Reasons why Debt Negotiation is Difficult

With the bad economy, limited income opportunities and evaporated real estate equity, many people are having difficulties paying off their debts. An increasing number of families are forced to make a difficult choice of either paying their mortgage or their other debts like credit cards and medical bills. Because of this, it comes as no surprise that many people are holding on to the slightest hope that they can get out of their debt situation. The truth is having unsecured debts like credit cards will be very difficult to pay. Some still try debt negotiation, but oftentimes, it doesn’t work for everyone. Here are the reasons why:

1.) Unrealistic expectations. Most people seeking to pay their debts have the expectation that they can easily do it because they heard that their neighbors did. They easily assume that seeking the help of a lawyer will be the solution that they are looking for. But, most people who want to negotiate debts do not have the capacity to deal with the settlements that may be offered to them.

2.) Money is required to bargain settlements. Being unemployed and not having enough money to pay regular bills like rent, mortgage, transportation, food and other day to day necessities will make it very challenging to negotiate other bills because there is no remaining cash left to use for the negotiation.

3.) Unsecured debts. Usually, most people with serious debt challenges have plenty of unsecured debts. They do not only have one but more. This won’t work with debt negotiation. Enough cash flow is needed to make a negotiation or settle them. Otherwise, the process is bound to fail. It is not helpful to negotiate several debts and only end up having the debt creditors bring them to court.

4.) Debt negotiation takes time. Even with the representation of a lawyer, it is not impossible to get sued and have a court judgment in the middle of the negotiation. This happens all the time.

There are some successful people with debt negotiation. They are able to settle debts with creditors and pay their debts on time in a certain number of months and years. However, their credit rating is affected and the debts will not reflect as “fully paid.” Instead, it will only show as “settled.” Yet, this does not free them completely. More money is required and any forgiven debt may be taxed as income.

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Important Information for Joint Mortgage Loan Applications

If you and your spouse are thinking of applying for a joint mortgage loan but one of you has bad credit, you may really have a difficult time. This is because the lender usually considers the lower credit score in deciding the rate of interest it will charge to the both of you. Here are some of the things you have to know about joint mortgage loan application with bad credit.

1.) The Person with Higher Credit can Apply for the Loan Alone
Although with two borrowers it is easier to get a higher amount of loan, this is only possible if both of you has good credit. Thus, if one of you earns a good income and has a good credit, you can already qualify for the mortgage.

The person with the higher income is usually considered as the main borrower. Just know that you will not be qualified to a bigger of loan with only one applicant.

2.) Find a co-signer
A parent, family member or close friend who can act as a co-signer can help you qualify for the amount of loan that you desire. For as long as their credit is good, any of them can take the place of your spouse with bad credit as a co-applicant. If you are thinking of obtaining an FHA mortgage, you must find a co-signer who is related to you. As a word of caution, you might have difficulties convincing your potential co-signer to sign for you if he or she has a higher income than you and your partner. The reason for this is that he or she will be considered as the primary borrower and that will be too risky for him or her.

3.) Legal Information
If you have finalized your decision to apply for a loan using one of your names, you can still request for the deed of the property to be placed on both your names since the deed and mortgage are usually separate. But, there are instances when the lender has to decide on this so make sure to check their policy first. Moreover, if only one name is stipulated in the mortgage but the two of you will pay for it, make sure to have a signed agreement in place just in case you separate. This is especially a security measure for couples who are not married.

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Various Forms of Assistance for Responsible Homeowners

The latest effort of the Obama administration to assist the housing market is aimed at homeowners with solid credit and is making on-time payments on their mortgages but is unable to refinance because they own underwater homes in falling markets.

President Obama is set to announce his plan in Nevada, a primary state that he hopes to win in 2012. Since the peak of the housing market bust, the prices of home in Nevada fell by 53%. In the metro area of Las Vegas, the prices decreased by 59%. It has been reported that there has been no refinancing activity for borrowers who are underwater in the area. The president’s plan is designed to change this.

Image via Wikipedia

A series of changes that will lighten the load of responsible borrowers at the moment will be announced. This is to help them take advantage of the good mortgage rates at present. According to the new regulations, homeowners with good credit who has missed a payment for a period of one year can still be considered as a responsible current borrower.

