Refinance Free Credit

I received a great question that I am sure applies to several people.  The answer will make you question what you know about your own Option ARM.

"I have an option arm with countrywide. They say that I don't qualify for a loan modification......"

Now this particular person has this loan on an investment property but the help I gave him will help many more people understand their loan a little better and what the next steps would be to avoid any undesirable situations.

Here is my Response:

"Thanks for the email!

I think that you should stick with that loan!

Changing that loan on a non-owner property will only go from bad to worse.  Let me Explain....

In the eyes of a bank you couldn't be more of a high risk.  An investment property with no equity in an option ARM is a bad place to be in, IF YOU DON"T HAVE A PLAN!

I suggest making the Interest Only payment as often as possible as that will be one sure fire way to keep the property.  I know that the interest rate is high but you have no other solution if you want to keep the property.  If you want to sell the property and it is an investment property I would suggest contacting your CPA before you move forward with that process so you know the consequences from a tax perspective.  

Lastly, ONE PIECE OF INFORMATION THAT IS THE MOST IMPORTANT THING YOU NEED TO KNOW ABOUT YOUR LOAN,

WHEN WILL IT RECAST?  

If you don't know the answer then you could be caught off guard when your loan "Maxs out" (recast) because once hit that point you won't have any options left but making the interest only payment.

The obvious next question is how do I find out where my recast point is?  You will need to review the paperwork you signed for the loan on that property.  You will be looking for a "Note" and "Riders" and within those documents look for recast in terms of percentages (110% - 125%).  Once you know the percentage you need to multiply your percentage against your original loan balance.  That outcome will be the "Max out" point for your loan and if you reach that number your loan will have a new minimum payment of interest only.  There are some other rules and tricks that will come up but if you are under 5 years into the loan you are good with just these basics.  If you are over that point you and I will have to talk!"

IF YOU ARE A HOMEOWNER and this is your PRIMARY RESIDENCE..... Additional Rules apply. 

You can find out more about those rules in my FREE REPORT!

 "Refinancing SECRETS for and Upside Down Loan that Banks Don't Want You To Know because it will Cost them THOUSANDS of Dollars!"

JUST SEND ME AN EMAIL with "Refi Secrets for Upside Down Loans!" as the subject to Brent@brentlane.net

The United States has the highest number of children growing up in a single-parent home in the developed world. According to the U.S. Bureau of the Census, data from 1998 shows that approximately 34% of families in the US were headed by a single parent and of this, 84% were headed by single women.

Kenyans living in the United States are not exempt from these statistics. Although solid data specifically targeting Kenyan homes in the United States headed by single women is hard to come by, anecdotal evidence informally gathered through social networks suggests that this is a growing phenomenon. Continue Reading »

Here’s a sponsored review by Blown Mortgage about the Mortgage Loan Calculator Web site and Free mortgage widget.  Blown Mortgage provides sponsored reviews to companies who wish to promote their services to our readers.  You can learn more about a sponsored review from Blown Mortgage here.

What do you get when you cross Web 2.0 with a mortgage calculator?  Check out the Mortgage Loan Calculator web site and see for yourself.  Whether you’re a consumer or an industry vet the Mortgage Loan Calculator provides a great, free calculator for those of you looking to determine your monthly mortgage payment and pay-off schedule for your mortgage or other loan.  

The site has two calculators, a mortgage calculator and a simple loan calculator.  The mortgage calculator is robust and includes all of the factors you need to determine your actual amortization and pay-off schedule.  Once you’ve plugged in all the variables the program provides a slick-looking graph of the results with the resultant mortgage payments in an easy-to-read grid format below.

The Mortgage Calculator Widget Gives Your Blog Instant Functionality

The mortgage and loan calculator is available in a streamlined widget which can be placed right on your blog or web site by simply copying a few lines of code and pasting it in to your side bar or wherever you want to place the widget.  This is a great value-add for any loan officer or real estate agent looking to provide good-looking, functional, valuable content to readers.

I’ve installed the mortgage calculator widget here on the sidebar of Blown Mortgage to show you how it works.  When the user tries the calculator from your blog or site the results are displayed in a slick ‘modal window’ that keeps the users on your site and doesn’t require a pop-up window or any other distraction.  That’s what I call slick integration.

See how the graph and pay-off information simply overlays the blog so the users don’t have to leave to get the data.  I love the graph design too.

Totally Professional

The execution of this calculator is superb from the smooth sidebar integration, modal window results and AJAX-based graphs that are incredibly visually appealing.  I recommend anyone who is looking for a mortgage calculator to offer to their readers to add this Mortgage Loan Calculator.  It’s a great little application that delivers a lot of value in a user-friendly and well-executed way.  Even though this is a sponsored review I’m ecstatic I found it.  It will have a permanent home on Blown Mortgage and I recommend that you find a spot for it too.

