(Money laundering news) How To Consolidate Your Debt

August 24th, 2008 admin Posted in finance |

By Paul Hata

Some homeowners opt to re-finance to consolidate their existing debts. With this type of option, the homeowner can consolidate higher interest debts such as credit card debts under a lower interest home loan.

The interest rates associated with home loans are traditionally lower than the rates associated with credit cards by a considerable amount. Deciding whether or not to re-finance for the purpose of debt consolidation can be a rather tricky issue.

There are a number of complex factors which enter into the equation including the amount of existing debt, the difference in interest rates as well as the difference in loan terms and the current financial situation of the homeowner.

This article will attempt to make this issue less complex by providing a function definition for debt consolidation and providing answer to two key questions homeowners should ask themselves before re-financing.

These questions include whether the homeowner will pay more in the long run by consolidating their debt and will the homeowners financial situation improve if they re-finance.

What is Debt Consolidation?

The term debt consolidation can be somewhat confusing because the term itself is somewhat deceptive. When a homeowner re-finances his home for the purpose of debt consolidation, he is not actually consolidating the debt in the true sense of the word.

By definition to consolidate means to unite or to combine into one system. However, this is not what actually happens when debts are consolidated. The existing debts are actually repaid by the debt consolidation loan. Although the total amount of debt remains constant the individual debts are repaid by the new loan.

Prior to the debt consolidation the homeowner may have been repaying a monthly debt to one or more credit card companies, an auto lender, a student loan lender or any number of other lenders but now the homeowner is repaying one debt to the mortgage lender who provided the debt consolidation loan.

This new loan will be subject to the applicable loan terms including interest rates and repayment period. Any terms associated with the individual loans are no longer valid as each of these loans has been repaid in full.

Are You Paying More in the Long Run?

When considering debt consolidation it is important to determine whether lower monthly payments or an overall increase in savings is being sought. This is an important consideration because while debt consolidation can lead to lower monthly payments when a lower interest mortgage is obtained to repay higher interest debts there is not always an overall cost savings.

This is because interest rate alone does not determine the amount which will be paid in interest. The amount of debt and the loan term, or length of the loan, figure prominently into the equation as well.

As an example consider a debt with a relatively short loan term of five years and an interest only slightly higher than the rate associated with the debt consolidation loan. In this case, if the term of the debt consolidation loan, is 30 years the repayment of the original loan would be stretched out over the course of 30 years at an interest rate which is only slightly lower than the original rate.

In this case it is clear the homeowner might end up paying more in the long run. However, the monthly payments will probably be drastically reduced. This type of decision forces the homeowner to decide whether an overall savings or lower monthly payments is more important.

Does Re-Financing Improve Your Financial Situation?

Homeowners who are considering re-financing for the purpose of debt consolidation should carefully consider whether or not their financial situation will be improved by re-financing.

This is important because some homeowners may opt to re-finance because it increases their monthly cash flow even if it does not result in an overall cost savings.

There are many mortgage calculators available on the Internet which can be used for purposes such as determining whether or not monthly cash flow will increase. Using these calculators and consulting with industry experts will help the homeowner to make a well informed decision.

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Home Loan Refinance - Colorado Springs Refinance - Escondido Refinance 378
By Alex Refintage

With a home you get the benefits of leverage, You invest a relatively small down payment, yet, you receive returns based on increases in the total value of your home. For a ton of articles, guides, tips and information about mortgage refinancing please visit our website. During this entire- Hi-year period, the DJIA closed no higher than 1051.70, and it fell to as low as 577.60 in 1974. Who has to pay PMI? Most lenders require private mortgage insurance from home buyers who put down less than 20% of the total value of their home or conversely, who borrow more than 80% of the total value of their home. John Morroni is the owner of RefinanceHelp.org, a site dedicated to mortage refinance and home prices. The West was the only region to mark price gains in 2006, with houses selling for 0.4% more than in 2005. Atlantic City and Salt Lake City metro areas saw highest price gains, with more than 20% increases in single family home prices. When do I have to pay the PMI premiums? Most lenders require that you pay the first years premium at closing, so dont forget to add it in when youre figuring out your closing costs. So if someone is about to become a significant customer, do your homework. One small business owner I know has only one employee, but has four different loans related to his business: an equipment loan, a car loan, a business line of credit and a business credit card. I’ve received bills from businesses offering discounts of 1% or 2% for payment within 10 days. Joseph Anthony is a tax professional in Portland, Ore., who writes about finance and tax issues affecting small businesses. One of the challenges of running a small business is dealing with the feast-or-famine nature. So if someone is about to become a significant customer, do your homework. Do your homework and determine what the best scenario is for you. On an after-tax basis, a 10 percent a year return on stocks is considered very good. Will your tax deductions become affected by lowering your interest rate. Do I have to pay for PMI until my mortgage is paid off? No. Good for my bottom line; good for the business’s cash flow. If instead, you had put $10,000 or $20,000 into, say, a home in boom-towns like Portland, Austin, Boston, Seattle, San Francisco, Park Cities, Denver, Boulder, Sarasotaor any one of dozens of other hot housing market citiesyou would have enjoyed a tenfold (or greater) increase in your original down payment investment. At a certain point, when new construction and speculation activity created an inventory that was way too high for the market, buyers, not sellers, became the markets driving force. On a $200,000 mortgage, youll pay about $1,000 for the first years premium. What this all means is in terms of researching your home purchase, be wary of PMI consideration. There are usually other requirements as well, such as no late payments in the year before you request cancellation, and no other mortgages or liens against your property. That result yields an after-tax annual rate of return around 24 percent. That’s not just about the flow of business, but also the flow of cash. When do I have to pay the PMI premiums? Most lenders require that you pay the first years premium at closing, so dont forget to add it in when youre figuring out your closing costs. Create Incentives for Faster Payment Small businesses can sometimes cut the time spent waiting for payment by offering a discount for quick payment. When a home buyer buys a house with less than 20% of the homes value as a down payment, the mortgage lender assumes a larger risk. Portland-Vancouver-Beaverton, El Paso and Seattle-Tacoma-Bellevue metro areas all ranked above the 10% gain level, while Springfield, IL, Palm Bay-Melbourne-Titusville and Sarasota-Bradenton-Venice all saw price drops of more than 10%. What this all means is in terms of researching your home purchase, be wary of PMI consideration. In fact, over the long term, fewer than 2 percent of professional fund managers have been able to consistently earn after- tax returns on stocks of more than 10 to 15 percent a year.

