Understanding Chapter 13 Bankruptcy

For anyone who has tried to successfully avail of a mortgage loan, things may have looked a bit better because of the sudden influx of money at hand that can ease some if not all of the present financial burdens that buying a property may bring. But reality is, sooner or later one will  have to pay out this loan. People with sufficeint funds won’t have any problem paying up. But how about those who will need additional help in order to fulfill their committment to pay the loan? Is Chapter 13 Bankruptcy an option  anyone can turn to? Will it be the right option to take?  

Chapter 13 Bankruptcy is part of the United States Code specially made for people who are regualrly receiving an income and are serious on paying out their debts. It is a financial rehabilitation under the federal court supervision. Debtors are given a repayment plan usually payable from three to five years depending on whether or not they meet the applicable state median. After it has been decided how many years the debtor will pay and how much will be paid on a regualr basis, payment immediately starts 30 to 45 days after the court decision. Creditors cannot collect in any way except through the bankruptcy court. The debtor keeps the property and creditors are paid less than the amount they are originally owed.

Not everyone can avail of this. Without the presence of the regular income, one will not be able to file for this. Or if there has been a prior dismissed bankruptcy petition within the last 180 days, the reason being the debtor was not able to fulfill his committment to pay to creditors. Debtors should also receive credit counseling from an approved counseling agency, individual or group, 180 days before being qualified to file.

Some advantages of filing for Chapter 13 Bankruptcy includes stopping foreclosures, being fully discharged of debts of kinds not included in Chapter 7, value collateral, splitting the overcharging on interest by creditors, and lastly, it protects debtors from collection activities of non-filing co-signers. On the other hand, disadvantages include having a record of bankruptcy on an individual’s credit record for like 10 years. One is also not allowed to have additional credits unless it is authorized by the bankruptcy court. Obviously, creditors may not be willing to lend anymore to individuals who have filed for this.

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Comparing Buying to Renting – Getting a Mortgage Loan

Contrary to the beliefs of most people, buying a home does not necessarily mean making the right investment decision. This is something that should be undertaken with much concern so before making the decision to buy. Indeed, being able to buy a home is dream come true provided that the purchase will not be made through a mortgage. However, if buying entails having to apply for a loan, then a person may have to think twice if indeed he is making the right decision to own his dream home.

When making this one big leap to achieve the dream of finally getting a loan through a home mortgage, it is best to make comparison between the finances incurred in home rental versus the finances that will be acquired in buying a home through house financing. When doing the comparison, it will be noticeable immediately that a higher monthly amortization expense can be expected for home mortgage than in rental. Usually, the difference is about 75% to 80%. It can be thought that this is just acceptable since the monthly amortization is for the payment of the house that is already bought and not just being rented. However, when interest payment will be considered, it may be found out that the monthly amortization is not really reasonable for owning a house. This is because bulk of the monthly amortization is applied to the interest first during the early years of the mortgage.

There is also no connection between savings and owning a home. If getting a home is being considered as a form of forced savings, there may be a need to restructure this kind of thinking. This is because the interest being applied into owning a house through a mortgage is not justified to take it as a form of savings. At the same time, the property is not even liquid to begin with. It means that it cannot be sold easily. As such, when money is needed, the property will not even give the owner the means to get the money easily.

It is not wrong to desire buying a home especially if the person can afford purchasing one. However, if the income will not allow the person and will just put that person to more debt, the dream can be set aside first. It will be good to save any amount that can be put aside first and be contented with what the budget can allow for the meantime.

What Can a Real Estate Agent Really Do For You?

When buying or selling a home, a real estate agent can prove invaluable in helping you navigating the sometimes-treacherous waters.

Some even go beyond merely a real estate agent and look for a Realtor. Realtors, not only are licensed in their state to do business, but act under a strict code of ethics.

When selecting a real estate agent or Realtor, go local and look for credentials. Look for an agent that is knowledgeable in the area that you’re looking. It may be better to go with an agent that only specializes in one or two areas. How much in depth information can an agent know about 10 different markets?  How much attention will you get if your real estate agent has to travel long distances to show you potential homes?

A good agent not only helps you buy or sell a home, but can help in determining how much home you can afford, but which home is best suited for your needs. If you have school-aged children, then the locations of the best schools in the area will not only be on your mind but hopefully your agent’s mind as well.  A good real estate agent will be able to help you navigate tax structures, utility costs, zoning rules and upcoming changes that may affect all that and property values which can also weigh on your decision.

