Mortgage, Real Estate and Debt Information

President Barack Obama is well aware that the current economic situation in the country leaves a lot of homeowners struggling. Housing prices have crashed and the all time high number of foreclosures does not help that at all, lowering surrounding homes values by as much as 9%. Home and property values have dropped so far that many homeowners now owe more on their mortgage than their home is actually worth. Due to these problems, the Obama administration has introduced the housing and homeowner stimulus plan. This plan was announced in February and has started this month. Most people no longer have 20% equity in their homes, which is typically required for traditional mortgage refinancing, due to the dropping home prices. The stimulus plan from President Obama is going to make it easier for homeowners to modify or refinance their current home mortgage and have more manageable monthly payments and avoid a possible foreclosure. The goal of this home mortgage stimulus plan is to help over 5 million homeowners stay in their homes and avoid foreclosure or defaulting on their loan. This is done by giving incentives to mortgage lenders to use their new guidelines for approving a mortgage refinance. So with more incentives and less risk to mortgage lenders are going to be more flexible on who can refinance, how much they can save, and finding financially affordable monthly mortgage payments.

Homeowners looking to refinance or modify their current mortgages will get their loans restructured by mortgage lenders. With this plan, the maximum allowable monthly mortgage payment can not exceed 38% of the homeowners gross monthly income. Mortgage lenders will also get a dollars for dollar incentive from the government to further lower the monthly payments to 31% of the homeowners gross monthly income. This is great news for a lot of homeowners who are out of work or just struggling to make their monthly mortgage payment. A lot of homeowners currently pay 40% or even 50% of their income towards their mortgage. A 20% reduction would add up to a lot of saved money every month.

The Treasury of the United States has an exact series of guidelines for mortgage lenders and banks to complete when refinancing or modifying a home mortgage loan. In the past for example, mortgage loans have been refinanced or modified by adding on missed payments to the loans principal which basically did nothing to reduce the monthly payment. The housing mortgage refinance stimulus plan announced by Obama will mean a great amount of savings for millions of homeowners.

Home refinancing can save you thousands or if it is done the wrong way cost you thousands. Greedy mortgage lenders will try to suck you dry if you let them. Learn how to properly refinancing a home mortgage and walk away happy and with more money.

As age catches up with seniors and their retirement gross nearer, seniors should start thinking about planning for the future. There is no doubt, some post retirement benefits will help seniors, but the amount of money can be inadequate for some seniors to meet their financial expenses for each month. Unless the senior is receiving a sizable amount of money for their retirement benefits, it is unlikely they have the funds for a comfortable retirement that would enable them to travel and enjoy their silver years. All these financial requirements can easily be taken care of my means of a reverse mortgage.

Many people think of ways in which they can add substantial amounts of money to their retirement so they can live the life they have always dreamed about. Most seniors have seen ads of elderly couples traveling to exotic foreign destinations beamed across the TV screen and they too want to join in the fun and enjoy life. There is a way to take those trips and have extra money without many hassles; the parties involved just need to be at least 62 years of age to apply for a reverse mortgage that can provide the senior with financial liberty by using their home equity.

If you are a senior citizen and are above 62 years of age and have a large amount of equity in your home, a reverse mortgage can assists you in your post retirement dreams. After you receive the loan from the lender, you will not have to pay back the loan as long as you live in your home. However, if you sell your home, you will have to repay the loan. The money you receive from the loan is tax free and you retain ownership of your home. In case of your death, the person who inherits the house will need the loan if they decide to keep the house. A reverse mortgage is not dependent on your health, income or even credit history.

Many seniors may decide to use a reverse mortgage for something other than a dream vacation. Seniors may decide to use the funds towards paying off their current mortgage, some may decide to use the money for health care, or even daily living expenses. The fact that a reverse mortgage allows seniors to have their own financial security and independence makes it a very popular option. Most people view a reverse mortgage as a need, meaning they will only do a reverse mortgage because they need the money not because they want the money for trips.

A reverse mortgage can be quite expensive because the cost of the loan includes credit reporting charges as well as appraisal and initiation charges, inspection charges etc. add them all together they can add up to a substantial amount which is deducted from the amount you will receive. If you do not properly manage your cash, you should seek professional to help manage the money you receive from the reverse mortgage in combination with the rest of your funds.

