Talking with many people within the industry and clients many people don't understand the the mortgage industries problems are more than subprime loans. And more than Alt-A loans that offered 100% interest only loans. While the subprime crisis spread to Alt-A lenders fairly quickly, A paper or conforming loans escaped the "credit crunch." However, conforming loans may not be able to escape the "credit crunch" forever.
While, it's tough to predict what will happen in 2008 given the market uncertainties, there is a chance the conforming lenders may be the next in line to take a hit. While, Fannie Mae and Freddie Mac have remained stable over the last 6 months, they are not out of trouble yet. If you ask 10 experts about their forecast for 2008, you will receive at least 9 different answers and they all base their forecasts on whether Fannie and Freddie will be able to steer clear of the credit crunch.
The main concern remains, will foreign investors continue to invest in American mortgage backed securities. If foreign investors become reluctant to invest their money in mortgage back securities Fannie and Freddie will be certain to experience problems 2008 and we may see rates increase to 7%-8%, which will hurt the real estate market even more. However, if foreign money supply continues the conforming market should be able to avoid the problems that have faced the subprime and Alt-A sectors.
We have also seen private mortgage insurance companies, such as MGIC, tighten their guidelines and are more reluctant or will no longer insure lower credit scores. This new trend has made it even tougher for people to obtain financing for a new home and/or refinancing their current mortgage.
I remain optimistic that Fannie and Freddie will remain stable through 2008 and the mortgage industry will be in better shape by the 3rd quarter in 2008. However, to be honest this is just a guess from my research and experience, hopefully, I'm right.
Prosperity Financial
Lafayette, CO
Your Mortgage Manager
http://www.colomortgages.net/, http://www.myprosperityfinancial.com/, http://www.3bed2bath.net/
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
Friday, December 28, 2007
Thursday, December 27, 2007
Colorado Mortgage Brokers Taking All the Blame?
Almost every day I turn on the news and see a new story about different bills in the Senate or House of Representatives or Colorado's legislative branch or the Federal Reserve trying to curb the foreclosure epidemic and they are always focused only on mortgage brokers. This is especially true for Colorado mortgage brokers. A majority of the new regulations passed by the Colorado legislative branch and signed by the governor only apply to Colorado mortgage brokers.
I will agree some thing must happen to help curb the fraud and dishonest practices that have occurred in the mortgage industry. However, these new rules/laws/regulations should apply to all mortgage professionals regardless of who you work for. These problems are not specific to mortgage brokers and I'm confident that a large portion if not the majority of the issues you hear in the news are a bigger problem in the larger banks.
There have been many surveys and reports that show consumers receive better interest rates, closing costs, programs and SERVICE from mortgage brokers, than they do from banks and direct lenders. There are a few reasons for this:
I will agree some thing must happen to help curb the fraud and dishonest practices that have occurred in the mortgage industry. However, these new rules/laws/regulations should apply to all mortgage professionals regardless of who you work for. These problems are not specific to mortgage brokers and I'm confident that a large portion if not the majority of the issues you hear in the news are a bigger problem in the larger banks.
There have been many surveys and reports that show consumers receive better interest rates, closing costs, programs and SERVICE from mortgage brokers, than they do from banks and direct lenders. There are a few reasons for this:
- Mortgage brokers have the ability to shop multiple lenders and find the best mortgage for their client, a bank or direct lender only has access to the products their company offers. The mortgage brokers ability to shop with multiple lenders and programs ensures that they can find the best mortgage program for you at the best rate available.
- Mortgage brokers don't have an endless marketing budget and most of their business is obtained from referrals and past clients, so they are more likely to work harder and offer better rates to earn repeat and referral business. Repeat and referral business is not as important to loan officers at banks because they know their marketing and banking customers will always bring more clients through the door.
- Mortgage brokers have more flexibility than banks and direct lenders because they have lower overhead, therefore, they can offer better mortgage programs at lower rates with lower closing costs. To give you an example, I have a friend that works for a large bank here in Colorado and his rates are typically 1.5% higher than what I offer and his closing costs are usually $4,000 more. Why would people pay so much more? Because consumers trust their bank and they don't shop around (banks know this and therefore charge higher rates).