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Refinancing Rate - Car Refinance - Fha Refinance 364
By Alex Refintage

A "streamlined" FHA refinance covers the lender’s underwriting and documentation requirements, and does not imply the absence of costs. You may be able to borrow on your home equity so that you can repair or improve your home, as long as you make sure that all improvements are energy efficient. This advice included information regarding foreclosure procedure, refinancing their current loan into a FHA loan, and working out payment plans to avoid foreclosure. Emanuele Allenti is the owner of bad credit home loans and poor credit home loans websites. For the homeowner looking to pull equity out of their home. The US Federal Housing Administration offers loans that enable individuals to acquire a home with a down payment as low as 3% - a percentage comparatively lower than most limits for regular loans. If you signed up for a refinancing on your home with an adjustable rate mortgage, this credit crunch, and rises in interest rates, may be the tip of the iceberg about to send your dreams of home ownership to a dark and watery grave. The saving grace for many Connecticut homeowners is that FHA loan requirements have undergone major changes for Connecticut mortgage loans. The US Federal Housing Administration offers loans that enable individuals to acquire a home with a down payment as low as 3% - a percentage comparatively lower than most limits for regular loans. The standard FHA underwriting guidelines will apply to the FHA Secure program and a new FHA approved appraisal will be ordered for the property. This echoes my concerns because for the last several months I have written several articles encouraging Connecticut homeowners who have adjustable rate mortgages to trade them in for low-rate FHA fixed mortgages due to the changing climate of the mortgage market. Key conditions of a refinance include FHA insurance of the target mortgage, updated payments, and a reduction in the payments made by the borrower due to the refinance. When applied to a typical house payment, this can sometimes double or triple the monthly mortgage payment for a home owner. The general idea is to enable homeowners to refinance various types of adjustable rate mortgages that have recently reset. When you are considering a FHA refinance home loan bad credit lender, be sure to have an experienced accountant and attorney explain the details before you sign your refinance documents. THE FHA, which stands for Federal Housing Administration can help you to refinance your current home mortgage whatever your reasons for wanting to do so, and offer you certain benefits as well. To do a FHA refinance home loan with bad credit, this aspect can be a real challenge for most people. Instead, it guarantees your loan for the lenders who are willing to work with you. Also be sure to get your FREE list of Connecticut mortgage lenders for homeowners with mortgage rates and low, bad or no credit. · You can get financing for up to 97% of your homes value. These lenders must abide by rules the FHA has set down, just as borrowers must. Rehab-Loan Program allows borrowing above the purchase price to make home improvements. The only stipulation is that you may only have one FHA loan at a time.. The fiscal year of 2007 will see the FHA program receive $41.58 million to help out the thousands of homeowners facing foreclosure and delinquency with advice and counseling. Instead, it guarantees your loan for the lenders who are willing to work with you. FHA will also charge mortgage insurance premiums based on the individual risk of each mortgage refinance loan that is written. Foreclosure rates on sub-prime loans are actually not as high as many are reporting. If you are a homeowner who has been taking a financial beating because your interest rates are jumping all over the place then these changes may be a lifeline for you. The federal housing authority (FHA) has finally made some long overdue changes to assist homeowners that are in distress because of increasing adjustable rate mortgage payments. The reverse mortgage or HECM, which targets the country’s senior citizens, allows the cash conversion of part of the individual’s home equity.