The advice of the administration officials is that the homeowners will no longer be requested to get an appraisal or required to undergo a full credit check. According to the official, if the payments have been current, it is already the lender who owns the risk. They also plan to get rid of the so called risk based fees that are currently charged on bad credit homeowners. This will raise the benefits of refinancing and eliminate hassle.

The administration official informs the CNN that they have been working out and coordinating the issue with FHFA and the banks. Then, the FHFA will contemplate on the proper guidelines and inform banks about them by November 15. Homeowners can start applying for the refinancing until after the 15th of November.

Between the present days until the 15th, the FHFA can think of including another category of homeowners in the plan. It is possible that the changes will be extended to bad credit homeowners who have home equities and have been current in their payments.

A government official shares that plans are continuously made to address the larger housing problems that affect the entire market. These will be announced in the future.

Previously, the administration already announced the forbearance for homeowners for up to one year if they lost their jobs. This allows homeowners to delay mortgage payments while unemployed.

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• Refi plan: If homeowners win, someone else loses (sfgate.com)

Various Forms of Assistance for Responsible Homeowners

The latest effort of the Obama administration to assist the housing market is aimed at homeowners with solid credit and is making on-time payments on their mortgages but is unable to refinance because they own underwater homes in falling markets.

President Obama is set to announce his plan in Nevada, a primary state that he hopes to win in 2012. Since the peak of the housing market bust, the prices of home in Nevada fell by 53%. In the metro area of Las Vegas, the prices decreased by 59%. It has been reported that there has been no refinancing activity for borrowers who are underwater in the area. The president’s plan is designed to change this.

A series of changes that will lighten the load of responsible borrowers at the moment will be announced. This is to help them take advantage of the good mortgage rates at present. According to the new regulations, homeowners with good credit who has missed a payment for a period of one year can still be considered as a responsible current borrower.

Image via Wikipedia

The advice of the administration officials is that the homeowners will no longer be requested to get an appraisal or required to undergo a full credit check. According to the official, if the payments have been current, it is already the lender who owns the risk. They also plan to get rid of the so called risk based fees that are currently charged on bad credit homeowners. This will raise the benefits of refinancing and eliminate hassle.

The administration official informs the CNN that they have been working out and coordinating the issue with FHFA and the banks. Then, the FHFA will contemplate on the proper guidelines and inform banks about them by November 15. Homeowners can start applying for the refinancing until after the 15th of November.

Between the present days until the 15th, the FHFA can think of including another category of homeowners in the plan. It is possible that the changes will be extended to bad credit homeowners who have home equities and have been current in their payments.

A government official shares that plans are continuously made to address the larger housing problems that affect the entire market. These will be announced in the future.

Previously, the administration already announced the forbearance for homeowners for up to one year if they lost their jobs. This allows homeowners to delay mortgage payments while unemployed.

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• U.S. throws lifeline to underwater homeowners – Reuters (news.google.com)
• Refinancing plan for US mortgages (bbc.co.uk)

Take Advantage of Low FHA Mortgage Rates

In the past week, mortgage rates reached another low record. This is one of the news regarding the terrible economic condition. The current rate on FHA mortgage declined to 3.990% with an annual percentage rate of 5.318%. This is once again another big chance for individuals and families who have existing FHA mortgages and for those who are thinking of getting an FHA mortgage.

If you are one of those with an FHA mortgage in your house, you can take full advantage of the streamline refinance program for your mortgage. This program will help you save extra money from your mortgage payments. Oftentimes, FHA streamline refinances do not ask for a new appraisal that is why the process takes faster than a usual refinance program. If you are paying your mortgage at a rate of at least 4.5%, you can inquire from different mortgage servicers to know the amount of savings you can have when you decide to refinance.

On the other hand, if you do not yet own a home as of this time but are thinking of purchasing one, now may be the best time to go for it. Even without enough funds to put in a down payment, you might be able to obtain a mortgage via the FHA. This type of mortgage may only ask you to pay at least 3.5% of your dream home’s purchase price as your minimum down payment. Because of this, FHA mortgage is popular to many homebuyers. There are also many mortgage servicers these days that are willing to assist you in getting an FHA mortgage especially if you have a good credit standing.

The housing market is offering the best mortgage rates so far. Although this may not be a good sign for the economy, it can benefit existing homeowners and those who have been planning to purchase their own homes but are waiting for the most affordable rates.

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