- The mortgage industry, like many sales industry, has a high turn over rate, especially within banks and direct lenders. Many loan officers that work at banks and direct lenders change company's every 6-12 months. This job hopping leads to less accountability for loan officers, as they have left the company before a borrower realizes they have received a bad loan.
Again, I think there are bad actors on both the mortgage broker and banker channels, but for some reason mortgage brokers are being singled out when it comes to new rules/regulations/laws. I believe if we truly want to protect the consumers, all mortgage professionals should be required to follow any new rules/regulations/laws including, licensing, E&O insurance, and industry education.
Prosperity Financial - A Proud, Honest Mortgage Broker
Your Mortgage Manger
Lafayette, CO
http://www.colomortgages.com/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
Monday, December 17, 2007
Getting Back on the Horse and Rebuilding
In previous posts I have talked about how to avoid bankruptcy(BK) and foreclosure (FC), however, life happens and some times there are no other options than BK or FC. If you find yourself in this situation, you are probably wondering how to re-build, re-establish, and get back on your feet.
The first step is to reflect on the past, and determine what was the cause of your financial problems and learn from your mistakes. While it may have been an unforeseen event such as job loss or family/personal emergency, was there any thing you could have done different to avoid BK or FC? I'm not talking about preventing the event itself, but did you have adequate savings that you could have used to pay your bills while you were trying to find a new job? Learn from the past, otherwise, you are doomed to repeat history.
The next step is to PLAN your financial future. There is no better time to develop a personal financial plan then when you have reached rock bottom. Create a budget for yourself and determine how much you can save on a monthly basis. Savings is the key, you must find a way to save at least a little every month. As with all plans, make sure you set dates to evaluate your plan and chart your progress. You will find that you need to make changes to your plan frequently in the beginning, I would suggest you do this every month or every other month for the first year and every 3-6 months after the first year.
Once you have a financial plan, now you need to work on re-building your credit...pull out the Advil and let's have some fun. First a quick piece of advice, if you are filing BK exclude at least 1 item from bankruptcy, this will help you re-build your credit quicker. If you have eliminated all of your debt through BK or all of your debt is currently is delinquent you will need to obtain new credit lines, in order to re-establish your credit.
There are a few ways you can do this, the first is by applying for new credit (credit cards, auto loans, pre-paid credit cards). When applying for new credit make sure the new credit will report to the credit bureaus, otherwise, it will not help you. Once you have new credit lines, make sure you keep your balances low on credit cards and that you make your payments on time. Another option, which will improve your credit quicker, is to become a co-signor or joint owner on a family or friend's credit card. Obviously, you want to be sure this person has perfect payment history and a low balance. This option will improve your credit quicker because it will report on your credit that you have had this account since the credit line was opened, providing you with a great credit history.
Next you will want to obtain a copy of your credit report, I would wait 2-3 months from the discharge of the BK or the completion of the FC. Many times, you will find that there are a lot of errors on your credit report. Items that were included in the BK are still reporting as open and/or your mortgage showing as active loan even though the FC is completed. You will need to dispute all of these items with the three credit bureaus. I would suggest you consult with a professional that is knowledgeable in credit repair (they will typically charge about $450) or contact us and we can provide guidance for free. It can take up to a year to clear your credit, but it is worth every penny and minute.
All of these steps are necessary to re-establish yourself and your credit, if you choose to only focus on 2 or 3 of these areas you will the road to recovery a challenging obstacle and you most likely will not be successful. If you have and questions or need a little help please feel free to contact us and we will be happy to assist you.
Prosperity Financial, LLC
Lafayette, CO
http://www.colomortgages.com/
http://www.myprosperityfinancial.com/
Your Mortgage Manger
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
The first step is to reflect on the past, and determine what was the cause of your financial problems and learn from your mistakes. While it may have been an unforeseen event such as job loss or family/personal emergency, was there any thing you could have done different to avoid BK or FC? I'm not talking about preventing the event itself, but did you have adequate savings that you could have used to pay your bills while you were trying to find a new job? Learn from the past, otherwise, you are doomed to repeat history.
