Housing and Urban Development Secretary Alphonso Jackson announced October 12th. that HUD will offer a mortgage financing program that requires no downpayment for people whose homes have been destroyed or damaged due to Hurricanes Katrina or Rita. In addition to requiring no downpayment, potential homeowners can live anywhere they choose in the United States. "HUD is committed to helping people affected by these terrible disasters to re-establish their lives," Jackson said. "We want to give these families and individuals an opportunity to start over - as homeowners - whether they owned or rented their previous residences." Under the special mortgage program, called Section 203(h), HUD, through the Federal Housing Administration (FHA), will insure mortgages for individuals or families in a Presidentially-declared disaster area whose residences were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Borrowers must be able to qualify for FHA mortgages, which are generally easier to qualify for than those on the private market, but they will not have to put any cash down to purchase the property. In addition, the FHA mortgage insurance premiums can be financed into the mortgage amount, so only minimal closing costs would be required. An added benefit of the 203(h) mortgages, which are offered by any FHA-approved lender, is that they can be used anywhere in the U.S. For example, Katrina victims from Louisiana can choose to move wherever they wish. The limits on the size of the mortgage amount is up to $312,895, depending on the average sales prices in the area. For More Information on 203(h) mortgages:
contact a HUD-approved lender,
the HUD National Servicing Center Hotline at: 1 (888) 297-8685,
or HUD's website: http://www.hud.gov
No Money Down Mortgages For Those Effected By Hurricane Katrina or Rita
How Did I Get So Much Debt?
There are a lot of things that can cause you to get in debt. Some of the top causes of getting in over your head are:
1. Reduced income/same expenses. Having one spouse out of work for an extended time, reduced overtime, or a missed bonus. All cause a reduced income, but the same expenses. Usually causing what wasn't earned to be charged on credit cards.
2. Divorce. A natural extention of #1, but far more permanant. Not only are you learning to live on less, but you have new bills of attorneys, maybe child support.
3. Poor money management. Do you have a budget? Make one! Do you know how much money it takes to run your house for a month? You may be suprised to find out it is more than you take in in a month. It will also be very helpful to know that you have "X" amount of money left each month after paying the mortgage, car payments, food, etc. Now you know to never spend more than that.
4. Gambling. This is entertainment folks, not a way to make ends meet. The only people who will ever make money here is the house. It can be addictive, hard to stop and loans are freely available. Gambling establishments may be the only place you can mortgage your house while intoxicated and have it be legal. I'm sorry, I forgot -- this is entertainment!
5. Medical expenses. Gaps in coverage, lapsed policies and increasingly costly alternatives make this a popular category. Just about every doctor I know now takes credit cards. If you think it's for convenience, think again. The medical industry wants to get paid at the time service is rendered. They know that if they don't, the chances of their getting paid drops.
6. Saving too little or not at all. The simplest way to avoid unwanted debt is to prepare for unexpected expenditures by saving three to six months of living expenses. With a savings cushion in place, a job layoff, illness or divorce will not cause immediate financial strain and increase debt. You always hear, "Pay yourself first." Do it and it will grow and be there when you need it. No one has ever regretted having a savings cushion. Do you take advantage of your companies 401k? You will likely get a raise as they will match your contribution. Your contribution will be done with pretax money. Planned correctly I have see people make a contribution to their 401k and actually take home more money than if they had not.
7. No money communication skills. How can you not know what your spouse makes? I'm not talking about knowing they brought home $713.46 last week exactly, I'm talking knowing they make $19.25 a hour, and they usualy bring home $700 a week. Do you know a ball park balance on the checkbook at minimum? Did you talk about where you spent money recently, anticipated bills, and a plan to take care of it all?
8. Banking on a windfall. Living on next years COLA increase this year is no way to manage your money. COLA covers next years increase in the cost of living then, not living this year in excess. Living counting on grandma leaving you all her money is risky business. What happens if she falls for #5 and gambles it all away? What happens if she decides to leave it to the dog and not you? You have the credit card payments to live with now, and you will have a dog who eats better than you later. Don't spend what you might not get tomorrow today.
9. Financial illiteracy. Many people don't understand how money works and grows, how to save and invest for a rainy day, or even why they should balance their checkbook. The schools don't teach it, your parents may not have sat you down and explained it. It doesn't matter. You are responsible for your life and your money anyway. Ask questions, search the internet, read books.
Some good links to check out:
http://www.youngmoney.com/credit_debt/credit_basics
http://www.credit.com/c_home_c.htm
http://www.cccsintl.org/
http://www.nfcc.org/
http://www.masteringmoney.org/
http://www.divorceinfo.com/debts.htm
1. Reduced income/same expenses. Having one spouse out of work for an extended time, reduced overtime, or a missed bonus. All cause a reduced income, but the same expenses. Usually causing what wasn't earned to be charged on credit cards.