In my line of work I hear people say it all the time, "I have the worst credit ever. Can you help me buy a car?". So that got me to thinking. How does someone get to that point of having REALLY bad credit? I also though about what could be done to help people with really bad credit. Maybe I can share some of my experiences find other people to share theirs.

In my experience, it seems that people earn really bad credit for one of 2 main reasons. Either they get bad credit because of an extenuating circumstance that is really beyond their control, or they get bad credit because they lack the ability to pay their bills on time. In the second main reason there are really 2 sub-categories. The first is people who cannot pay their bills because they spend more than they earn and the people that cannot pay their bills because of laziness and lack of foresight when it comes to paying their bills in the future.

As an example of reason #1, we often get customers that make good money, drive nice cars, and have a lot of bills. Then something happens, whether it be divorce, loss of job, illness, or some other major life event, and all of a sudden it becomes very difficult to pay the loans, credit cards and other debts that have been accrued over the years. When something like that happens, it is usually very easy for us to help. When there is a singular life event that affects your ability to repay your debts it it obvious on your credit and we can convince lenders to give you another chance.

There are similar people with similar jobs that never can seem to quite get their act together. Maybe their car payment is always a little late, maybe the minimum payment on their credit cards does not seem like a big deal, maybe they decided not to tell one of their creditors that they changed addresses and since they are not receiving the monthly statement they decide the bill does not need to be paid. This type of person will eventually come to the realization, "Maybe I should have taken my credit more seriously." Often by that time it is too late.

When you establish a long track record of not paying any meaningful bills, you will earn a very low credit score and any loans or credit cards you receive will be unfavorable. Loans will have a high interest rate and/or a high down payment requirement. Credit cards will have higher rates and/or high fees.

It seems so obvious to most of us, but to people with chronic derogatory credit it does not seem obvious. In fact, usually they tend to blame it on the bank, or on the postman for losing the mail, or for someone for stealing their identity. Why would someone want to steal the identity of a person who has never paid a bill in their life up to that point? They wouldn't.

In my job I often interview people about their credit. Sometimes I ask someone about a particular account on their credit, and before I get a chance to congratulate them for having that one positive account, the customer says "That account isn't mine, someone stole my identity." It is hilarious! The one actually good item on their credit, and they say it wasn't them. Do they think someone stole their identity so that they could pay a loan or credit card on time? I usually tell them to NOT dispute that account because it is the only piece of positive credit on their bureau. Usually, it was an account that was in their name AND another person's. That is why it actually got paid on time...the other person made sure of it.

So what are we looking for on the blog? We are looking for people that have questions about their credit and we are looking for people that have meaningful thoughts to contribute. Perhaps someone can share their bad credit story and how they were able to turn it around. Maybe some experts in the credit or law fields could have some ideas to share. I do not know what kind of response to expect, but I hope it is a positive one.

Should you use your home equity to consolidate your debt?

Now I know that mainstream financial writers and planners will disagree with my advice in this lesson but I don’t care what the “mainstream” thinks. My goal in the advice I give my clients and people who read what I write is: How can I improve their financial well being? Remember, Carrying Debt Prevents You From Saving!

If you own a home and you have significant credit card debt it may make sense for you to tap the equity that has built up over the years and consolidate your debts into one payment. This approach will often reduce your monthly obligations and possibly increase your tax deductions. A strategic refinance to consolidate your debts can also free up cash you can actually invest towards your retirement. Now, you might be thinking you are simply borrowing from Peter to pay Paul and that you are actually extending the overall cost of the credit card debt. But are you really? Here is an example of one of my clients in their 50’s (we’ll call them Mary & Tom) we helped out of this exact situation.

Mary and John had run up some significant debt on several credit cards and were recommended to us by their accountant. Like for many of us, life had gotten in the way and over the years they had amassed $35,000 in credit card debt in addition to 3 mortgages. They had no retirement savings. With an average interest rate of 23%, you can imagine the minimum payments were killing them. We were able to structure a program for them that reduced their overall monthly payments by $1,260 – that is more than $15,000 per year and Mary and John now have positive cash flow every month. We set them up with a financial planner who in turn instituted a methodical contribution plan setting aside half of this monthly savings for their retirement, while the other half goes into a fund to pay for sudden expenses. Once this fund reaches a cash equivalent of six months reserves to pay all their expenses should they lose their jobs this half will then get re-directed to their retirement accounts. They are able to enjoy life again knowing they are not drowning in debt, they have money available for emergencies, and their retirement planning is now on track to attain their goals.

This post is an excerpt from Chapter 12 of my book entitled, Mortgages: What You Need to Know