The next step is to PLAN your financial future. There is no better time to develop a personal financial plan then when you have reached rock bottom. Create a budget for yourself and determine how much you can save on a monthly basis. Savings is the key, you must find a way to save at least a little every month. As with all plans, make sure you set dates to evaluate your plan and chart your progress. You will find that you need to make changes to your plan frequently in the beginning, I would suggest you do this every month or every other month for the first year and every 3-6 months after the first year.
Once you have a financial plan, now you need to work on re-building your credit...pull out the Advil and let's have some fun. First a quick piece of advice, if you are filing BK exclude at least 1 item from bankruptcy, this will help you re-build your credit quicker. If you have eliminated all of your debt through BK or all of your debt is currently is delinquent you will need to obtain new credit lines, in order to re-establish your credit.
There are a few ways you can do this, the first is by applying for new credit (credit cards, auto loans, pre-paid credit cards). When applying for new credit make sure the new credit will report to the credit bureaus, otherwise, it will not help you. Once you have new credit lines, make sure you keep your balances low on credit cards and that you make your payments on time. Another option, which will improve your credit quicker, is to become a co-signor or joint owner on a family or friend's credit card. Obviously, you want to be sure this person has perfect payment history and a low balance. This option will improve your credit quicker because it will report on your credit that you have had this account since the credit line was opened, providing you with a great credit history.
Next you will want to obtain a copy of your credit report, I would wait 2-3 months from the discharge of the BK or the completion of the FC. Many times, you will find that there are a lot of errors on your credit report. Items that were included in the BK are still reporting as open and/or your mortgage showing as active loan even though the FC is completed. You will need to dispute all of these items with the three credit bureaus. I would suggest you consult with a professional that is knowledgeable in credit repair (they will typically charge about $450) or contact us and we can provide guidance for free. It can take up to a year to clear your credit, but it is worth every penny and minute.
All of these steps are necessary to re-establish yourself and your credit, if you choose to only focus on 2 or 3 of these areas you will the road to recovery a challenging obstacle and you most likely will not be successful. If you have and questions or need a little help please feel free to contact us and we will be happy to assist you.
Prosperity Financial, LLC
Lafayette, CO
http://www.colomortgages.com/
http://www.myprosperityfinancial.com/
Your Mortgage Manger
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
Thursday, December 13, 2007
Purchase Horror Story - Don't Let it Happen to You
A Realtor that I have helped in the past called me today to share a story of one of his clients. His clients, like many savvy mortgage shoppers, went online to shop multiple mortgage companies to find the best rate and program before they started looking at houses. They found a lender that offered them a rate that was almost 0.50% lower than any of the lenders. They found a house they really liked, put in an offer, and every thing was great until the day before closing.
They called the lender to discuss what the final payments, closing costs, and how much money they would need to bring to the closing. What they found out was that their interest rate was almost a full point higher than what they were originally quoted. The lender would not budge on the rate stating that rate changes and they could do not any thing about it. They could not change lenders as the closing was tomorrow and they really wanted the house so they could not back out (if they did back out they most likely would have lost their $3,000 in earnest money). They were forced to close on the mortgage and take the mortgage with the higher rate.
It's tough to say if the mortgage lender was acting fraudulent, and I hate to speculate on what happened, but at the very best, the lender exercised very bad communication. One thing many people don't understand is how often and how big rate fluctuations are in this market. If you obtain a rate quote today and don't close on your house for 60-90 days your rate will more likely be different, however, the lender should communicate any and all changes in rates.
How can you protect yourself from this happening to you? It's pretty easy to avoid this type of situation by following a few simple steps.
