The Common Sense Approach To Debt Management

The Common Sense Approach To Debt Management

By: Alisdair Cosgrove

When people start getting in debt up to their ears, most of them start thinking about ways to get out of it.

This is a normal inclination, but it is unfortunate that many people do not carry out their planning stages to their conclusion. This lack of far-sightedness is apt to lead to a repeat of the same mistake - over and over again. When it is not your intent to make this a life pattern for you, your plans for debt consolidation have to encompass a great number of items.

Any way to pay the bills they can come up with, that will help keep the collectors away is what many people gravitate toward. This may be necessary but you have to question whether or not proper time was given in choosing their best path to a solution.

In too many cases, there is fast run to the bank or to an online lending website to obtain a loan which may only be a quick fix for a bigger problem. The lender tells them exactly how much they can borrow and they take that amount without question, whether the loan is a payday loan, a home equity loan or a personal loan.

It is unfortunate that the lender’s advice to borrow more to purchase a bigger house is now backfiring because their loans always come with a price tag. No one, of course, could have foreseen what is taking place now, but common sense must still be applied. When you get more than you can afford to pay for in the hopes of being able to afford it later, this is risky business; it is much more risky for you than the lender who told you to go for it.

A solid debt consolidation program should always provide a way for education. You have to take time to see not only what works, but what works best. Education also needs to involve the correcting of bad habits, or a bad pattern for life will be established by that individual.

There must be a change in the way your money gets spent each month, if you continually buy things on credit. Instead of questioning whether you have spent what you have budgeted for the month, it becomes easier to just find out how much more can be charged.

You can establish good life patterns as well as bad patterns for life, and each one of them has a starting place. As you prepare for your debt consolidation, hoping for a new start, it is wise to take the time to become educated on good money management , simultaniously, and read up on how to save money.

We most likely can take the same amount of time and energy to establish good spending habits and patterns for life as it takes to establish those bad ones. If you do this, it will affect your future more positively as well as that of your loved ones.

Alisdair Cosgrove interests include debt relief, loans and other personal finance topics and has been writing for numerous years and can find more of his debt articles at www.tfgi.com, offering debt consolidation loans and also debt relief services. Visit today for more tips on many debt consolidation and relief topics.

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The Top 7 Reasons to Get Pre-Approved for a Home Loan

The Top 7 Reasons to Get Pre-Approved for a Home Loan

By: Patricia Barmatz

There are many steps that are required when purchasing a new home. The most important step is to be pre-approved for a home loan prior to looking for a house.

Now, keep in mind that a pre-approval is very different than a pre-qualification. A pre-qualification is given when the lender talks with you (usually over the telephone) and takes the information that you tell them and qualifies you off of your word without collecting any documentation from you.

The pre-approval process is a little more complete. In this process, the lender will ask you to complete a loan application and return it to them with all the documentation needed to submit to the lender for an approval. These items would include tax returns or W-2’s, paystubs, bank statements, etc. Once the lender received this information, they would run a credit report and submit the loan for approval. When the lender receives the approval, they will write you a pre-approval letter stating the purchase price and interest rate that you qualify for on a new home loan. This letter is then given to the seller at the time an offer is presented to show them that you have your financing in place.

Here are the top 7 reasons why you should get pre-approved for a home loan:

1. A pre-approval will tell you how much you qualify for on a new home loan. This helps you and your realtor to look for a property that is not above the amount that you can afford.

2. A pre-approval gives you the chance to go over the different loan programs available to you with your lender. You will also be able to see what the monthly payment will be on each program.

3. In today’s market it takes time to get a loan approved. Getting a pre-approval puts you ahead of the game by sending all of your paperwork in before you get into escrow. By having a pre-approval, you may be able to shorten the escrow period needed to close a loan. This can make a big difference to a seller that is looking to close as soon as possible.

4. Some real estate agents will not start the process of searching for homes until you have a pre-approval.

5. If by chance you do not qualify for a home loan at the time of the pre-approval, your lender can guide you in the right direction to prepare you to purchase in the near future. Sometimes there are items on the credit report that can be paid off or disputed to help you to qualify. Without sitting down with a lender, you would not have known about these issues until you are in escrow, which would either delay the close of escrow or cause the property to fall out of escrow.

6. You will learn about the lenders guidelines on locking in an interest rate. When can you lock your loan and for how long.

7. You will be able to relax and know that you have your financing in place when you find the right home for you.

The pre-approval process may sound like you are putting the cart before the horse, but in reality it is ensuring that you are buying within your means and gives you the opportunity to understand the different loan options available to you.

The pre-approval process may sound a little daunting, but it is a necessary step that is needed in purchasing a new home.

