When we have 30 years to pay a loan why should we take the trouble of paying it off in 15 years by increasing our monthly interest and suffering to make the ends meet every month? Well here is the reason.

One of the major advantages of opting for a 15 year mortgage is the lesser amount of total interest paid apart from its rate of interest being typically lower compared to the 30 year mortgage.Initially the money you pay is accounted only for the interest. As years go by the interest you pay on a monthly basis is allotted to compensate for the principal.

Imagine a person has taken a FRM for 15 years at the rate of 5% and another person for 30 years at the rate of 5.25% for a principal of  $200,000, lets see what happens:

15 year    30 year

Monthly Payment                     $1581        $1104

Interest Paid                               $84,686       $197,587

Total                                                $284,686     $397,587

With a 15 year mortgage you save about $112,901 which can be used for a constructive purpose.

]]> http://www.8000credit.org/940/15-year-mortgage-30-year-mortgage/feed/ 0 http://www.8000credit.org/922/sell-buy-properties/ http://www.8000credit.org/922/sell-buy-properties/#comments Fri, 23 Oct 2009 02:00:51 +0000 Teena http://www.8000credit.org/?p=922 Bored of searching for properties from the endless amount of listings on newspapers and websites? Fed up of not finding your dream home in spite of investing a lot of time and money? Then i have a solution for you.

Applying the concept of dating websites, Sellmestraight.com has come up with a fabulous idea where you can list your requirements and a list of homes and contact info of the sellers matching your criteria would appear. You can contact the seller and start the process of buying your dream home.

Doesn’t this sound simple? The system doesn’t not only benefit the buyers but also the sellers by saving them the cost of middle men. I think its a revolutionary idea that is going to save a lot of trouble as well as time for many.

If you have used this service, or if you are going to use it, tell us how you liked it.

Although you might hear radio commercials like houses for $12000, such is not the case. The truth is that, you can get a 20-40% off on the actual value of the home. Still as its much more affordable than a new home, its a pretty good option to explore.

I recently read an article on AOL money about few tips on buying a foreclosed home and would like to share it with you all.

Check a Few Properties:

Foreclosure.com and realty trac both list thousands of property. They charge a fee but according the article, its worth paying the fee. Do some research on local economy and find a place where lot of properties are on foreclosure.

Avoid the Auctions:

When you go for a property that is on auction by a court, you might not get the opportunity to have complete inspection of the property. Wait for banks to put the property back in the market.

Compare Prices:

Do not buy a property on foreclosure without knowing about the prices of other properties in the same locality. Use zillow.com and other similar websites to compare prices

Make arrangement for Finances:

Before you shop around for the house make sure you have enough money arranged. Not all banks are comfortable lending for a distressed property. Hence you could go for a pre approved Mortgage.

Inspect Thoroughly:

Make a thorough inspection of the property. It is an important step while buying a foreclosed property. This way you can be sure of the amount you have to allot on repairs. Make sure the property is a value for your money.

]]> http://www.8000credit.org/858/foreclosed-homes/feed/ 0 http://www.8000credit.org/612/so-called-small-business-loans/ http://www.8000credit.org/612/so-called-small-business-loans/#comments Tue, 28 Jul 2009 15:23:04 +0000 Teena http://www.8000credit.org/?p=612 Where do Big time investors or Great Business people come from? Do they appear out of thin air? They begin a scale business and develop gradually their field of expertise. Such investors contribute to the economic welfare of our country. So, what does the Government do to improve the growth of business men? How does it help? It allocates $15 Billion dollars to help Small Business Owners. But are we under the inkling that it reaches the owners of the Small Businesses? We are all fundamentally wrong! The plans have been modified.

The investment plans of the Government will come along with a package of SBA Guaranteed loans. This is quite alike to the:

“Collateralized Mortgage Obligation (CMO)” and

“Collateralized Bond Obligation (CBO)” in the home finance industry. Such CMOs and CBOs act as the main incentive for the current economical catastrophe.

SBA ensures you the availability of your loan and apportions your loan with a bunch of equivalently structured loans. These bunches of loan are acquired by shareholders in the secondary market. Here the share holders acquire the security provided by the borrowers of the loan.

The Banks put up these loans for sale in the secondary market, so as to receive cash which will again be bestowed as loan to Small Businesses. This demeanor proves favorable for the Banks, the Borrowers and the Share-holders.