It happens all the time. Debt collectors try to collect on debts that consumers have no knowledge of or never owed in the first place. So, what do you do when a bill collector demands payment in full on a debt that you never knew existed? You need to request a validation of debt.

A validation of debt is a request for proof that the collection agency that is contacting you owns the debt/or has been assigned the right to collect the debt on behalf of an original creditor. A validation of debt also includes a complete payment history, starting with the original creditor, and a copy of the original signed loan agreement or credit card application. This may be a debt you really owe or possibly a debt that was sent to collections by mistake. Either way, debt collectors can be very unapproachable. It is important to remember that you also have rights. According to the Fair Debt Collection Practices Act, Paragraph 809, - Validation of Debts:

"(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing:

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

The information presented in this article only covers some of the more important aspects of debt validation. It is important to do your research and fully understand your rights and obligations prior to attempting any type of communication with a debt collector.

If you're interested in doing the credit repair yourself, you'll want to be clear on a few of the basics.

One aspect you'll want to fully understand is the debt validation letter.

Its important to not only know what debt validation means, but also when to use it, how to use it, with whom to use it and why you'll be using it.

Lets start with what it means.

Debt validation means having the company trying to collect the debt provide proof that the debt is actually your responsibility and that they have the right to collect it.

You'll want to send a debt validation letter as soon as you hear from the collection agency. When you are contacted for the first time by a company claiming to own a debt they say you owe and insisting that you pay it immediately, get their mailing address and send them a validation letter whether you recognize the debt or not.

You'll want to make sure that your debt validation letter does not say you refuse to pay the debt. You also don't want it to say you will. Instead have it ask for specific proof that you are the party responsible for the debt.

You'll also want to make sure that it asks for substantial evidence that the particular company seeking to collect the debt has the legal authority to do so. Not only must they have proof from the original creditor that they purchased the debt, you'll also want them to provide proof that they have a right to try to collect the debt in your particular state.

An example of proper proof that the debt belongs to you, would be a copy of the unique agreement you made with the original creditor.

An example of proper proof that the particular company trying to collect the debt has authority to do so would be a copy of the receipt of your debt's purchase.

Knowing how to create a proper debt validation letter is one of the many tools you'll want to add to your toolbox, when a collection agency enters your life. For more free tools, visit http://www.help-with-credit-issues.com today and take back control.

In the last couple of years real estate investment has taken a huge beating. With the markets crashing in most parts of the US and in some parts of the UK, the general mood is grim, as far as real estate is concerned. In almost all parts of the world, home sales have slowed to a snail's pace and value of properties has plunged like never before. The cause is not helped by climbing mortgage rates either.

A good majority of investors are therefore staying away from investing in real estate. Understandable, but a tad overcautious?

It would seem so.

The financial downturn has its benefits. For instance, if you are a buyer in this market, chances are you will make a handsome profit because it is a buyer's market out there. For one thing, rates have crashed. So, anyone making a buy today can be assured that they are buying when rates have bottomed out. Secondly, most sellers have come down from their high horses and are willing to sell if they get a genuine buyer with a reasonably good offer. Some are even ready to sell if they break even. So, if you have the money, there's no reason to hold yourself back.

But there are a number of things you need to remember before investing in real estate.

Real estate is not the stock market. You cannot expect to play it for short term profits. In the past, people have invested in property and flipped it for handsome profits. But that bubble has popped and it is anybody's guess when things will be as they were before. So, play in real estate only if you are in it for the long run.

The second rule in real estate investing is to always, always be prepared for the deal. Many people buy as a direct result of knee jerk reactions to all the bad news they hear. That's the natural thing to do when sources around you are pushing nothing but volatile pieces of news. But a wise investor needs to be objective and dispassionate in their decision.

The best way to achieve objectivity is to collect as much information as possible. Every investor needs a systematic and disciplined approach to the investment process and must act in keeping with a grand plan of events.

Another important thing to remember in real estate investing is to keep your risks proportionate to your ability to absorb these risks. Make an investment only when you are financially capable of it. For instance, a person who is accumulating assets can take higher risks than, say, a retiree.

For someone looking for an opportunity to invest in real estate, the sky is really the limit. As the economy picks up and growth begins to make itself felt once again, the wise can make huge profits. However, the bottom line is that investing in real estate is a huge risk. You can win only if you utilize and take advantage of superior research, planning and high quality financial planning.