They called the lender to discuss what the final payments, closing costs, and how much money they would need to bring to the closing. What they found out was that their interest rate was almost a full point higher than what they were originally quoted. The lender would not budge on the rate stating that rate changes and they could do not any thing about it. They could not change lenders as the closing was tomorrow and they really wanted the house so they could not back out (if they did back out they most likely would have lost their $3,000 in earnest money). They were forced to close on the mortgage and take the mortgage with the higher rate.
It's tough to say if the mortgage lender was acting fraudulent, and I hate to speculate on what happened, but at the very best, the lender exercised very bad communication. One thing many people don't understand is how often and how big rate fluctuations are in this market. If you obtain a rate quote today and don't close on your house for 60-90 days your rate will more likely be different, however, the lender should communicate any and all changes in rates.
How can you protect yourself from this happening to you? It's pretty easy to avoid this type of situation by following a few simple steps.
- Do business with some one you trust and was REFERRED TO YOU.
- Talk to your lender about lock options, you can typically lock your rate for 30 days at no cost and longer if you are willing to pay a little more in closing costs. It may be worth to pay a little more in closing costs if you and your lender believe interest rates are going to increase.
- If you talked to a lender about rates before you found a house and didn't lock the rate, ask them again what your rate will be once you have a contract on a house.
- Once you decide to lock your rate ask your lender to fax/email you the lock confirmation. Every lender has the ability to do this and if they say they can't or won't I would find a new lender. A good faith estimate (GFE) is not the same as rate lock, it just an estimate of your rate and closing costs, but things can change (see story above).
- Ask your lender to email/fax you the closing docs before the loan commitment date on the purchase contract. If you find a problem with the loan before the loan commitment date you are more likely able to extend the contract (and find a new lender) or terminate the contract with out losing your earnest money.
While most mortgage professionals are honest and professional individuals, as in all business, there a few bad apples or people that just don't know what they are doing. Make sure you take every step to protect yourself. If you have any questions, please feel free to call or email me.
Prosperity Financial - Your Mortgage Manager
http://www.myprosperityfinancial.com/
Purchase - Refinance - Cash-out - Debt Consolidation - Home Equity - Great Rates
Wednesday, December 12, 2007
Mortgage Industry Update - What the News Doesn't Tell You
I thought this would be a good time to give every one a quick update on the Colorado mortgage industry. Every time the Fed lowers the fund rate we receive a lot of inquiries on what is happening to the mortgage rates. Along with the Federal Reserve lowering the rates over the last few months, there has been a lot of mortgage talk in the news lately; subprime/ARM bail out, guideline changes, and mortgage reform.
We will start with the Federal Reserve lowering the rates and where rates stand now. Typically, the Fed's lowering the funds rate has little or no impact on the mortgage rates, however, it will lower your rates on credit cards, home equity line of credits, and short term mortgages. It also may have an impact on your ARM, depending on what index your loan uses. Please call us and we will review your current loan with you to see what, if any, affect it may have on your ARM. With that being said, mortgage rates are still great. You can purchase a house with NO MONEY down and receive a 30 year fixed rate of 6.25%.
The subprime/ARM bailout has been receiving a lot of news lately. I'm not going to go in to specifics or if I agree with the plan or not. What you need to know, is the current plan will help very few people in America and you should not count on the government to help you save your house. If you are having a tough time paying your bills or your loan is going to adjust in the next 12 months, contact us immediately before it's too late. There is a lot we can do to help you restructure your mortgage and advice that we can provide to help you through these tough times. At the first sign of trouble call us, it's better to be safe than sorry and you will be surprised what we can do.
There has been a lot in the news about guideline changes and it's a lot tougher to obtain a new mortgage now. While a lot programs have disappeared or changed guidelines, most of the programs that were affected were exotic mortgages (interest only, negative amortization, hybrid ARMs). There a lot of great mortgage programs that are available and offer great rates and flexible terms, like no money down purchases.