Patricia Barmatz has been working in the mortgage industry for the past 24 years and specializes in FHA home loans, VA home loan, conventional & jumbo loans. To visit her website, please go to http://www.yourmtglender.com .

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Mortgage Refinance – Determining Your Home’s Value First

Mortgage Refinance – Determining Your Home’s Value First

By: Matt Borkowski

Perhaps you are looking to refinance your home as rates continue to drop. With this crazy real estate market you may be worried about your home value if you choose to go forward with a refinance.

One thing I want you to understand is that you are much more involved in your home than the lender will ever be. The lender simply wants to refinance your mortgage and have that loan backed by the true value of the home.

To do this the lender is firstly interested in factual data. It is secondly interested in a licensed appraiser’s fuzzy opinion.

Most residential property valuations are based upon the market analysis approach. What this means is the lender wants to find similar properties as yours which have sold recently (ideally 6 months of less) within your subdivision or up to about one mile away from your home.

A similar property to yours is self explanatory. A perfect comp would be a replica of your home in your subdivision.

What you want to do is to avoid websites which claim they can do instant comparables for you. They are totally bogus, and I haven’t seen one that is even close to accurate.

The next thing you can do is go down to the appraisal district or recorder’s office and find similar sold properties to yours in your subdivision and surrounding area within the last 6 months. The folks there can help you do this. You want to make sure you have similar square footage, similar structure, and the comps were built within a 5 year window of your home.

The second part of the equation is that mortgage companies do rely on the appraiser’s fuzzy opinion. This is all about the added value an appraiser gives the home based upon its location, lot size, upgrades, and floor plan. This is very subjective which is why lenders go mainly on data.

When determining this you cannot give dollar for dollar increases in value if you happen to put hard wood floors in your living areas. At best you can give it 50 cents per dollar. And don’t give your pool more than $10,000 in value. I know it was $30,000, but that’s the way it goes.

If you want to save yourself tons of time and really get a bird’s-eye view of your home’s value call up your realtor and have her do a comparative market analysis. It takes her 5 minutes to do this, and she will probably be able to give you a better idea of value than you could anyway.

Head to Matt's website for Austin mortgage and home loan refinance. Also, for you Texas reverse mortgage folks, get one heck of a guide right here.

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Is Debt Consolidation a Good or a Bad Idea?

Is Debt Consolidation a Good or a Bad Idea?

By: Melanie Mathis

For people in need of debt relief, debt consolidation is often the option considered. Debt consolidation is simply combining all your debts into a single loan so that instead of paying several creditors, you’ll only be paying a single creditor. Is debt consolidation a good or a bad idea? To answer this question, let’s take a look at the advantages and disadvantages of debt consolidation,

Advantages of Debt Consolidation

* Paying your debts is a lot more convenient. Because you’re only paying one creditor, you’ll have an easier time tracking your payment schedule and submitting your payments.

* Budget your monthly expenses more efficiently. Since you’ll only be dividing your monthly budget between your expenses and your debts, it will be a lot easier to manage.

* Lower your interest rates. Since you’ll be paying just one creditor, the interest rates of your debts would also be significantly lower.

Disadvantages of Debt Consolidation

* There is the risk to incur new debts again. People who consolidate debts tend to use their credit cards again once their outstanding balances has been paid off. Paying a single debt each month makes it seem like you don’t owe much at all and you still can afford to incur new debts.

* A debt consolidation loan is technically a second mortgage. Since a debt consolidation loan is secured on your home property, it is just like a second mortgage. It can take you a long time to be entirely debt free.

* Lower interest doesn’t necessarily mean less payment. Yes, a debt consolidation loan will lower your interest rate but since it is a long-term debt, if you calculate your repayments, you could be spending more in the long run.

* You run the risk of losing your home. This is the most serious factor about getting a debt consolidation loan. If you still fail to keep up with your debts, you end up losing your property. Obviously, once you get into a debt consolidation, you need to be aware of this risk and do all you can to make sure you will never delay or miss your monthly payment.

Would You Go for Debt Consolidation?

As you can see, there’s more to debt consolidation than just rolling all your debts into just one payment. If there are other ways to get out of debt without getting a debt consolidation loan, why not consider it? If you really feel helpless about your situation, seek credit counseling from a trusted non-profit credit counseling group especially if you have trouble controlling your spending.

Bear in mind that debt consolidation will only work if you can perfectly keep up with your monthly payments. If you’re still unable to make your payments after consolidating your debts, then you’ll be facing a more serious dilemma and that is losing your home.

Don’t rush into debt consolidation without considering the responsibilities and consequences that comes with it. Remember, debt consolidation comes with adjusting your lifestyle and finding ways on how to handle your finances more efficiently.

About the Author Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended Debt Consolidation Companies. Copyright 2009.

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