Analyzing the above facts on investment loans gives us a conclusion. SBA loan (commencing as bank as well as SBA) should give your approval to your participation. It has raised the standard of prerequisites over the preceding year or so. Dallas Morning News states that “SBA loan evasions have reached the peak of 154% in 2008.” This kind of securities accompanied by the competing banks, progressing evasions and a reduced amount of affairs in the secondary market has hugely affected the growth of SBA loans. The standardization has been increased by the Banks and SBA to make sure they don’t subject to such losses another time. So, they securely dissect every borrower of the loan.

The happenings in the secondary market stopped abruptly. Share-holders (already in grave danger due to the declining share market and economic downfall) are either disinclined to jeopardize on these securities or deprived of money.

So, the plan was re-considered so as to help small businesses. The Government will get hold of the securities by SBA Guaranteed loans. It will also interrupt and replace the individual share-holders. The Government came up with this idea to favor banks instigating and selling their loans in the secondary market. And also in favor of the small business owners as the profits from these securities can be re-lend to them. This helps to increase the SBA Guaranteed loans to 90% and lessens the amount for both the bank and the borrower thus engrossing the banks involvement in this plan.

Many banks considering this to be an established and well-renowned plan have started to reduce their SBA loans programs too. They reason out themselves as such, “There have been very few borrowers who are “qualified” and approved for SBA loan programs. So, we had to reduce the program to ensure we don’t undergo any slaughters.” But doesn’t it ring a bell when we say “There is decrease in these types of loans.” or “There is shortage of funds.” (Think! Think!) As the standardization of the approval decreases, the quality of the borrower also decreases which will again subject to losses and economical crisis. The importance we give to the financial crisis will eventually yield trust-worthy applicants.

Thus, we come to the conclusion that “One has to consider wisely the idea of starting a new business or improvising on the existing ones. You have to run over the idea as many times as possible.” To obtain a strategic position for you and your business in the industry, you should improvise on your events of honor, pride or trust, work on your over all debts and build on pre-eminent future-plans.

Do you get a blurred image of what is happening in the name of “INVESTMENT PLANS”??

]]> http://www.8000credit.org/612/so-called-small-business-loans/feed/ 0 http://www.8000credit.org/578/card-act-for-dummies/ http://www.8000credit.org/578/card-act-for-dummies/#comments Thu, 23 Jul 2009 21:24:40 +0000 Teena http://www.8000credit.org/?p=578 People below the age of 21 years are going to find it rather difficult to get a credit card since the introduction of the CARD Act which has been forward in 2009. The CARD Act stands for Credit Card Accountability, Responsibility and Disclosure.

From the beginning of the year 2010, individuals below the age of 21 years will not be permitted the issue for a credit card unless they provide with proof or evidence to suggest that they will cash out their loans and leave no unclear debts.

Several blogs have started protesting against this Act already because in a way people below the age of 21 years are being singled out and treated unfairly from the rest as legally they do qualify as adults.

The records of  credits in the banking system prevail to be one of the biggest factors that would determine the amounts of loan as well as the rate of interest at which  it is given out at and this is despite what politicians decide.

However as it is now more difficult for individuals below the age of 21 years to get credit cards, it is natural that they will have a lack of time to work on their credit records and thus will be on the losing end in any sphere where a credit check is required. And mind you, a credit check would be required for thing as basic as wanting to rent an apartment.

I feel  introduction of this law will create a pattern of consumers who fall in the younger group to move towards preferring secured credit cards. The concept of secured credit cards is much like that of regular credit cards. Just that in this case, the secured credit cards need a security deposit which is sync with the limit of the card.

In this case if the consumer fails to clear his debts, then the company simply withdraws his card and takes the deposit that has already been made in payment. Hence the consumer does not have to put in an extra effort to gather proof as this security proof already serves the purpose of designating the ability of the consumer to clear the debts issued on his credit card.

In addition to that, since the secured credit card functions just like a regular credit card, by using it, the individual can build up a advantageous credit record as well.

Regular credit cards require a person to get a lot of paperwork done which he can easily choose to avoid by using a secured credit card instead. They will not require a witness to acknowledge their ability to repay their loans or need proof of income to establish the same.

They can use their secured credit card depending on the amount they choose to deposit. Also one can use this card wherever a VISA or MasterCard can be used, users of the secured credit card will be able to buy things online or in other places that compel the using of a credit card.

If you are one among those people who haven’t received the full payment of the economic stimulus last year, you may be eligible now for a part or full of the portion unpaid because of the change in certain circumstances. For such people, recovery rebate credit can be a one-time benefit. A credit normally adds to your tax refund and at times it lowers the tax amount owed by you. This makes the amount you got in the recovery rebate credit amount will be added as be treated as a refund in your tax return.