2. Divorce. A natural extention of #1, but far more permanant. Not only are you learning to live on less, but you have new bills of attorneys, maybe child support.
3. Poor money management. Do you have a budget? Make one! Do you know how much money it takes to run your house for a month? You may be suprised to find out it is more than you take in in a month. It will also be very helpful to know that you have "X" amount of money left each month after paying the mortgage, car payments, food, etc. Now you know to never spend more than that.
4. Gambling. This is entertainment folks, not a way to make ends meet. The only people who will ever make money here is the house. It can be addictive, hard to stop and loans are freely available. Gambling establishments may be the only place you can mortgage your house while intoxicated and have it be legal. I'm sorry, I forgot -- this is entertainment!
5. Medical expenses. Gaps in coverage, lapsed policies and increasingly costly alternatives make this a popular category. Just about every doctor I know now takes credit cards. If you think it's for convenience, think again. The medical industry wants to get paid at the time service is rendered. They know that if they don't, the chances of their getting paid drops.
6. Saving too little or not at all. The simplest way to avoid unwanted debt is to prepare for unexpected expenditures by saving three to six months of living expenses. With a savings cushion in place, a job layoff, illness or divorce will not cause immediate financial strain and increase debt. You always hear, "Pay yourself first." Do it and it will grow and be there when you need it. No one has ever regretted having a savings cushion. Do you take advantage of your companies 401k? You will likely get a raise as they will match your contribution. Your contribution will be done with pretax money. Planned correctly I have see people make a contribution to their 401k and actually take home more money than if they had not.
7. No money communication skills. How can you not know what your spouse makes? I'm not talking about knowing they brought home $713.46 last week exactly, I'm talking knowing they make $19.25 a hour, and they usualy bring home $700 a week. Do you know a ball park balance on the checkbook at minimum? Did you talk about where you spent money recently, anticipated bills, and a plan to take care of it all?
8. Banking on a windfall. Living on next years COLA increase this year is no way to manage your money. COLA covers next years increase in the cost of living then, not living this year in excess. Living counting on grandma leaving you all her money is risky business. What happens if she falls for #5 and gambles it all away? What happens if she decides to leave it to the dog and not you? You have the credit card payments to live with now, and you will have a dog who eats better than you later. Don't spend what you might not get tomorrow today.
9. Financial illiteracy. Many people don't understand how money works and grows, how to save and invest for a rainy day, or even why they should balance their checkbook. The schools don't teach it, your parents may not have sat you down and explained it. It doesn't matter. You are responsible for your life and your money anyway. Ask questions, search the internet, read books.
Some good links to check out:
http://www.youngmoney.com/credit_debt/credit_basics
http://www.credit.com/c_home_c.htm
http://www.cccsintl.org/
http://www.nfcc.org/
http://www.masteringmoney.org/
http://www.divorceinfo.com/debts.htm
Save Money Heating Your House This Winter!
A new government report has predicted large spikes in heating bills this winter. This is mostly due to continuingly high oil prices, as well as the lingering affects of the recent hurricanes Katrina and Rita on energy production.
The Energy Information Administration estimates that the average heating bill will cost one-third more this winter, for typical winter weather. A colder winter may boost bills almost 50%.
As temperatures drop, use these helpful hints to save and stay warm:
- Take advantage of heat from activities you already do, recommends TipKing.com, a Web site that offers household money-saving tips. Cook at home to generate warmth. When you shower, leave the bathroom door open to spread heated steam throughout your home.
- Cut your time in the shower in half and wash your clothes in cold water.
- Always wear socks or slippers at home because your feet are sensitive to cold. If you get cold, put on a sweater or wrap yourself in a blanket before deciding to turn up the thermostat.
- If you own a waterbed, make your bed each morning, advises the American Council for an Energy-Efficient Economy. Covers keep heat in the bed, so you can lower the setting and use less energy.
- Keep your thermostat a few degrees lower than usual. You won't notice much change in your home's temperature, but you'll save on heating costs.
- If your home has a multiple zone heating system, consider lowering the temperature in the zones you are not using, say the bedrooms during the day.
- Lower the thermostat when you leave for work, or whenever you won't be home for a long period. But be sure to keep it high enough to prevent pipes from freezing. New-model programmable thermostats can do the job automatically, and pay for themselves quickly..
- Minimize your use of ventilation fans, including those in your bathroom and kitchen. They pull hot air out of a room quickly.