Ahh, and now my favorite subject, mortgage reform. Although mortgage reform has not been in the news as much as some of the other topics, it probably has the biggest impact on you and all home owners. I always get a kick out of people trying to make rules, laws, and guidelines for industries they no nothing or very little about. It reminds of the the Holiday Inn commercials, where people are playing roles they no nothing about but are ready to handle they situation because they slept at Holiday Inn. To give you an idea on how bad are elected officials can screw things up, there was a bill introduced in Colorado that would require you to have $40,000 in equity in you home at all times regardless of the value of your house. Which means, you would have to have at least a $40,000 down payment to purchase a house. The good news on this front, it appears that are elected officials have received some good advice from professionals in the industry and are not going to screw things up too much. However, I would recommend every one to stay tuned and be involved.
Once again, for the most of us our house is the largest asset we have and biggest purchase we will ever make in our lives, make sure you do the proper research and ask questions any time you become confused. Don't be that that person that spends more time planning lunch or their weekend than their financial future.
Prosperity Financial
Your Mortgage Manager
http://www.colomortgages.com/
http://www.myproserityfinancial.com/
Lafayette, Colorado
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
We will start with the Federal Reserve lowering the rates and where rates stand now. Typically, the Fed's lowering the funds rate has little or no impact on the mortgage rates, however, it will lower your rates on credit cards, home equity line of credits, and short term mortgages. It also may have an impact on your ARM, depending on what index your loan uses. Please call us and we will review your current loan with you to see what, if any, affect it may have on your ARM. With that being said, mortgage rates are still great. You can purchase a house with NO MONEY down and receive a 30 year fixed rate of 6.25%.
The subprime/ARM bailout has been receiving a lot of news lately. I'm not going to go in to specifics or if I agree with the plan or not. What you need to know, is the current plan will help very few people in America and you should not count on the government to help you save your house. If you are having a tough time paying your bills or your loan is going to adjust in the next 12 months, contact us immediately before it's too late. There is a lot we can do to help you restructure your mortgage and advice that we can provide to help you through these tough times. At the first sign of trouble call us, it's better to be safe than sorry and you will be surprised what we can do.
There has been a lot in the news about guideline changes and it's a lot tougher to obtain a new mortgage now. While a lot programs have disappeared or changed guidelines, most of the programs that were affected were exotic mortgages (interest only, negative amortization, hybrid ARMs). There a lot of great mortgage programs that are available and offer great rates and flexible terms, like no money down purchases.
Ahh, and now my favorite subject, mortgage reform. Although mortgage reform has not been in the news as much as some of the other topics, it probably has the biggest impact on you and all home owners. I always get a kick out of people trying to make rules, laws, and guidelines for industries they no nothing or very little about. It reminds of the the Holiday Inn commercials, where people are playing roles they no nothing about but are ready to handle they situation because they slept at Holiday Inn. To give you an idea on how bad are elected officials can screw things up, there was a bill introduced in Colorado that would require you to have $40,000 in equity in you home at all times regardless of the value of your house. Which means, you would have to have at least a $40,000 down payment to purchase a house. The good news on this front, it appears that are elected officials have received some good advice from professionals in the industry and are not going to screw things up too much. However, I would recommend every one to stay tuned and be involved.
Once again, for the most of us our house is the largest asset we have and biggest purchase we will ever make in our lives, make sure you do the proper research and ask questions any time you become confused. Don't be that that person that spends more time planning lunch or their weekend than their financial future.
Prosperity Financial
Your Mortgage Manager
http://www.colomortgages.com/
http://www.myproserityfinancial.com/
Lafayette, Colorado
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
Monday, December 10, 2007
Shopping for a Mortgage Online? -Not the Best Idea
The Internet has made all of our lives easier in one way or another. Whether you are purchasing a new washer and dryer or searching for directions or looking to purchase a new house, the Internet is full of useful information to assist you in your decision. However, for every piece of useful information online, there is an equal amount of useless or erroneous information.
I know many people who have turned to the Web, when shopping for a mortgage, sites like Lowermybills, Refinance.net, Lending Tree offer the ability to shop multiple companies quickly. Lending Tree, being the most known, has advertised for years, when banks compete you win. However, there are a few things you should know about these online companies before you provide them with your personal information.