Private funds and finding people who are able to provide private funding can have a dramatic impact upon your ability to succeed at building lasting wealth. Many people find that without some assistance, taking the first step towards long term financial security can be difficult. Achieving your investment goals can be a complicated process and traditional lenders may shy away from individuals who have a poor or little credit rating. Many individuals find that securing the necessary funds to make a solid start to building can made easier when they approach private individuals for funding.

What are Private Funds?

Private funds are those financial resources that are made available through the private sector or private individuals. For those who are interested in building a business, seeking venture capital or investing in real estate, there are a number of private funding opportunities available. Using private funds provides you with the advantage of lower costs, but more importantly, private funds are generally more flexible than other loans.

With daily living expenses, mortgages, credit cards, car loans and other loans eating into your income, using private funds can be one means of securing the money you need to start getting ahead financially. If you use the private funding to begin building long term wealth, and you manage to create a solid profit margin through real estate investment, then private funds can really help you start to get ahead. Private funds will let you stay in control of your finances and provide opportunities for achieving your goals when you may not be able to receive the loan through a regular financial institution.

Securing private funds from private individuals generally means that you borrow the money from these lenders who in turn want a return on their investment. Borrowing in this way is a lot more flexible than borrowing from lending institutions. This gives you the advantage of tailoring a loan to fit your unique investment goals and lending requirements.

Securing Private Funding

Getting private funding for your investment goals could be easier than you imagine. You might find that you can secure funds through a family member, business associate or friend. One way to secure the funds is through simply letting people know that you are interested in borrowing the money. If someone is familiar with the process it will be easier. If you need to look further afield to find the money you need, you might still find that this is simpler than you had thought.

One option for securing private funding is to seek out lenders through networking via investment clubs, real estate clubs and via contacts you make in these places. Many investors who are seeking private funding will recommend that you 'prospect' for investors willing to put up the cash for your planned investment. By regularly networking and building your contact base, you'll find that you have a wider circle of people you can approach when seeking private funds. Once you have a solid group of contacts, you'll also find this can help you learn of new opportunities for real estate investment and you'll have a group of lenders who genuinely understand the investments you are making.

Another opportunity for finding potential lenders to provide private funding is via internet ads. These can help you gain more information about how to secure private funds, as well as a wealth of additional information through educational opportunities and reports. It's not advisable to advertise for prospective lenders online yourself. Instead, it is recommended that you attend networking events or investment workshops and similar to meet others who have an understanding of private funding and an interest in lending funds for profitable opportunities. The general rate of interest on private funds is fairly consistent with personal loans, sitting at about 9-15%. This makes the use of private funds a mutually beneficial activity for both the investor and the lender.

If you are seeking an opportunity to begin investing, then private funding for real estate investment is a chance to get started on the road to financial security and long term wealth. By using private funds, you can access the money necessary to carry out investment deals for mutual benefit. In securing funds where you may not have been able to if you had to go through traditional channels, you'll achieve your goals for real estate investment faster.

How do second mortgages work?

More commonly known as a home-equity loan, a second mortgage is a type of secured loan that you take out on your property using the equity it has. The amount of money you will be allowed to borrow is based on the market value of your property minus your balance from the first mortgage. For example, if you own property that has a market value of $100,000 with a balance of $40,000, then you have a $60,000 equity credit line. You would then be allowed to borrow up to that much for your second mortgage.

Why make use of your equity?

There are times when you may need money in order to pay for certain things. Making improvements in your home and purchasing new appliances are just some of the more common reasons. A second mortgage might be more beneficial to you financially than using conventional credit cards because the interest rates on home-equity loans are much lower. This is due to the fact that it is a secured loan. In certain circumstances, it might even be possible to have the interest you pay in a second mortgage become tax deductible.

Two Types of Home-equity Loans

There are two types of loans you can choose from if you are a property owner looking to get a home-equity loan, open-end loans and closed-end loans.

With a closed end loan, the borrower will receive one lump sum up to 100% of the value of the property, minus any liens. If you choose this type of loan, you would not be able to borrow anymore after that first initial payoff.

An open-end loan revolves. This means you will be able to choose when and how often you want to borrow. You will also be able to borrow up to 100% of the value of your property, minus any liens.

2nd Mortgage provides detailed information on 2nd Mortgage, Refinance 2nd Mortgage, Bad Credit 2nd Mortgage, 2nd Mortgage Loans and more. 2nd Mortgage is affiliated with 1st Mortgage Rate.

