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financial matters

Friday, December 29, 2006

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Friday, December 08, 2006


Santa Claus, the tooth fairy, an honest lawyer and an old drunk are walking down the street together when they simultaneously spot a hundred dollar bill. Who gets it?

The old drunk, of course; the other three are mythological creatures.

HA HA HA HA....................... btw it was for a laugh:-)


It's Christmas time and many of us are looking at renovating or making additions to our homes and gardens.

Home owners can either do this stuff on their own or hire professionals.

It can range form getting your wall papers changed to any thing like upgrading your bathrooms and kitchen......almost everything you can think of .

Wednesday, December 06, 2006

Reverse Mortgage Info

Understanding and Selecting Reverse Mortgages

What’s a reverse mortgage? In a nutshell, it’s this. In a regular mortgage, you make monthly payments to the lender. But in a “reverse” mortgage, you receive money from the lender and generally don’t have to pay it back for as long as you live in your home. Instead, the loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Reverse mortgages can help homeowners who are house-rich but cash-poor; they have become an important resource to our senior population.

There are three versions of the reverse mortgage. They include single-purpose reverse mortgages, which are offered by some state and local government agencies and nonprofit organizations; Home Equity Conversion Mortgages (HECMs) which are a federally insured HUD product; and proprietary reverse mortgages, which are issued by commercial mortgage lenders.

Single-purpose reverse mortgages are not available everywhere. In states and cities that offer them, they are a very low cost arrangement and usually available only to low and moderated income households. However they can only be used for one purpose specified by the government or nonprofit lender – for example, to pay for home repairs, improvements, or property taxes.

There are no limitations on the use of funds generated by HECMs or proprietary reverse mortgages, and they are available everywhere. They are more expensive than single-purpose reverse mortgages and their up-front costs can be high. The amount you can borrow with either of these models depends on a number of factors but generally speaking, the older you are and the more equity you hold in the home the more you can borrow.

One of the primary differences between an HECM or private reverse mortgage and a refinance loan is that reverse mortgage loan advances are not taxable and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence.

Some of the facts to keep in mind about these loans:

  • Lenders not only charge origination fees and other closing costs for a reverse mortgage but may also charge servicing fees during the term of the mortgage.
  • The amount you owe on a reverse mortgage generally grows over time. Interest is usually a variable rate and is charged on the outstanding balance and added to the amount you owe each month.
  • Reverse mortgages can use up all or some of the equity in your home, leaving fewer assets for you and your heirs.
  • Because you retain title to your home, you remain responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses.
  • Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

There are enough pitfalls in reverse mortgages that in the case of an HECM, HUD requires that you meet with a counselor from an independent government-approved housing counseling agency. The counselor must explain the loan’s costs, financial implications, and alternatives. This is a tremendous resource. Shop the loan market all you want, but take what you find to a counselor who can walk you through all your options and compare them, side by side.

Reverse Mortgage Counseling

Avoiding Reverse Mortgage Scams

Reverse mortgages are gaining in popularity as more senior's start looking for ways to supplement their retirement incomes. And as the interest in reverse mortgages increase, so are the cases of reverse mortgage fraud and scams. Many seniors are finding that they have lost thousands dollars of their hard earned equity to these reverse mortgages scams. Since reverse mortgages typically involve our largest asset (your home), this type of fraud can have a serious negative impact on your retirement. The following reverse mortgage fraud information will help you avoid becoming a victim of a reverse mortgage scam.

Reverse Mortgage Scams

There are several types of reverse mortgage scams that can end up costing you thousands and even tens of thousands of dollars in equity in your home if you become a victim.

Charging for free information on reverse mortgages

Several estate planning companies have been charging thousands of dollars for information provided free from HUD. Typically these companies charge for this information as part of an estate planning program. Seniors that sign up for these programs are unaware that these firms are collecting thousands of dollars by charging a fee of 6 to 10 percent of the total amount borrowed. These fees cost the victims $6,000 to $10,000 on a $100,000 reverse mortgage. HUD has recently issued a directive to lenders that issued reverse mortgages insured by the Federal Housing Administration (FHA) to stop doing business with these companies.

Pushing reverse mortgages as a way to pay for purchases

Some companies that sell large ticket items or services, like annuities or insurance products, may try to suggest using a reverse mortgage as a way fund these purchases. When the additional cost of the reverse mortgage is factored into the purchase, it ends up costing the homeowner much more than the benefit provided by the product or service.

Unethical reverse mortgage terms

Some lenders slip in excessive fees and terms into their contracts. These terms can have a serious effect on a senior’s equity. In some cases, lenders have used shared equity or shared appreciation terms, which gives the lender the right to collect a portion of the appreciation when the home is sold or refinanced. The cost of these type provisions can run into the tens of thousands as the home appreciates. These rising cost provisions eat up equity without providing any additional benefit to the homeowner.