Many of these online companies, Lending Tree being one of them, are actually mortgage lenders as well. Therefore, while you may think there are a few banks competing for your business, this may be not be the case.
On the other hand, you may find yourself on the other side of the spectrum and you may receive 15-20 calls from one submission. Online companies make their money by selling your inquiry to mortgage brokers and lenders, and some of these companies may sell your information to 15-20 companies to maximize their profits. What you thought was a great idea, now has turned in to a pain, with mortgage companies calling you every 15 minutes. If you have experienced this before, you know that mortgage companies are relentless when it comes to trying to contact you and that's because they spent good money to get your information.
Another problem I have with online companies, they don't require their lenders to go through any type of background investigation or provide certification of their experience or knowledge. The loan officers receiving your information may have very little knowledge of the industry or even worse they may be frauds. While most companies don't require you to input your social security number, some, like Lending Tree, do require you to enter your social security number.
So how you should shop for mortgages? Referrals are the best way to find a great mortgage company that will take care of you. Ask friends, family, neighbors who they used to purchase their house or refinance. If you are new to the area and don't know any one ask your Realtor, financial advisor, insurance agent who they used or who they would refer. I always suggest to shop with at least 3 lenders but not more than 6.
Also, I would suggest to use a local mortgage lender. There are a lot variables in the mortgage industry that are related to the local market and you are less likely to have problems if your lender is familiar with your market. We don't do any loans out of Colorado, because we know we won't be familiar with the local market and, therefore, not able to provide the service we expect of ourselves.
If you don't know any one that can provide you a good mortgage professional, your best bet is to visit the National Association of Mortgage Brokers website for local mortgage professionals, http://www.namb.org/.
Happy shopping!!!
Prosperity Financial
Lafayette, CO
Your Mortgage Manager
http://www.myprosperityfinancial.com/
http://www.colomortgages.com/
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
I know many people who have turned to the Web, when shopping for a mortgage, sites like Lowermybills, Refinance.net, Lending Tree offer the ability to shop multiple companies quickly. Lending Tree, being the most known, has advertised for years, when banks compete you win. However, there are a few things you should know about these online companies before you provide them with your personal information.
Many of these online companies, Lending Tree being one of them, are actually mortgage lenders as well. Therefore, while you may think there are a few banks competing for your business, this may be not be the case.
On the other hand, you may find yourself on the other side of the spectrum and you may receive 15-20 calls from one submission. Online companies make their money by selling your inquiry to mortgage brokers and lenders, and some of these companies may sell your information to 15-20 companies to maximize their profits. What you thought was a great idea, now has turned in to a pain, with mortgage companies calling you every 15 minutes. If you have experienced this before, you know that mortgage companies are relentless when it comes to trying to contact you and that's because they spent good money to get your information.
Another problem I have with online companies, they don't require their lenders to go through any type of background investigation or provide certification of their experience or knowledge. The loan officers receiving your information may have very little knowledge of the industry or even worse they may be frauds. While most companies don't require you to input your social security number, some, like Lending Tree, do require you to enter your social security number.
So how you should shop for mortgages? Referrals are the best way to find a great mortgage company that will take care of you. Ask friends, family, neighbors who they used to purchase their house or refinance. If you are new to the area and don't know any one ask your Realtor, financial advisor, insurance agent who they used or who they would refer. I always suggest to shop with at least 3 lenders but not more than 6.
Also, I would suggest to use a local mortgage lender. There are a lot variables in the mortgage industry that are related to the local market and you are less likely to have problems if your lender is familiar with your market. We don't do any loans out of Colorado, because we know we won't be familiar with the local market and, therefore, not able to provide the service we expect of ourselves.
If you don't know any one that can provide you a good mortgage professional, your best bet is to visit the National Association of Mortgage Brokers website for local mortgage professionals, http://www.namb.org/.
Happy shopping!!!
