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Archive for September, 2009

Rising unemployment is throwing a wrench into the Obama administration’s effort to reduce foreclosures and stabilize the housing market through various initiatives like “Making Home Affordable”. When the first wave of delinquencies and foreclosures started in the fourth quarter of 2006, it was centered on the risky adjustable subprime mortgages which, in many cases, were destined to failure due to the unsuitability of the borrowers. The majority of industry watchers at the time felt that defaults would be contained to those unsuitable borrowers, with a small percentage of Alt-A mortgages at risk as well. Underestimated at the time was the effect that unemployment, resulting from the first wave of foreclosures, would have on the rest of the mortgages, including those originated for prime borrowers. According to economists, the current accelerating wave of foreclosures is directly related to unemployment or underemployment which started with the subprime mortgage meltdown and has grown to engulf the entire economy.

Also assuming that the foreclosure problems would be contained to subprime borrowers, the Obama Administration’s foreclosure prevention and loan modification plans were “built around the subprime crisis model, not the unemployment crisis model,” said Michael van Zalingen, director of homeownership services for the nonprofit Neighborhood Housing Services of Chicago.

The Obama program provides starting interest rates as low as 2% and financial incentives to mortgage-servicing companies and investors to reduce mortgage-related payments to the target of 31% of the homeowner’s monthly income. The jump in unemployment, however, has resulted in many borrowers that don’t have sufficient income to qualify for a loan modification under the plan. Mr. van Zalingen said, ” …roughly 45% of the more than 900 borrowers who sought help at two recent counseling events would fall into that category even if their interest rate were dropped to 2% and their loan term were extended to 40 years.” Many of those who couldn’t qualify had recently suffered job losses or a reduction in income, Mr. van Zalingen said. Approximately 27% of borrowers who called the mortgage industry’s national “Hope Hotline” in the second quarter of 2009 blamed unemployment as the first or second cause for their mortgage problems. That number was almost three times the amount of homeowners that cited unemployment as a major issue in the second quarter of 2008. “We recognize that unemployment is a significant complicating factor,” said Deputy Assistant Treasury Secretary Seth Wheeler. “We are studying what more we can do.” Unfortunately, it’s going to take more than study to stem the crisis.

The administration is considering making changes to the Making Home Affordable plan to address the downward spiral of unemployment and the number of homeowners that are being knocked out of the plan because of it. The administration is also contemplating whether stronger guidelines should be added to the plan concerning the way mortgage companies work with homeowners who are current unemployed but have good prospects re-employment.

One option would take the form of a forbearance plan with incentives to lenders that could be offered to good employment prospects would allow them to miss a set number of payments while they seek work. The issue here is that setting the protocol for determining good employment prospects, what kind of caps would put in place, and figuring out how many payments could be missed is a circuitous process in itself which could take years to put in place.

Other options include having the government pay a portion of unemployed homeowners’ payments, short term loans to newly unemployed homeowners, or loosening the requirements for home loan modifications in general. Nobody is claiming ownership of any of these ideas due to the complexity of getting multiple parties in agreement where some would be sacrificing more than others.

Making Home Affordable has run into multiple problems including an extremely slow rollout of the plan. Getting lenders and servicers up to speed on the plan’s guidelines while getting hit with a tidal wave of applications has led to frustration from homeowners and lenders alike. The dynamic between loan servicers and the mortgage investors behind them has also slowed matters to a crawl as they navigate issues like the recently passed safe harbor bill and the net present value test. The increasing unemployment rates and the related delinquencies comes as 20 mortgage-servicing companies are coming online with the ability to modify troubled loans under the Obama plan. While the Treasury boasts that more than 200,000 borrowers have received modification offers under the program, they recently declined to give statistics on completed loan modifications, saying they were fine tuning reporting systems. Industry watchers are saying that when home loan modifications get done they are producing positive results, particularly when legal counsel is brought in to lead the modifications for the homeowner.

Meanwhile, delinquencies are rising on a monthly basis and the foreclosure backlog continues to grow. The percentage of mortgages that had gone to at least 30 days past due but not yet in foreclosure climbed to a record 8.49% in May, up from 8.08% in April and 5.66% a year earlier, according to LPS Applied Analytics. These numbers are real and growing which has homeowners hoping that the government’s planning and theoretical thinking lead to an answer sooner, rather than later.

Loan Modification Help Center visit loanmodificationhelpcenter.org Loan Modification / Loan Modifications / Mortgage Loan Modification

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There are many tax credits available to Texans for First Time Homebuyers. By definition, a first time homebuyer under federal standards is anyone who has not purchased a home before, or who has not been an owner of record on a home for the past three years. Under the federal stimulus package, a homebuyer may be eligible for up to a $8000 tax credit if they close and fund on a purchase as a first time homebuyer by November 30, 2009. This is not a loan- nor does it have to be repaid. There is a formula that must be applied and income does come into play for some higher income individuals which could lower the tax credit. There are no restrictions on what the homebuyer can do with the money, whatsoever. Use the funds to pay down other debt, put into savings, take a vacation, to buy furniture for your new home, or even to use as a down payment.