Then, when a home is bought or sold, a good real estate agent or Realtor can help you line up movers or contractors. If it has anything do with buying or selling a professional can help in any aspect. After all, there’s more to buying and selling real estate than just price. A good agent or Realtor can help you decide which options are best for you and your money.

3 Rules for Buying a Home

There are tons of things to think about when buying a home. It’s hard to decipher which are most important. Before you begin, keep these 3 rules for buying a home in mind.

1. Seek professional help. A good place to begin is Realtor.com. It’s the official site of the National Association of Realtors (NAR). Not every real estate professional is a Realtor. Only members of the NAR can call themselves Realtors. They’re expected to be more knowledgeable and are held to a strict code of ethics. If you’re not ready to work with a Realtor yet, you can also use the site for its wealth of information. You can find homes for sale, the value of homes in your area and much, much more.

2. Determine what you can afford before you go shopping. It’s easier than you think. Just look for borrowing power and mortgage calculators online. Borrowing power compares your debt, income and other financial obligations to determine whether you’re a good credit risk by estimating how much you can borrow. Mortgage calculators can give you an estimate of you mortgage payment. The calculators can vary by site. Most allow you to input home value, loan term, down payment and interest rate. Some will show he amortization schedule as well.

3. Research your potential new home, find all the information you can. This rules goes hand-in-hand with Rule 1. A professional will be able to tell you, not only when the roof or the plumbing was updated but can also help you determine your new home’s value, potential problems, history, neighborhood and even area schools and job markets.

As the old saying goes: Knowledge is power. It may save you time and money in the long run if you stick to these 3 rules.

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3 Steps to Fixing Your Debt – The Free Mortgage Calculator

Debt can be stressful and if you’re not careful a nearly endless cycle. If you’re reading these words, then you’ve already made the decision to do something about it. Well, there’s plenty of help out there, most of which you can do on your own. Here are 3 steps to fixing your debt that can make this stressful situation a little more easy to bear.

First, get a free copy of your credit report. You can get one free credit report per year from all three credit reporting agencies, Equifax, Experion and Transunion. You can see on the report just what is damaging your credit and if you have any outstanding debts that you may have let slip by you.   Any bill that has gone unpaid, even for a short period of time can accrue interest and penalties. These not only add up to more debt that’s in turn hit with more interest and fees, the institution can raise your current interest rate when your credit rating drops.

When the credit card or other bills start rolling in, be aware there are two possible methods for paying them off. One is called laddering, where you pay the most on the bill with the highest interest rate, because carrying high interest debt will cost more. The other method is the debt snowball. Put the most money toward the smallest bill and pay the minimum on all others. When the smallest is paid, those payments are added to the next bill and so on.

Debt consolidation is also an option. But be careful, the debt doesn’t go away. You get a loan that covers your debt at a lower interest rate than you were paying. It can help reduce overall interest and you only pay one creditor instead of many.

These 3 are just a few of many methods you can try to fix your debt. Talking to professional is also a good idea. They can help you on your way to managing your debt. They can help you fix your debt and look into ways of buying a home based on your situation.

Buying a Home That Needs Work

Buying a home that needs work isn’t actually that hard to buy and fix up, but you should do your homework before starting the process. You’ll want to talk to your bank or mortgage lender, real estate agent and some sort of interior designer so that you can figure out all of the costs before getting into a project you can’t handle.

Talking to your Mortgage Lender

Your mortgage lender tells you how much you can afford based on your income and current debt with a number such as $170,000. That budget includes the monthly taxes you’re going to pay for the home as well. Instead of getting a home that costs $170,000 you can get a home that needs work for $120,000 and get another loan for $50,000 to finish the work on the home.

Usually a bank will appraise a home to make sure it’s worth what you’re buying it for so that they don’t loan you $170,000 for a $150,000 home. If they did that and had to foreclose on you then they’d lose a lot of money trying to sell it. So in this case the mortgage lender would appraise the home as if it were finished to make sure they can sell it and get their money back.

Talking to your Real Estate Agent

Have a long conversation with your real estate agent that you chose after talking to at least 5 or 6 different ones. Tell them exactly what you’re looking for and what you want to do. Tell them you want a home with a lot of “cosmetic” work which means paint, rugs and sheet rock problems. DO NOT get a home with an structure damage such as the roof, foundation or floors because you’ll pay a lot to fix it and it won’t increase the value of your home as much.

