Get Out Of Debt

Shopping around for the best deal on mortgages can often be confusing and a bit daunting. This is true whether you’re a first time buyer or someone wanting to relocate or get yourself a bigger house. Getting some advice to help you along the way can be really good idea before you commit yourself to anything, particularly if you’re not familiar with the different mortgages available or which one to go for. Talking to an independent mortgage or financial advisor is a good idea.

Perhaps one of the main benefits of going for an independent financial or mortgage advisor is the fact that they’re independent. This means they won’t be trying to sell you products from any particular bank or lending company as they receive the same finder’s fees from all mortgage companies. You’ll also have the peace of mind in that they’ll listen to your circumstances impartially and will be able to advise you on your best options without bias, so you don’t have to worry about being forced into anything.

Another great benefit of using an independent mortgage advisor is the fact they know so much about mortgages.

They have to be knowledgeable for their job, and so they’re ideally placed to explain all the technical jargon to you that often puts people off. They’ll also be able to explain to you about fixed rate and flexible mortgages, as well as issues such as early payment premiums. This will help you understand what’s on offer from different lenders so you can make an informed decision.

Once you understand the different products on offer, you also need to know the process of how to go about obtaining one of them. Here, your independent mortgage advisor will be able to guide you through the process of applying for a mortgage and will help you compile all the information you need.

They’ll also be on hand to answer any queries you have in an impartial manner, which can be ideal if you’re feeling a little blindsided by your lender of choice.

Lastly, having an independent financial or mortgage advisor on board can sometimes help to speed up the whole application process as you’ll have the benefit of being able to utilize their skill and experience to help you along. Getting them to help you means that you’re more likely to make a good application and they’ll also be able to keep an eye on the process as it progresses, so you won’t have to spend so much time stressing about the mortgage and can focus on your new house instead.

If you’re like the average person, let me warn you ahead of time about what I’m going to reveal in the next few paragraphs. You may be angry after you finish reading this article about how you’ve been misled in the use of credit card debt.

The American economy is designed to make you work yourself to the point of exhaustion, only to build wealth for those very same companies you work yourself to death for – not for YOU!

The most eye-opening example of this is with consumer debt. For example, if you purchase your home with a conventional mortgage, you’ll pay about THREE TIMES the amount over the life of the loan. Think about it this way. It’s like taking your monthly mortgage payment and tripling it, then sending it off to the bank.

This is how much you will eventually pay back for the privilege of using their money. So you can see how two-thirds of the total amount you’ll pay your mortgage company is primarily INTEREST payments. Interest is pure profit for the mortgage companies and a detriment to your financial well-being.

Ask yourself a serious question – does the Bank deserve to get so much of your hard earned money? Do you think that they are doing such an outstanding job that they should be compensated so well?

This simply means that when you come home from a hard day at work, you’ve just contributed to your bank or mortgage company’s bottom line – not yours. THIS IS YOUR MONEY! I’m sure you’ve work hard to earn it. You’ll most definitely have to pay taxes on it.

For instance, if you think your mortgage payments are out of control –consider credit card debt. If you have an average payment of $5,000 in debt, it will take you over 60 years to pay that debt in full if you make the minimum payments.

I don’t know about you, but I wouldn’t want to be retired and still making payments on credit cards I charged up in my twenties.

But you know the story, and you’ve probably heard it a million times — the rich get richer and the poor get poorer. It’s certainly not fair and I’ll give you an easy way to get out of debt without loans or debt consolidation programs and more importantly, stay out of debt.

When you know how to invest the money you’re currently spending on mortgage payments, car loans, credit card debt and any other type of monthly installment debt, you’ll be pleasantly surprised at how quickly you can become debt-free.

Make a commitment to yourself to find at least 10% of your monthly take home pay to help you get out of debt. Look for ways to cut costs. Go over your cable bill, your cell phone plans, see if it still makes sense to keep your home phone, revisit insurance policies, etc. and see where you can redirect money to help you get out of your debt situation.

Now go and gather up your credit card bills, automobile loans, and any other installment loans you have and total them up. Keep in mind there’s a difference between debt and expenses. Expenses are things like utilities, foods and taxes.

After you’ve come to grand total, look at the monthly payments for each debt. Select the monthly payment that is the smallest amount. Now, you’ll add the money you’ve “found” to help you pay down this debt to zero. Once this debt is paid in full, take the money you were paying on this debt, add it to your second debt, plus the extra money you found and continue to payoff your debt in this manner.

It won’t happen overnight, but you didn’t get into debt overnight either. Consistency is the name of this game. By faithfully following this method, it will take the average person between 5-7 years to get completely out of debt.

In order to be competitive, a number of lenders are now advertising so-called “no fee” mortgages. According to commercials from a number of mortgage companies, you can obtain a home loan where you only pay the loan’s interest; there are no additional costs at closing. Can you really save money by applying for a no fee mortgage?

As usual with this sort of advertising, the answer is “perhaps, or perhaps not.” A mortgage company isn’t going to simply drop charges that can amount to as much as 3%-5% of the amount borrowed. Any lender that simply did away with a source of revenue would quickly go out of business, as those fees contribute to their bottom line.