The State of Texas has just announced a special program where a portion of the $8000 tax credit can be used for a down payment on a purchase by advancing a portion of the tax credit at time of closing. There are some fees payable to the State of Texas and you have to go through an approved lender in order to access this program. Legacy Financial, Inc. is an approved lender with the State of Texas. The “loan” must be repaid within 90 days of closing or it becomes a second lien on the home and begins to accrue interest at 10%.

Further, for some approved lenders, there are other tax credits provided by the State of Texas for certain occupations. Under this program, the State of Texas provides up to a $2000 credit each year for the life of the loan on a first time homebuyer within certain occupations. Specific occupations include: Firemen, Police Officers, Teachers, Librarians, Public Security personnel, Jail Employees, Emergency Medical personnel are all eligible for this program. There is a detailed formula that includes income qualifying to determine the amount of the actual tax credit. Legacy Financial, Inc. is an approved lender on this program, as well.

So, the timing of buying a home could not be better. Low interest rates, low home prices and an amazing amount of money available in the form of tax credits make now the time to be buying a home. Please feel free to contact us for more information and a no cost analysis to see exactly what level of tax credit you might be eligible for. Remember- the key date on the federal tax credit is November 30, 2009 where you must be closed and funded on the purchase of a home to obtain the tax credit of up to $8000.

http://www.texhomemortgages.com http://www.legacyfinancial.com Chad Bates is President/CEO of Texas Home Mortgage Company, Legacy Financial, Inc.

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Your credit score affects you in more ways than you realize. You may think nothing of this three-digit number but just ask any lender if they would give a favorable loan term to anyone who does not have a good credit score and you will realize how important it is to maintain a good credit score.

A good credit score is indicative of good financial health. It means that you pay all your bills on time, that you never missed out on your monthly credit card payments, that you have more credit available than you have debts. To a lender, this is credit heaven.

But maintaining a good credit score takes some work. Just as it would take one years to build a reputation and only one second to destroy it, it would take a good amount of time before you are able to hit past that average mark in credit scores and just one unpaid bill to watch it all crash down.

Below are some steps to help you better maintain a good credit score:

Pay Your Bills on Time

It doesn’t matter how you do it, whether by credit card, check, or bank draft, just so long as you do it on time. This is the first step in maintaining a good credit score. Punctuality in making your payments, after all, is a vital element of good financial management.

Keeping tabs of all your due dates may help. You can then create a budget plan where in you list your household’s money flow — in (income, salary, etc.) or out (expenses, repayments, etc.), including the dates when you are supposed to make your payments.

Save

Save for the rainy day. There is not a better financial advice around than this and no better way to maintain a good credit score. Savings come in handy during emergencies or when there are contingencies that you suddenly need to answer for. This way, you won’t have to rely on outside financing whenever you run into trouble.

In addition, you could also add your savings to the money needed in order to purchase the home of your dreams or any other items you may need in the future.

Practice Self-Restraint

It would be hard maintaining a good credit score if every time you go to the mall, you feel this wild urge to buy everything you see and end up with mile-long bills as a consequence.

No, you need to practice self-restraint if you want to keep your good credit score. Just because you want something does not mean that you have to have it now. Buy only those that are absolutely necessary and leave the rest for later when you have more money to spare.

It is common fact that not everyone has a perfect credit to provide back up when applying for a car loan, or any type of loan for that matter. This is one of the main reasons why lending companies are offering car loan for bad credit customers or customers with less than perfect credit. Below are a few companies that offer car loans for bad credit.

AutomobilesCars.com — Car Loans for Bad Credit

AutomobilesCars.com is an association of car dealers providing car loans for bad credit consumers nationwide. They help people with excellent credit and bad credit get car loans quickly and without any hassles. Their online application form is easy to fill out and their dealers can have your application approved within 24 hours.

Auto-Loans-Financing.com — Car Loans for Bad Credit

Auto-Loans-Financing.com has been providing car loans for people with poor or bad credit and bankruptcy since 1995. Their online car loans help you buy a car even if you have a bad credit history or poor credit report. As opposed to direct lenders who require rigorous underwriting criteria, Auto-Loans-Finanancing.com works within a network of national indirect car financing companies and therefore can have your car loan application for bad credit approved with lesser underwriting restrictions.

AutoLoans.us — Car Loans for Bad Credit

AutoLoans.us specializes in car loans for bad credit, poor credit, bankruptcy, slow credit or credit problems. Even first-time buyers can find many car loan programs through their special bad credit auto loan programs. Their online application is quick and hassle-free. You do not pay for anything when you apply for bad credit car loans and AutoLoans.us approve 100% of applications for financing.