Prosperity Financial
Lafayette, CO
Your Mortgage Manager
http://www.myprosperityfinancial.com/
http://www.colomortgages.com/
Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates
Friday, December 7, 2007
How Much do you Know About Your Credit Cards
Every one I know has at least one credit and most people have multiple credit cards. Even though, we know we should only use them if we have the ability to pay them off quickly or in case of emergency, we find ourselves swiping the card for purchases that are not necessary and often for items that we can't afford. Why do we do this? How have credit cards become such a large part of American society? The ability to purchase an item now and paying for it later costs Americans billions of dollars. How much are you credit cards costing you???
On average Americans have over six credit cards with an average balance of $2,500 on EACH card, over $17,000 in credit card debt!!! In total Americans have over $9 BILLION in credit card debt!!!
If you make the minimum payment on a credit card with $2,500 it will take you over 20 YEARS TO PAY IT OFF!!! With a total cost of OVER $5,800!!! You borrowed $2,500 and you paid $5,865.51, and if you are the average person and have 6 credit cards you will pay $35,193 to pay off your credit card balances of $17,500...how does this make sense??? Would you be willing to pay $93.84 for a pair jeans, when the store is selling the same jeans for $40.00? No? This is exactly what you are doing when you purchase an item using your credit card and can't pay off the balance quickly. So next time when you think of purchasing an item (and you can't afford it), before pulling out the credit card, ask your self if you are willing to pay more than double for that item.
What about the transfer game? I know a lot of people that think they have the credit card companies fooled, they transfer their balances to a low or no interest card to save money. However, this is what credit card companies want you you to do. They know most consumers don't read the small print and/or review their statements closely every month. Did you know, most of these offers require to use you card at least once a month (and the new purchases have a different, higher interest rate) just to keep the promotional rate? Or if you are even one day late they will charge you a much higher rate on your balance (18%-30%).
Even if you are able to maintain your great rate, you can still fall in to the credit card companies trap. Typically, they will lower your minimum payment to entice you to make a lower payment during your promotional period, therefore, paying off less of your balance. In addition to paying off less of your balance, the credit card companies know that a majority of us will use our credit cards more now that our monthly payments are lower, raising our balance and making them more money in the long term.
Like Vegas, the house always win, so don't play with your credit cards unless you can pay off the balance at the end of the month or it's emergency and you don't have any other options.
Prosperity Financial, LLC
Lafayette, CO
http://www.myprosperityfinancial.com/
http://www.colomortgages.com/
Your Mortgage Manager
Purchase - Refinance - Debt Consolidation - Cash Out - Home Equity - Great Rates
On average Americans have over six credit cards with an average balance of $2,500 on EACH card, over $17,000 in credit card debt!!! In total Americans have over $9 BILLION in credit card debt!!!
If you make the minimum payment on a credit card with $2,500 it will take you over 20 YEARS TO PAY IT OFF!!! With a total cost of OVER $5,800!!! You borrowed $2,500 and you paid $5,865.51, and if you are the average person and have 6 credit cards you will pay $35,193 to pay off your credit card balances of $17,500...how does this make sense??? Would you be willing to pay $93.84 for a pair jeans, when the store is selling the same jeans for $40.00? No? This is exactly what you are doing when you purchase an item using your credit card and can't pay off the balance quickly. So next time when you think of purchasing an item (and you can't afford it), before pulling out the credit card, ask your self if you are willing to pay more than double for that item.
What about the transfer game? I know a lot of people that think they have the credit card companies fooled, they transfer their balances to a low or no interest card to save money. However, this is what credit card companies want you you to do. They know most consumers don't read the small print and/or review their statements closely every month. Did you know, most of these offers require to use you card at least once a month (and the new purchases have a different, higher interest rate) just to keep the promotional rate? Or if you are even one day late they will charge you a much higher rate on your balance (18%-30%).
Even if you are able to maintain your great rate, you can still fall in to the credit card companies trap. Typically, they will lower your minimum payment to entice you to make a lower payment during your promotional period, therefore, paying off less of your balance. In addition to paying off less of your balance, the credit card companies know that a majority of us will use our credit cards more now that our monthly payments are lower, raising our balance and making them more money in the long term.