Protecting yourself from reverse mortgage scams

If you are looking into reverse mortgages, there are several things that you can do to

protect yourself from falling victim to these types of scams.

  • Speak with a HUD approved reverse mortgage counselor. The counselor will help you understand reverse mortgages and help you evaluate your situation.
  • Obtain several offers from different reverse mortgage lenders in order to compare different options. The rule of thumb is to get at least three separate offers so that you have a good comparison of the terms offered.
  • Make sure you understand all the terms and conditions within the reverse mortgage contracts. Your reverse mortgage counselor can guide you through the contracts.
  • You generally have three business days after signing the loan document to cancel it for any reason.

If you suspect that a company is operating in violation of the law, let your reverse mortgage counselor know and then file a complaint with your State Attorney General's office or banking regulatory agency and the Federal Trade Commission (FTC) at

Monday, December 04, 2006

Home Refinance Dos

Refinancing your home mortgage can be a great decision- if it saves you money! A homeowner naturally would not refinance if a new mortgage cost him or her more money than it saved, but a good offer, and a quick decision without looking at the long term effect can be a detrimental action, and could actually cost the homeowner more than the original mortgage! Lenders are in the business of making more money, so don't expect all of them to be honest and do the future comparison for you.

So you are considering refinancing because you believe you can get a better monthly payment, a lower interest rate or a shorter term loan that you could pay off more quickly and own your home sooner than your original loan. These are all good reasons to refinance.

As a general rule, you should not refinance if the "safe margin" of balancing costs of refinancing against savings is less than two percentage points higher than the current market rate. You also need to determine how much longer you are going to be in the house. It takes about 3-5 years to realize the savings, given the costs, when you refinance.

Other factors that may make you want to refinance are getting a fixed rate loan as opposed to a variable rate, converting to an adjustable rate loan with more protective features such as lower cap rates, or remove cash from the equity built in your home.

Refinancing usually involves the homeowner to pay off the original mortgage, and sign for a new one with better conditions, whatever that may be for that specific homeowner. Keep in mind that there may be costs attributed to paying a mortgage off early, which are called prepayment penalties. If you are paying off your first mortgage early, the lenders may charge penalty fees which basically gives them their interest that would be paid if the mortgage were carried out for the life of the loan. You may be able to add the closing costs to the new mortgage and still have a smaller mortgage than the original one.

In order to decide if refinancing is right for you, you absolutely must compare the original loan and new loan based on the future! The future period should be how long you expect to keep the new loan. If the total costs of the new mortgage are less than the current mortgage, then, and only then would you refinance.

As in any mortgage, you must look at the annual percentage rate and fees. You have to make sure that the total costs of financing a new mortgage will be less than the total savings in interest. To cut refinancing costs, you may ask for no money upfront and then take a higher interest rate, leading to a higher monthly payment. But if it is still less than the current mortgage, you could definitely consider this as an option and not have to come up with a large upfront sum.

Always do your due diligence when considering financial changes. Be sure to have the lender disclose all information to you and leave nothing unclear. If you need help or clarification on information, ask for a professional for help! The use of a financial calculator can also be useful. If it has been a while since you have dealt in the mortgage industry, read up on new laws, current market rates and interest rates, and other pertinent information that allow you to be educated in the decision making process. There is a lot of information available to you, and make sure it is correct by running it by a trusted source.

Thursday, November 30, 2006


Paying off one loan through the means of obtaining another; refinancing is a way to secure a lower interest rate.


1- Refinancing can have lower interest rate

Refinancing a mortgage or other type of loan can change the loan to a lower interest rate. Alternately, refinancing can be used to transform available equity in one's house into ready cash, available for other purposes or expenses.

2- Refinacing can be used to reduce risk associated with ARM

Interest rates on adjustable-rate loans and mortgages shift up and down By refinancing an adjustable-rate mortgage into a fixed-rate one, the risk of interest rates increasing dramatically is removed, thus ensuring a steady interest rate over time.

3- It is tax- deductible

Finally, refinancing a loan or a series of debts can assist in paying off high-interest debt such as credit card debt, with lower-interest debt such as that of a fixed-rate home mortgage. In addition, non-tax deductable debt, such as credit card or car loan debt, can be transformed into tax-deductable debt such as home mortgage debt, potentially lowering one's taxes or shifting one into a more advantageous tax bracket.


1-Certain loans contain penalty clauses triggered by an early paymentof the loan.

2- In addition, there are also closing and transaction fees typically associated with refinancing a loan or mortgage.

Decision on whether or not to refinance should be taken very carefuly.

home refinance

Wednesday, November 29, 2006

Penny Wise

Wednesday, November 22, 2006