How do these mortgages work? The lender is going to charge you a higher rate of interest than a mortgage company that itemizes closing fees will. Their profit must originate somewhere; it’s going to come from charging you more to borrow the money. That’s not necessarily bad; it means that they are earning their money in a different way. The increased rate of interest may make the loan more attractive to buyers on the secondary market. The company may make some additional money by re-selling your mortgage to another company later.

What does this mean for you, the buyer? As with any loans or anything else that you might buy, you need to shop around before applying for a loan. The only way to tell who is providing a bargain is to compare the costs of all the lenders and crunch some numbers. Only when you examine everything, including how much in total you will pay over the life of the loan, will you be able to tell who is offering the lowest cost. Each lender is going to have different ways of making their profits; some will charge higher interest rates, others will add more fees at closing.

Is the promotion a financial scam? No, but it might be rather misleading. The companies, via their advertising, would like you to believe that you are paying less, as suggesting that there are no closing costs might lead you to believe that you are paying less money. You aren’t actually paying less money, but it makes for good advertising. Whenever you think about taking out a home loan, you should assess all of the estimates from all of the mortgage companies you talk to so that you might find the deal that best meets your needs. Clever consumers always know to be suspicious when a promotion seems too good to be true.

Because of high finance fees, reducing credit card debt is often challenging. For this matter, many consumers seek other practical ways to eliminate debt. If you own a home, consider a home equity debt consolidation loan. Debt consolidation loans offer a fast and simple way of becoming debt free. Here are a few tips for obtaining a home equity loan.

What are Home Equity Loans?

Homeowners are likely very familiar with how home equity loans work. Because of rising home values, many properties have seen a sudden appreciation. The difference in the amount owed to mortgage companies and the market value of the home equals equity. Hence, if you owe $75,000, and your home is worth $150,000, the equity amount is $75,000.

By obtaining a home equity loan, homeowners are given the opportunity to tap into their equity, and use the money for any purpose. There are different types of home equity loans. Some lenders may only approve loans for 80% of the equity, whereas others will offer 125% home equity loans.

Using Home Equity Loans for Debt Consolidation

Home equity loans open the door to becoming debt free. Once funds are acquired, simply use the money to payoff debts (credit cards, auto loans, student loans, etc.) Rather than sending payments to several creditors, make a single payment to the home equity lender.

A home equity loan will not remove debt. However, these loans make managing debts easier. Furthermore, the interest rate for most home equity loans is much lower than credit cards, thus enabling you to payoff the loan within a few short years.

Pros and Cons of a Home Equity Loan

There are several benefits to obtaining a home equity loan. For starters, once credit card balances are paid in full, your credit score will likely increase. Secondly, home equity loans are affordable. By consolidating debts, you can expect a monthly savings of approximately 40%.

Unfortunately, there is also a negative side to home equity loans. If used responsibly, home equity loans are very useful for debt consolidation. Yet, once credit cards are repaid, many people re-accumulate debt. Additionally, some homeowners are unable to afford home equity loan payments. Because loans are secured by your home, several missed payments could result in foreclosure.

Homeowners who have been blatantly taken advantage of during the mortgage process may have a defense to foreclosure based on the unconscionable contract. There are a number of factors that can point to unconscionability in a loan, and homeowners should do their research or hire a qualified attorney to help them, but the following list of five signs to watch out for may be a starting point for borrowers.

One clear sign a loan may be unconscionable is if the borrowers have a limited awareness or understanding of the language the contract is written in, and was unable to read the documents well. This gives lenders an opportunity to include terms and conditions in the loan that unfairly burden the homeowners. Mortgage companies have an obligation to make sure the borrowers understand enough of the language in order to sign the contract and know what it means.

Lenders that knew (or should have known) that the borrowers taking out loans could not afford to pay them back may be guilty of entering into an unconscionable contract.

Many subprime loans were made using the unfounded assumption that homeowners would magically double their incomes in the space of a year. Other mortgages were made where the monthly payment was just a few dollars less than the total amount of income the borrowers received each month.

Another sign of unconscionability may be in cases where the borrowers are not represented at the closing of the mortgage transaction by an attorney, but the lenders have one that rushes the process. Combined with other factors, such as the ones listed in this article, there may be an indication of the lender attempting to rush the closing process and intimidate the homeowners.

If terms are changed in the mortgage at the last minute, and these changes negatively impact the borrowers, the loan may be unconscionable.

While most loans change many times from the qualification stage to closing, last minute changes that increase the cost of credit or place large burdens on the homeowners may indicate unconscioinability. For instance, requiring one year of interest to be paid in advance and not disclosing this condition until closing may be a sign.

Finally, if homeowners apply for a loan and receive few, if any, benefits from the transaction, it may be unconscionable. For instance, if borrowers refinance and receive a higher monthly payment but no cash out or consolidation or any other benefit, the transaction is obviously unfair. But lenders may be able to get away with this by making large promises and then eating up any funds through fees, processing charges, and other administrative costs.

The main sign of an unconscionable contract is that it contains terms that are unfair to one party. For many mortgages given to people who had no ability to pay back the loans or were based on fraudulent appraisals or forged income documents, this may be a huge issue. As well, homeowners may be able to bring this issue into court when defending a foreclosure or attempting to stop a trustee sale.