Like Vegas, the house always win, so don't play with your credit cards unless you can pay off the balance at the end of the month or it's emergency and you don't have any other options.
Prosperity Financial, LLC
Lafayette, CO
http://www.myprosperityfinancial.com/
http://www.colomortgages.com/
Your Mortgage Manager
Purchase - Refinance - Debt Consolidation - Cash Out - Home Equity - Great Rates
Monday, December 3, 2007
When does your Mortgage Adjust?
With over 2.5 million mortgages schedule to adjust in the next 12 months there is a good chance that you have an adjustable rate mortgage (ARM) or know some one that does. If you have an ARM there is no reason to panic, with a little planning you shouldn't have a problem with finding a new loan that you can afford, BUT you MUST plan a head. A majority of people suffering problems or facing foreclosure becuase their ARM adjusted was because they DIDN'T PLAN!!! The mortgage industry has changed drastically over the last 6 months and it may cause a problem for you when you try to refinance.
Start developing a plan 6-12 months before your ARM adjusts. Talk to a mortgage lender and have them look at options that are available to you now. Even though rates are historically low, most likely your payment is going to going to increase and is important that you know in advance how much higher your payment will be (especially if you have interest only ARM). If you know 6-12 months in advance that your payment is going to increase by $300 you can develop a budget now, that will help you afford the higher mortgage payment.
With the elimination of programs in the mortage industry over the last six months, you might also have a hard time qualifing for a new mortgage. Not only have programs been eliminated, guidlines are now, much more strict making it difficult for many to qualify for a new loan. Talking to a lender in advance will help you understand why you don't qualify now, and provide time for you to make adjustments so you can qualify in 6-12 months.
Also, in a few areas in Colorado houses have depreciated, therefore, your house may be worth less than what you currently owe on your mortgage. While you might still be able to refinance your mortgage, it will be more difficult and the extra time will ensure that you find a new mortgage before your existing ARM adjusts.
Another thing to consider, is that you may be better off selling your house and down sizing to smaller house that is more affordable. I know, it's not the best time sell your house and you may have to offer it at a reduced price, but the more time you have to sell your house the better chance you have. Also, it's a great time to buy a house, there are a lot of great houses available at reduced prices which should offset the money you lose when you sell your current house. If you end up losing a little money, it's still better than losing your house in foreclosure.
Prosperity Financial, LLC
http://www.myprosperityfinancial.com/
Your Colorado Mortgage Manager
Start developing a plan 6-12 months before your ARM adjusts. Talk to a mortgage lender and have them look at options that are available to you now. Even though rates are historically low, most likely your payment is going to going to increase and is important that you know in advance how much higher your payment will be (especially if you have interest only ARM). If you know 6-12 months in advance that your payment is going to increase by $300 you can develop a budget now, that will help you afford the higher mortgage payment.
With the elimination of programs in the mortage industry over the last six months, you might also have a hard time qualifing for a new mortgage. Not only have programs been eliminated, guidlines are now, much more strict making it difficult for many to qualify for a new loan. Talking to a lender in advance will help you understand why you don't qualify now, and provide time for you to make adjustments so you can qualify in 6-12 months.
Also, in a few areas in Colorado houses have depreciated, therefore, your house may be worth less than what you currently owe on your mortgage. While you might still be able to refinance your mortgage, it will be more difficult and the extra time will ensure that you find a new mortgage before your existing ARM adjusts.
Another thing to consider, is that you may be better off selling your house and down sizing to smaller house that is more affordable. I know, it's not the best time sell your house and you may have to offer it at a reduced price, but the more time you have to sell your house the better chance you have. Also, it's a great time to buy a house, there are a lot of great houses available at reduced prices which should offset the money you lose when you sell your current house. If you end up losing a little money, it's still better than losing your house in foreclosure.
Prosperity Financial, LLC
http://www.myprosperityfinancial.com/
Your Colorado Mortgage Manager
Subscribe to:
Posts (Atom)
