Home?
I just wanted to let you know about an important announcement from FHA that will have an impact buying a home. As of this coming April 18th, the monthly Mortgage Insurance Premiums will increase for FHA loans (.25%). The change raises the current premium from .9% to 1.15% on 30 year fixed loans.
This increase could have a large impact on borrowers and their ability to qualify for FHA financing (or may even take them out of their comfort level for monthly payment).
Example:
$150,000 loan amount
Current monthly MIP: $112.50
New monthly MIP: $143.75
While this change will help strengthen FHA, which is important since some estimates show that FHA loans represent nearly 50% of all loans being done today, it puts the burden of shoring up FHA back on the consumer.
Even though FHA has increased their rates, the FHA loan is still a good option for buyers with little to put down; however, conventional financing is becoming more attractive every day.
If you have any questions at all about what this might mean, call or email me anytime. I'm committed to doing whatever I can to help people buy a home.
I just wanted to let you know about an important announcement from FHA that will have an impact buying a home. As of this coming April 18th, the monthly Mortgage Insurance Premiums will increase for FHA loans (.25%). The change raises the current premium from .9% to 1.15% on 30 year fixed loans.
This increase could have a large impact on borrowers and their ability to qualify for FHA financing (or may even take them out of their comfort level for monthly payment).
Example:
$150,000 loan amount
Current monthly MIP: $112.50
New monthly MIP: $143.75
While this change will help strengthen FHA, which is important since some estimates show that FHA loans represent nearly 50% of all loans being done today, it puts the burden of shoring up FHA back on the consumer.
Even though FHA has increased their rates, the FHA loan is still a good option for buyers with little to put down; however, conventional financing is becoming more attractive every day.
If you have any questions at all about what this might mean, call or email me anytime. I'm committed to doing whatever I can to help people buy a home.
Saturday, February 26, 2011
Renters Have Much to Gain by Pursuing Home Ownership
Scottsdale, AZ – Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.
Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.
Taum Hemmingsen is the owner/banker of Marketline Mortgage, LLC. Taum hosts Home Buyer’s Seminars which are open to the public on the first Tuesday of each month from 6:30p – 7:30pm. Seating is limited. To reserve your seat at the next event, call 480-967-8286 to RSVP and obtain a free copy of Taum’s Home Buyer Handbook.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.
Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.
Taum Hemmingsen is the owner/banker of Marketline Mortgage, LLC. Taum hosts Home Buyer’s Seminars which are open to the public on the first Tuesday of each month from 6:30p – 7:30pm. Seating is limited. To reserve your seat at the next event, call 480-967-8286 to RSVP and obtain a free copy of Taum’s Home Buyer Handbook.
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