Buying a second mortgage for homes has emerged as a feasible option for people who are unable to make the requisite down payment for the property. First of all it is important to understand how a second mortgage works. Suppose you wish to buy property and don’t have the required 20% of the sale price as the amount to make the down payment. One option for you is to opt for private mortgage insurance for the required amount. In this, you will again need to make a small down payment and then make monthly installments for the rest of the value.

Another option is to take loan in two installments. Let us, for example, assume that you are in a position to make 10% down payment. That means you will require 90% of finance. In this case, you will get 80% loan as the first mortgage and the remaining 10% will be financed as the second mortgage.

This is also called piggyback financing. But you must keep in the mind that interest rates for second mortgage is higher than that of the first mortgage. This is because the risk factors are greater with the second mortgage loan as compared to the first mortgage loan. If there is a financial crisis, the primary loan or the first mortgage loan will be paid first. The second mortgage or the subordinate loan will be paid later.

To sum it up, second mortgage loans are loans with a fixed rate of interest. As in the case of the first mortgage loan, the second mortgage loan will depend upon your credit history and also the current rate of interest prevalent in the market. Generally the rate of interest is higher but the fees involved are lower.

Second mortgage loans provide an excellent opportunity to raise money for home buyers facing financial difficulties in raising the requisite money required for the down payment. Therefore, buying a second mortgage is fast gaining popularity for raising the cash needed for buying property.

Mortgage Buyers provides detailed information about mortgage buyers, first time mortgage buyer advice, first time mortgage buyers and more. Mortgage Buyers is affiliated with Home Equity Loans.

Every time you read an article about REO, there is a sentence there that says not to expect the same steep discount from short sales. They also add that short sales provide opportunities for higher profit margins and investors should focus more on preforeclosures or short sales than REO's.

But in practice, more investors and home buyers purchase REO properties than short sales. And according to a leading foreclosure website, only around 10% of short sale deals actually close.

So what is turning buyers and investors away from short sales?

1) Length of time to close a short sale deal is too long

Banks typically respond to REO offers within 1 to 2 weeks. On the other hand, in a short sale deal, the lender only gets notified of the deal after more than a month of negotiations between seller and buyer. And banks are much slower to respond to short sale deals than REO offers.

In fact, REO deals typically close within a month, but short sale deals if they close at all can take up to 4-6 months to close.

2) More complex negotiations and paperwork in short sales

Buyers are dealing directly with distressed sellers, and after that with bank representatives who are hesitant to accept short sale deals because of the deficiencies.

Hence, it takes more time, and energy to get in touch with all the parties and get them to agree on a price to close the short sale deal. While in the REO process, you only deal with the bank or its agent.

3) Trouble reaching an agreement between Second and First lien holders in short sales

Some second lien holders drive a hard bargain of getting a higher share of the selling price which can destroy the whole deal. And first lien holders are usually not willing to compromise to a lesser win-win deal with the second lien holder, and the buyer is not willing to pay more to satisfy all the lien holders.

Hence, if you consider the time, effort, and stress you spend on moving a short sale to a close - REO deals are a more profitable way to own foreclosed properties.

Craig Picard and Don Goff have helped 367 real estate investors grow their profits from buying and selling bank owned properties from zero to over $10,000 per month in only 3 months. To get your free CD "Foreclosure Investing Secrets" and learn how to profit during this recession go to http://www.REOInvestingRiches.com

Read enough about the Phoenix (or elsewhere) real estate market, and someone will start spouting statistics. And while market stats are important to understand, one must exercise extreme caution in interpreting them, or listening to others interpretations.

Let's take a look at "Days on Market" (DOM), or "inventory", or "months supply". Whatever you prefer to call it, it is an oft-cited indicator of overall market conditions. And generally speaking, it's not a bad indicator. The supply of homes available for sale is a key component in understanding the overall real estate market conditions.

It is important to understand a few things though:

* Our current market really consists of three major categories of inventory: 1) Bank/lender owned homes (also known as REOs); 2) pre-foreclosure/ short sale properties; and 3) "normal" properties (homes that are owner/investor owned and not in a pre-foreclosure status).