AZAutoLoan.com — Car Loans for Bad Credit

If you need an a car loan for dependable, late model used car, truck, mini-van, or SUV but feel that poor credit, or even no credit is holding you back, then you can check out what services AZAutoLoan.com has for you. With the car loans for bad credit offered by AZAutoLoan.com, you no longer need to spend numerous hours applying for car loan financing only to end up being turned down. How, you can be approved for a loan without putting down any substantial down payment amount.

Car-Loan-Financing.com — Car Loans for Bad Credit

Car-Loan-Financing.com offers car loans for bad credit to help you purchase a new car or a used brand even with a bad history of credit or a bankruptcy in your record. To qualify for a poor credit car loan at this online site, all you need is a minimum income of $1, 500, a one-year full-time employment history, and no car loan repossessions outside of bankruptcy in the last year.

The continuous effect and impact of the credit crunch vis-

Many borrowers entering the investment loan market are happy enough to run with their existing bank who invariably will recommend a simple 25 year investment loan on a principal and interest basis with a 5 year interest only term initially. As a general rule the bank will not look at restructuring your existing loan to ensure that your investment loan is the best suited for you not just from a flexibility point of view but also from a taxation perspective. It is more likely that they will not wish to disturb any existing home loan you may hold with your bank for fear that you may consider a refinance and they lose you as a customer..

The fact is the banks are doing a disservice to you if this is their approach. The reality is that when you are looking for an investment loan you must consider your other borrowings because if you properly structure your investment loan with any existing home loan debt then there are benefits for you.

In the past borrowers have simply accepted that they need to draw on their personal income to subsidise the shortfall that occurs on a negatively geared investment (i.e. the rental income from the property does not cover the interest payments on the investment loan and other outgoings (rates, maintenance etc) incurred by the investor. It is also fair to say that in the past, loan structures have been simplistic stand alone facilities.

Today you are able to structure your total portfolio so that within the one mortgage you have various loan accounts each of which are flexible and offer opportunities to minimise your tax. The multiple loan accounts are necessary within your portfolio because:

1. your home and investment loans are not mixed (the ATO views mixed loan accounts dimly and will require that any principal repayment into a mixed home and investment loan facility be apportioned between the 2 accounts. You are not able to apply the total amount to reduce your non-deductible home loan debt first — a much more tax efficient option.

2. The cost benefit you will enjoy with the multiple accounts in that for accounting purposes income and expenses for each investment property are easily identified. Saves you in accounting fees!

3. you can include a capitalising line of credit as one of your accounts if you have built up equity in your home property. It is advantageous to put an investment line of credit loan into the mix because this not only provides you with a safety net to cover off any vacancy factor on the investment property (which might put a strain on your cash flow) but also and more importantly it allows you to draw on the line of credit to meet any shortfall in the interest payments on the investment loan or other maintenance costs associated with the investment property. By utilising the line of credit to service any shortfall in interest you receive a two-fold benefit:

(i) you can use more of your personal income to reduce your home loan non- deductible debt — instead of subsidising the cost of the interest on your investment loan.

(ii) by borrowing to meet the interest rate shortfall you increase the amount of deductible interest you can claim under your investment loan borrowings.

Investment loan choices should be well considered. Here is a quick information on investment loan choices that could save you alot of money.

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Wells Fargo is one of the few mortgage lenders authorized by the Government to offer President Obamas housing stimulus plan. This plan allows homeowners refinancing or mortgage modification opportunities for struggling homeowners. Interest rates can be reduced as low as 2% to help homeowners. Here is what you need to know before using this plan for yourself:

Over $75 billion has been allocated to this mortgage refinancing and modification bailout plan. This plan will have homeowners paying monthly home loan payments which are less than 31% of their gross monthly income. This will be done by lowering interest rates to as low as 2%, extending the length of the home loan, or adjusting other terms and conditions. The $75 billion will be given mainly to mortgage lenders and banks for providing help to struggling homeowners. This money will cover all closing costs, and help with the financial risks lenders and banks take on when approving “at risk” or financially struggling homeowners. With this money covering some of their potential losses, mortgage lenders and banks can approve more homeowners than ever before.

Besides being one of the biggest lenders in the country, Wells Fargo, is also one of the most effective lenders for homeowners who need to do something about their mortgage. Wells Fargo has the professionals, connections, and knowledge to help almost any homeowner. With this mortgage bailout plan, they can help even more homeowners.

Homeowners struggling to pay their home loan every month need to take action. The longer you let your mortgage problems build up the more expensive, and less likely it will be that you can save your home. Contact Wells Fargo today and see how they can help you keep your home.

At my site I will teach you how to properly refinance or modify a home mortgage saving you thousands of dollars, or even your home. A lot of Greedy Mortgage Lenders will try to suck you dry if you let them. Learn the right way to refinance or modify your home loan at my site: http://www.refinancingcondo.com

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