Hot Mortgage Deals

Recent projections estimate that by June, over 5 million homeowners will be heavily underwater. Let us define that a little more precisely. You are heavily underwater if the current market value of your home is only 75% of the balance on your mortgage. Between you and me, this means you are pretty screwed. The scary part is that if this projection proves true 10% of all US homeowners will be in this pickle; not the place you want an economy to be if you are trying to dig yourself out of a recession.

This is why the Obama Administration is running about like headless chickens trying to find solutions to this problem, quick, mid-term, and long term solutions; any kind of solution that will get us out of this.

It was this kind of panic that caused the government to put all their weight behind HAMP, the government’s loan modification program. Loan modifications were and always have been procedures designed to help homeowners stuck with sub-premium loans. Sub-premium loans as you all know is a kind way of talking of usury, loans with interest rates so high they give you vertigo if just to think about them. However loan modifications are not, and never have been a fix for homeowners with great loans that are unemployed and cannot afford their mortgage.

What alternative solutions are there?

One proposal is to buy time by simply banning foreclosures until other options have been looked into by the homeowner and lender. You have to love that proposal, if you cannot stop homes foreclosing by economics just make it illegal. As crazy as this measure seems it is designed to buy time and allow homeowners to find ways of keeping their home. This would take the current guideline of asking lenders to evaluate defaulting homeowners for a loan modification to the next level by making it compulsory.

The Mortgage Bankers Association says its members are already following this principle, and that foreclosure is always a last resort when all other options have been exhausted.

Another plan sponsored by the Mortgage Bankers Association is to not modify permanently the loans of troubled homeowners that have lost their jobs but simply to reduce their mortgage payments substantially for up to nine months to give homeowners a chance of looking for a new job.

As you probably guessed the Banker’s Association is requesting Treasury to pay for the program. Nevertheless, it does seem like a good idea to provide a homeowners with a break until he finds a new job than taking forever to marginally reduce the mortgage payments of an unemployed borrower.

However, many are analysts are saying that the real strategy to follow is to find a way to improve the economy. A strong job market would pull out the housing market from the fix it is in. On this theme, there were some good news last week. The number of homeowners starting to default unexpectedly dropped in the fourth quarter of 2009. However, the government also reported that home prices dropped by 1.6% in December; making it clear that the economy still has a long way to go before it gets a clean bill of health.

Related posts:

1. Unemployment Home Loans, Are They A Real Alternative To Loan Modifications
2. Foreclosure Re-default Drops by 26.5 When Loan Modifications Reduce Loan Balance
3. Loan Modification Alternative by CitiGroup: Refinancing 30 Year Fixed Rate Mortgages

Related posts:

1. Unemployment Home Loans, Are They A Real Alternative To Loan Modifications
2. Foreclosure Re-default Drops by 26.5 When Loan Modifications Reduce Loan Balance
3. Loan Modification Alternative by CitiGroup: Refinancing 30 Year Fixed Rate Mortgages

Debt management, art of making the best of a bad situation

So you are in serious debt. Really serious debt. You are actually quite desperate because you have no idea how you got in such a pickle and even less of an idea how you are going to get out. Debt management is your newest best friend. What is debt management and how can it help you to get out of debt?
Debt management is the art of taking control of your debt and using the tools at your disposal to minimize the cost and damage of debt. Debt management is not a single solution like a magic pill or a silver bullet, it is more like a way of thinking, an attitude that helps you make the right decisions to get yourself out of serious debt.

Debt management affects our lifestyle, our spending habits and our financial decisions. The principles behind Debt Management are simple: Understand your debt, minimize your debt and control your debt.
This is how it works:

Understand your debt.
You need to know how bad your situation is before you can fix it. Many people develop such a phobia to their debt, they try to ignore it ostrich style, and this obviously creates problems of its own burying the person deeper into debt.  So get paper and pen and write out exactly what you owe, that includes your mortgage, credit cards, car loans, everything and include the interest rates you are paying on them.

Minimize your debt.
The second step after understanding your debt is to start to managing your debt by taking decisive action. Your first priority is to work out what your income is and compare it to your monthly expenses. This is where debt management gets really hard. Often people who are in serious debt have got used to spending more than they have and reducing their quality of life or spending habits seems impossible. However you will have to be hard on yourself, get your income and work out a budget that will fit into it. Working out a budget is a living project you will never finish, in you might have to re-design your budget after step 3, the important thing is to realize your limits and stick within them.

Minimize your debt.
There are different ways of minimizing your debt, lets have a look at two.

Debt management tools that will help your minimize your debt include debt consolidation and creating extra income to pay your debt.
Debt consolidation refers to taking on a large loan to pay for a bunch of smaller loans. This can be beneficial because one large loan can mean cheaper monthly payments and a lower interest rate.

You can also try to create some extra cash to pay your mortgage from assets, selling things you no longer need or can do without, redeeming of shares and insurance policies. It is often worth cashing in on an investment that is growing slower than your debt, once your  debt is under control you can start to save again.

Related posts:

1. Common pitfalls of debt consolidation you must avoid.
2. Relief at the end of the tunnel of debt.
3. Bad credit, how to break the cycle of debt

Related posts:

1. Common pitfalls of debt consolidation you must avoid.
2. Relief at the end of the tunnel of debt.
3. Bad credit, how to break the cycle of debt