Your real estate agent should be able to show you some homes that need basic TLC work which will lead you into talking to an interior designer.

Interior Designer

Talking to 3-4 designers will give you a lot of ideas even if you don’t hire them at all. They will come to your home and you can walk them through one at a time so that you can discuss what you want to do. Give them your $50,000 budget and see what they’d be able to do with it.

Be specific with them too. Tell them you’d like a pool table, fire place or berber carpets so that they can squeeze in your favorites first. They aren’t going to just do what they like, they want to hear your interests so that they can put a big smile on your face when everythings done.

All of that should be done before actually buying a home because you want to make sure everything can fit into the budget you have. It’s a lot of work to do before making an offer, but when you do make the offer you’ll be very confident that you can do what you set out to do.

The saying is “make sure all of your ducks are in a row” because if you don’t then something could go wrong much easier. Also remember to use a mortgage calculator to figure out if you can actually afford the $170,000 the bank is approving you for.

Don’t treat your “maximum” approval like the speed limit by calling it the minumum instead. Your max is your max, plain and simple, so don’t go over it and make sure you can actually afford it with your own spending habits.

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Finding the Right Mortgage Broker or Lender

Finding a good Mortgage Broker to work with your specific needs can be a task, but you must take every part of buying a home seriously. Getting the wrong mortgage broker, real estate agent or home inspector could cost you thousands and thousands of dollars.

Picking out your bank, lender or mortgage broker will be the first of many items to check off your list of buying a home. A mortgage broker finds the best interest rates and packages from a pool of banks and lenders in your state. There’s NO cost to you for using a broker rather than going direct to a bank. The bank or lender gives the broker a commission style payment for finding and processing the loan. They can find you very good deals but you need to trust who you’re working with.

At The Free Mortgage Calculator we’re in the process of finding them for our visitors. Along with all the free information we’re going to start qualifying mortgage brokers for each state so that you can click on your state and find a great broker that will help you individually. This is currently set to launch on November 1st of this year.

You may not get that personal feeling when dealing with a bank or private lender directly because banks have many other programs they’re involved in such as retirment funds, savings and checking accounts, CD’s and much more. A mortgage broker is soley in business to help you get the loan that you want and their staff is trained accordingly.

When you first start looking for a mortgage broker to see what you can afford for a home you should talk to at least 5 so that you can feel out who you trust the most. Even if you don’t know ANYTHING about baseball but you talk 10 sports writers in a row you’ll be able to tell the smart ones apart from the “full of bull” ones.

Sometimes I hear people going through the buying process and they say that everything’s going smooth except we hate our real estate agent, or we hate our mortgage broker. So why didn’t you drop them and find someone else? You don’t pay them anything until they follow through with whatever YOU want them to. Tell them what you want, be assertive but you don’t have to be rude. Just drop them when you feel they aren’t doing enough for you.

If you continue to ask for homes under $200,000 and your agent continues to bring you to homes over your budget let them know the problem or just go find another agent. Taking your time in this economy is the best option because the longer you wait the better chances you have of catching a cheap foreclosure or short sale.

Use a mortgage calculator to see what the mortgage payment will be on the amount that you get approved for by the different brokers. If you get approved for $180,000 then use the calculator to see what the payment is and make sure to add in the monthly taxes. This way you can see if you can really afford the price range they gave you. If you can’t then back off a little bit.

If a car sales man told you that you could afford $65,000 for a car is that what you’d start looking for? Or would you start looking at a more reasonably priced car around $30,000. You don’t want to spend every last monthly dollar you make on your mortgage or you’ll never be able to save money or have extra spending money at the end of each month.

Remember that a good mortgage broker will work for you to find you the best interest rate, loan program and lowest closing costs from the many different banks and lenders out there. Talk to 4-5 brokers before choosing one and make sure you have a good rapport before working together.

Knowledge Will Save You Thousands
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Real Estate Deals – Buying and Investing In Homes Now!

What’s it going to take to get it into peoples heads that it’s an incredible time to buy a home in this terrible economy? I’ve heard big time investers and real estate experts talking on TV about how bad the economy is and to wait to buy a home and I’d love to debate them face to face.

They continuously discuess the percentage real estate is down, how much more it might go down and when the rock bottom will hit so that everyone can start buying homes again. The problem with their broad statements is that real estate is different than stocks!