- Cover windows at night. Lowering the blinds or closing the shades keeps out cold air. The heavier the window covering, the better. Remember to uncover the windows during the day to allow sunlight to naturally warm your home.
TipKing.com - http://articles.tips.net/Tips_for_cutting_home_heating_bills.shtml
Programable Thermostats - http://www.energystar.gov/index.cfm?c=thermostats.pr_thermostats
http://www.pueblo.gsa.gov/cic_text/housing/thermo/thermo.htm
http://www.powerhousetv.com/stellent2/groups/public/documents/pub/phtv_yh_di_000438.hcsp
News Links:
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/12/AR2005101202199.html
http://www.nytimes.com/2005/10/15/business/15energy.html
http://www.courant.com/business/hc-winterheat1012.artoct12,0,1523617.story
New Conforming Limits for 2006
Talk has been going around for a few weeks about the upcoming release of the new conforming loan limits for 2006 from Fannie Mae and Freddie Mac. The amounts will not be offiicial until early December, and not effective until January, be here goes to concenseus figures:
1 Unit - $400,000
2 Unit - $512,000
3 Unit - $618,900
4 Unit - $769,100
The 1 unit amount is up 11% from the 2005 conforming limit of $359,650.
Most Americans don't need a $400,000 mortgage. The median existing-home price was $218,000 in July, according to the National Association of Realtors. That's a 14.1 percent increase from the previous July. But in some parts of the country $400,000 isn't enough. For example in California a $500,000 home is not out of the norm. A $400,000 loan is needed just to get to 80 percent loan-to-value ratio.
Record home sales prices this year are driving the increase in loan limits. "There's a lot of differentiation across the country regarding the rate of home-price appreciation. Certain coastal states have seen growth in excess of 20 percent while areas of the Midwest have seen only 4 percent to 5 percent growth," says Mike Fratantoni, economist with the Mortgage Bankers Association.
1 Unit - $400,000
2 Unit - $512,000
3 Unit - $618,900
4 Unit - $769,100
The 1 unit amount is up 11% from the 2005 conforming limit of $359,650.
Most Americans don't need a $400,000 mortgage. The median existing-home price was $218,000 in July, according to the National Association of Realtors. That's a 14.1 percent increase from the previous July. But in some parts of the country $400,000 isn't enough. For example in California a $500,000 home is not out of the norm. A $400,000 loan is needed just to get to 80 percent loan-to-value ratio.
Record home sales prices this year are driving the increase in loan limits. "There's a lot of differentiation across the country regarding the rate of home-price appreciation. Certain coastal states have seen growth in excess of 20 percent while areas of the Midwest have seen only 4 percent to 5 percent growth," says Mike Fratantoni, economist with the Mortgage Bankers Association.
Bankruptcy, Down to the Wire!
On October 17th, new laws will go into effect, making it tougher for individuals to file for bankruptcy. The new rules have been given a great deal of publicity; so many consumers are rushing to file prior to the new law taking effect. According to the American Bankruptcy Institute, the number of filings was anticipated to increase another 10% to 20% by the end of the third quarter 2005...and second quarter 2005 was the largest single filing quarter in history with 458,597 filings.
So what is changing so drastically with the new laws?
First of all, the costs associated with filing for bankruptcy will most likely increase, purely due to the complexity of the new law (one lawyer I know has told me his fee will double). Second, the new law requires that prior to filing bankruptcy, an individual must have sought credit counseling from an approved agency, within the six months proceeding filing for bankruptcy. Third and probably most dramatic, many bankruptcies will now have to use Chapter 13 - a reorganization of debt - as opposed to the more commonly used Chapter 7 - more often a complete clear out of debt, allowing the protection of certain assets.
Chapter 13 requires that a plan be filed with the court to repay the debts associated with the bankruptcy in three to five years. But if the filer could not keep up with the set payment plan, the individual could change the bankruptcy from a Chapter 13 to a Chapter 7 and have the remaining debts cancelled. The new law may no longer allow individuals to make this switch.
The rule reads that if someone earns less than the median household income for their state, they will be allowed to file Chapter 7. But if someone earns more than the median income and can afford a $100 per month debt payment, then generally Chapter 13 will be the only option. And the IRS will be the ones determining this based on the persons income and expenses - the individual will not be allowed to make this determination.
As always, it is important to seek the advice of a legal professional on laws governing your particular area.
In Connecticut I would recomend:
Greg Arcaro, Brown Paindiris & Scott - (860)659-0700
http://www.bpslawyers.com/index.cfm/hurl/SectionID=6/AttorneyID=22
Peter Lawrence - 860-677-6416 or (860) 626-1333
http://www.avonct.us/merchant2.php/list2/564/Lawrence,+Peter
Live elsewhere?