* Real estate is local. And the Phoenix metro area is a BIG place. Any time statistics or price indexes are quoted for the entire Phoenix area, you have to understand that conditions across the Valley can vary dramatically. Even within a suburb, conditions can vary from subdivision to subdivision. Within a single large Master Planned Community, conditions can vary from neighborhood to neighborhood.


The supply of homes is a perfect example. The general consensus in the real estate industry is that a six-month supply of homes is considered a "balanced market". Less than a six month supply means we are in a seller's market and more than a six-month supply is an indicator that we are in a buyer's market.

At this moment in time, if you look at all the available inventory of homes across the Phoenix metro area, there is a 5.2 month supply of homes.

If you're a seller, you may be thinking, "Hallelujah! Phoenix is a seller's market!" and if you're a buyer you may be thinking, "Crap. I should have bought a home a couple of months ago when it was a buyer's market and I would have had more negotiating power."

Let's look at the categories of inventory that make up this number...

If you extract the data for just lender owned properties, you'll see a much different picture.

Currently in the Phoenix metro area, there is only a 1.1 month supply of foreclosed homes. That indicates a very strong sellers market for foreclosed homes. A close examination of the data shows that foreclosure inventory is down, sales are up and pending sales (those homes under contract but not yet closed) are also up.

OK, so now you need to understand why these numbers are what they are. And sometimes the numbers alone won't tell the whole story. Nothing in the numbers tell you that some large lenders and the Government Sponsored Entities Fannie Mae and Freddie Mac imposed moratoriums on foreclosures that are in the process of being lifted. Nothing in the numbers tell you that there is still a lot of short sale/pre-foreclosure inventory - much of which slips into the lender owned category when it doesn't sell on the open market.

There are almost 12,000 homes listed in a short sale position. And it would take 15.2 months to sell all the existing short sale properties - if there were no more properties placed on the market.

The simple fact is, no home lasts for 15 months in a short sale position. The lender will foreclose long before that time period expires.

And what if you are a "normal" seller? Just the guy who owns their home and wants/needs to sell it. You aren't in trouble with the payments, and you've got enough equity to sell at current values and repay your loan (and hopefully pocket a little cash at close).

There is a 11.9 month supply of "normal" homes. You my normal seller are still looking at a strong buyer's market. Yes, sales and pending sales are trending up, but they are nowhere close to what they were last year and the year before. On average, you can expect it to take almost a year to sell your home. And guess what? You also get to compete with that foreclosed home across the street. The seller there is a bank that has probably already taken it in the shorts, they have no emotional investment in the home, and they've priced it very aggressively to get it off their books.

The Bottom Line

Not all statistics are as they appear, nor does any one stat tell the entire story. Consolidating all types of listings across an area the size of Phoenix metro into one number is usually very misleading. Look closely at all real estate stats, keeping in mind that the variations across market segments and location can swing wildly (and change quickly). You should try to understand what the real estate market is like in your location, for your type of home in your situation. Just keep in mind that it is very easy to generalize and misinterpret real estate market stats, particularly the data that aggregate large areas of completely different property types.

Mortgage is like a loan to finance the purchase of your home. In this process home is collateral for the loan that you take. In this you have to sign a legal contract in which you have to agree that you will pay the debt with interest in a certain period of time. This time may be 15 to 35 years.

In case you fail to pay the debt lender has right to take over your property and sell it to recover the loan amount. You have to pay the debt on monthly installments. This monthly amount is calculated taking care of loan amount, interest rate, taxes, insurance amount etc and is collectively known as PITI.

Amortization:

Amortization is a process in which principal loans amount and interest comprise the bulk of your monthly payments, It reduces your debt over a fixed periods of time. Benefit of Amortization is that in early years you pay heavy interest and later that interest rate degrades slowly.

In addition to this principal and interest rate your monthly installments also consists of money need to pay taxes and insurance.

According to a general rule if your down payment is below 20 % of total cost then it is considered as riskier loan than those with large down payments. To offset that risk, the lender sets up the escrow account to collect those additional expenses, which are rolled into your monthly mortgage payment.

The taxes we are talking about are actually property taxes. This property tax is used to help finance the cost of running your community. You must pay your property tax even if you don't need an escrow account and even after your mortgage is paid off.

Insurance amount that you have to pay is home insurance which cover your home and your personal assets against any mis happening. Lenders won't et you close the deal on your home purchase if you don't have home insurance.

So this is all about Mortgage that you need to know about. We will deal in this matter further in much details.