The DOW Jones stock is what it is and you can only buy it for that specific number. So when they say The DOW is down 4%, it’s down 4% and you can buy it for 4% less than what it was which makes sense.

Real estate, on the other hand, is technically down 20% or something like that which means NOTHING when there are foreclosures and short sales available to buy for next to nothing. What if you found 10 DOW shares available at $3,000 instead of the current price in September 2011 of $11,500 per share? That’s an incredible deal right?

There is very very low real estate prices out there with record low current interest rates which gives you low monthly expenses. Even if you’re not looking to buy a home right now just keep an eye out and start researching things that will help you save money when it comes time to go through the process.

Many people have told me how much they learn about real estate after going to the process of buying a home for the first time. Then after they bought their 3rd or 4th home they wish they had that knowledge when they bought their first home because they would have done a few things differently.

If you start looking at the current homes on the market right now then you’ll have a much better idea of a “good deal” in 6-8 months when you actively start looking for a home. You can look on MLS listing websites that show current homes for sale and the most recent homes that have sold.

Seeing the actual sale price of a home contains a boat load of information when you start to negociate a price. If you know that 3 similar homes sold for $150,000 and the home you want is listed for $145,000 then you can make a few guesses as to why they listed it at that price. They might want to get rid of it fast and since you already did your homework you know that you can offer full price because you’re still getting a better deal than the last 3 people to buy a similar home.

I’ve seen plenty of foreclosures and short sales sell for a higher price than the listed amount because people did their homework, wanted that home and wanted to be taken serious with a serious offer.

When a bank or mortgage lender tells you that you can afford $150,000 please don’t start looking at $150,000 homes. It makes me sick to my stomach to see people max out their monthly spending money just to buy a home. There are far too many deals out their right now, you just need to be patient and watch the real estate market so you can see them come out that day.

Have all your ducks in a row with a preapproval letter from the bank stating that you can afford the home your looking to make an offer on. Talk to a few different real estate agents and let them know that you just want to make sure they will be there when you need them. Have them send you a few listings here and there and be VERY SPECIFIC about what you want.

“I want a deal! I want a foreclosure or short sale for very cheap in a 2 bedroom home or condo”

Since you continue to see 2 bedroom homes and condos sell on the market over the last 6 months for $150,000 then you’ll understand the deal when your real estate agent sends you a foreclosure listing for $75,000 that needs about $10,000 in work.

The power of knowledge will save you money every time. You can’t screw over a mechanic with a car problem, you can’t quote high insurance to an insurance agent and you can’t pull the wool over the eyes of a real estate agent with an over priced home. Learn and understand as much as you can about real estate because you’re speding a very large amount of money!

Knowledge Will Save You Thousands
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Buying a Home is Easier For the Educated

I see people buying a home everyday making classic mistakes without anyone to help them which leads me to believe they need some kind of mortgage consultant. If these people had a third party consultant to help them buy a home then they could save thousands and thousands of dollars.

I think the main problem with a mortgage is the length of time it takes to pay it off which makes people think less clearly about the amount of money and more about the monthly payment. They like a certain home, ask what the monthly mortgage payment is and they’re happy because they get to live there. Well I’ve found that people are much happier with less home and more spending money at the end of the month so think twice about getting that slightly bigger home for more money.

I’m not sure if there’s even such a thing as a mortgage consultant these days. I’d say 50 years ago a banker or mortgage lender would talk about your finances with you and discuss your best options based on your situation. Nowadays you won’t get much help at all because it’s hard to trust anyone trying to sell you something. All the phony commercials and lines of bull we hear makes it hard to believe anything coming out of a sales persons mouth.

I think a 3rd party consultant might be the way to go because all they’d be doing is selling you knowledge so you can quickly see what you’re getting for you money. Is a 30 year mortgage the best option for you? Maybe, maybe not. Do you know what an ARM rate is? Do you fully understand what a foreclosure is and what might happen to you if you don’t make your mortgage payments? 

Buying a home is a serious matter and serious things can happen. Random bills come up at random times and you need to be prepared with a savings account or additional monthly income that can pay those bills. Living check to check so that you can afford a bigger home is a terrible idea for so many reasons and a good idea for only one reason.

What Subject Are You Educated In?

Are you a car sales person? Are you a mechanic? Do you work in insurance? Everyone has knowledge in some subject that they happen to like the most. Do you think I could trick you into buying a car with a bad engine or sell you expensive insurance without any real coverage? People don’t get tricked when they have knowledge in the subject because they know and understand the standard scams and tricks that are usually pulled.