Martindale - Hubbell
http://www.martindale.com/xp/Martindale/Lawyer_Locator/Search_Lawyer_Locator/loc_search.xml
What is the median income in your area?
http://www.census.gov/hhes/income/4person.html
or
http://www.huduser.org/datasets/il/il05/index.html
So what is changing so drastically with the new laws?
First of all, the costs associated with filing for bankruptcy will most likely increase, purely due to the complexity of the new law (one lawyer I know has told me his fee will double). Second, the new law requires that prior to filing bankruptcy, an individual must have sought credit counseling from an approved agency, within the six months proceeding filing for bankruptcy. Third and probably most dramatic, many bankruptcies will now have to use Chapter 13 - a reorganization of debt - as opposed to the more commonly used Chapter 7 - more often a complete clear out of debt, allowing the protection of certain assets.
Chapter 13 requires that a plan be filed with the court to repay the debts associated with the bankruptcy in three to five years. But if the filer could not keep up with the set payment plan, the individual could change the bankruptcy from a Chapter 13 to a Chapter 7 and have the remaining debts cancelled. The new law may no longer allow individuals to make this switch.
The rule reads that if someone earns less than the median household income for their state, they will be allowed to file Chapter 7. But if someone earns more than the median income and can afford a $100 per month debt payment, then generally Chapter 13 will be the only option. And the IRS will be the ones determining this based on the persons income and expenses - the individual will not be allowed to make this determination.
As always, it is important to seek the advice of a legal professional on laws governing your particular area.
In Connecticut I would recomend:
Greg Arcaro, Brown Paindiris & Scott - (860)659-0700
http://www.bpslawyers.com/index.cfm/hurl/SectionID=6/AttorneyID=22
Peter Lawrence - 860-677-6416 or (860) 626-1333
http://www.avonct.us/merchant2.php/list2/564/Lawrence,+Peter
Live elsewhere?
Martindale - Hubbell
http://www.martindale.com/xp/Martindale/Lawyer_Locator/Search_Lawyer_Locator/loc_search.xml
What is the median income in your area?
http://www.census.gov/hhes/income/4person.html
or
http://www.huduser.org/datasets/il/il05/index.html
Home Mortgage Interest Deduction
Probably the most common deduction on U.S. tax returns are home mortgage interest deductions. Home loan interest, along with interest paid on loans used to invest, is deductible if you itemize. Friday the Government Accountability Office issued a report that said tax breaks such as deductions for home mortgage interest and state and local taxes cost the federal government $728 billion last year and need to be reexamined.
With our national budget in the red we need to look at ways to raise more money. This news certainly makes for scary headlines. Read in the articles "We're in the fact business, not the policy business" - Comptroller General David Walker of the Government Accountability Office, and "We do not intend to implement the report. The administration rejects any attempts to address the long term fiscal imbalances with tax increases," said OMB spokesman Alex Conant, spokesman for OMB.
Sounds like the home mortgage interest deduction is safe for now.
Some links of interest:
New links:
http://news.yahoo.com/s/nm/20050923/pl_nm/economy_taxes_dc
http://www.latimes.com/business/la-fi-taxbreak8oct08,0,1112971.story?coll=la-home-headlines
Information:
http://www.taxesindepth.com/mortgage-interest-tax-deduction.html
http://moneycentral.msn.com/content/Taxes/Cutyourtaxes/P33353.asp
With our national budget in the red we need to look at ways to raise more money. This news certainly makes for scary headlines. Read in the articles "We're in the fact business, not the policy business" - Comptroller General David Walker of the Government Accountability Office, and "We do not intend to implement the report. The administration rejects any attempts to address the long term fiscal imbalances with tax increases," said OMB spokesman Alex Conant, spokesman for OMB.
Sounds like the home mortgage interest deduction is safe for now.
Some links of interest:
New links:
http://news.yahoo.com/s/nm/20050923/pl_nm/economy_taxes_dc
http://www.latimes.com/business/la-fi-taxbreak8oct08,0,1112971.story?coll=la-home-headlines
Information:
http://www.taxesindepth.com/mortgage-interest-tax-deduction.html
http://moneycentral.msn.com/content/Taxes/Cutyourtaxes/P33353.asp
The First Post!
Getting a mortgage for your home is an important descision. You should know your options, and feel comfortable with your choice, both today and when you make your last payment.
I hope with this blog to share with you helpful hints and links, any information I think will help you to be a better consumer when you get your mortgage.
I hope with this blog to share with you helpful hints and links, any information I think will help you to be a better consumer when you get your mortgage.
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