I doubt you could sell me a home with a lean on the mortgage or a crack in the foundation because I know how to take all the necessary steps in order to be sure I don’t get tricked. Knowledge is power and it will save you every time. Play around with my mortgage calculator and read all the pages and posts you can about mortgages, real estate agents, home inspectors and negotiating a good price on your new home.

Buying a home costs more money than you can make in about 4 years and since you have so many other bills it will actually take you about 30 years to pay it off. Some make more than others but usually buy a bigger home so it’s all relative. Be sure that you spent enough time learning about the process of buying a home before you actually get into a payment plan like this. You’ll be happy you did.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

A 30 Year Fixed Rate Mortgage Is Too Long For Most Buyers

The standard length of time to pay back a mortgage loan is over 30 years time which has become far too long for most people buying a home. There are all different types of people, couples and partners buying homes to live in, flip or hold for the long term to sell for a profit. So is the same type of mortgage loan good for each of these possible scenarios?

First, if you’re over the age of 35 getting into a 30 year mortgage then what’s your plan to make the monthly payment after you retire at the age of 65? You can use a mortgage calculator to see how much money you have to add to the mortgage to pay it off 5 years earlier. The problem is that when you’re 35 years old the last thing you want to think about is retirement because it’s so far down the road. Well that’s how far it will be when you finally make the last mortgage payment of your 30 year term as well. So maybe it’s something to consider.

Second, what’s wrong with a 15 or 20 year mortgage? Only the rich can afford to pay off their mortgage in 15 years right? Well if you start looking at homes in your price range based on a 30 year mortgage it’s obvious you can’t afford the same priced home over 15 years and niether can the rich.

Everyone makes a certain amount of money per month and can afford to use a certain portion of it on a home. A certain portion will also go to a car payment, household bills and much more. So if the bank says you can afford $180,000 for a mortgage then use a mortgage calculator to figure out the monthly payment that you can afford and see how much home that is over 15 years instead.

Getting a 15 year mortgage is like doubling the amount you add into your retirement fund each month. You’ll pay a lower interest rate, you’ll pay more principal and you could buy and pay off 2 homes in the time that it took you to pay off one home over 30 years. Then you can also collect rent on the second 15 year mortgage to help add even more money into your retirement fund.

Let’s look at the math and see how much more you get for your money with a 15 year mortgage. You can afford $1,500 per month for a mortgage and monthly taxes.

Option 1

30 Year Mortgage – $220,000 ($1,100/mo) Taxes – $400 = $1,500

Interest Rate – 4.50% Interest rate
Total Interest paid in 30 years – $181,000
Total Taxes Paid – $144,000

Total Cost – $545,000 to get a $220,000 home

Option 2

15 Year Mortgage – $170,000 ($1,250/mo) Taxes – $250 = $1,500

Interest Rate – 3.75%
Lower taxes for lower priced homes
Total Interest Paid – $52,000
Total Taxes Paid – $45,000

Total Cost – $257,000 to get a $170,000 home

Buy a second home the day it’s paid off for all the same costs.

First home – $257,000
Second home – $257,000

Rent out second home for 10 months per year for half the cost of the monthly fees ($750). You’ll have months without a renter so 10 months per year is a good number to use.

$750 x 10 = $7500 x 15 years = $112,000

First home – $257,000
Second home – $257,000
Minus Rent – $112,000

Total cost of 2 homes over 15 years – $402,000
          – Got 2 at $170,000
Total cost of 1 home over 30 years – $545,000
          - Got 1 at $220,000

If only people liked math as much as I do! Everyone would be able to learn and understand this simple formula to have $340,000 in your retirement at a cost of $402,000. Instead everyone’s paying $545,000 to only have $220,000 in their retirement.

By the way, I’m not just preaching, I actually just bought my 3rd condo. I personally like condos better than homes, even with the condo fee, because you don’t have to live near it to take care of the lawn, outside paint and structure issues. I hire a property management group to find a renter, write up the lease, collect the money and take care of all problems that arise with the tenant.

A 30 year mortgage is a mistake all around. There are so many other options to take into consideration that will make you more money than “investing” in a home over 30 years. People buy a home because it’s a good investment compared to renting. So look into investing slightly more and you’ll find better options.

Knowledge is Power – Knowledge Will Save You Thousands
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