There are certain categories which makes you eligible for recovery rebate credit. The ones who didn’t receive economic stimulus payment will form one category. People who got economic stimulus less than the highest quantity will also be eligible. Recovery rebate can also be availed by those families who had an extra qualifying child in the year 2008.

The persons who had claimed to be a dependent in tax return of someone else but cannot do so in the year 2008. The ones who received a social security number which is valid in the year 2008 will also be eligible for the recovery rebate rate. The claims for recovery rebate credit should be done on the forms, 1040, 1040A and 1040EZ. The lines to use will be specified in the instructions of these forms. In contrast to economic stimulus payment, recovery rebate credit may be added in the tax refund for the year 2008 and the issue as a separate payment will not be done.

When you are filing the form electronically, the software itself will help you to figure out the credit for you. For calculating the credit yourself, there are many interactive tools available in the internet for helping you in the calculation which includes the ‘Recovery Rebate Credit Calculator’?’ The ‘Recovery Rebate Credit Calculator’ will help you in figuring out the amount which you must claim on the tax return of 2008. The Form 1040 has a worksheet in the booklet which contains the instruction will also help you in figuring out the credit by hand. Even if you are using the ‘Recovery Rebate Credit Calculator’ or completing the worksheet, the amount of economic stimulus payment of the year 2008 will be required, if you have one.

The United States President Barack Obama seems to have gone wiser by the day and has brought in the ‘PAYGO’ legislation. This legislation aims to reduce the government spending by a considerable amount.

The legislation says that all the new congress tax cuts or increase in the government expenditure will result in higher taxes and lesser spending in some other department of the government so that the excess spending is offset.

The statutory “Pay as you go” legislation has been submitted with the aim of curbing government expenditure and preventing it from going over board. If this legislation were to work, the fiscal deficit in the United States could slightly bee soothed. Touted to hit a whopping 1.8 trillion mark this fiscal, the mood of the US economy still remains gloomy.

At this time, this legislation comes as a tiny relief as it is expected to reduce government spending by a good fifty percent. The legislation however does not have too many supporters. One insider says that is like a ‘Fig leaf’ adding that this is just the government’s way of increasing or bringing in money to spend on newer policies. On this note, President Obama’s words would be nice to recall.

When the announcement was being made, he went on to say that the deficit which has resulted in the government’s pockets have been mainly due to the administration falling prey to several new policies such as huge tax cesses which have not only drained the economic resources but also benefited the masses in a very disproportionate manner suggesting the ‘rich grow richer and poor become poorer’ trait of a typically capitalistic economy.

If the president is to be believed, the announcement of this legislation is just the beginning of one of the many steps that he plans to take to bring in “fiscal discipline” into this administration.

What does the ‘paygo’ mean for the common man? Honestly speaking, Nothing! This will continue to be a replay of the ‘paygo’statutory of the 1990s which was a proven failure. Even now, there remain many aspects of the government spending that remain exempted from this legislation.

In fact, on the other hand, this legislation coming into effect may have a negative effect on the healthcare reforms besides the unknown nature of the automatic benefit reduction the policy would put the US Agricultural industry, says Mr. Max Baucus, the Chairman of the Senate Finance Committee.

If history were to be repeated, recommended spending cuts will be voted out and the government will continue to window dress its increased spending on its ‘new’ policies that yield invisible results.

Phillip Silva, district director for the SBA (Small Business Administration) which is currently overseeing the American Recovery Capital Loan Program said that this would aid small businesses, which are experiencing sales erosion due to the recession and are finding it difficult to pay back their financial indebtednesses.

Eligible companies are entitled for $35,000 interest free and SBA guaranteed loans for a period of five years, provided they apply to their area banks that would decide which of the two would be granted. SBA is currently paying the interest on loan costs charged by the area banks.

Around $225 million of the $700 odd billion-stimulus package bill that was passed by the Congress was meant for the payment of interest charges on loans that were granted to small enterprises nationwide by the SBA.

Co founder and publisher of Cinco Puntos Press – Bobby Byrd, an El Paso publishing house, said he eagerly waited to apply for the $35,000 loan, as this would help him to pay out on author royalties during a time of sales decline of approximate 20%.

He further adds that for small businesses this is like the bailout plan given to GM, its like a stimulus package that would help companies to grasp the situation, reflect and set a vision for the future. However, president of United Bank of Paso Del Norte, Les Parker, the biggest granter of SBA funded loans in El Paso’s believes that banks would have to lend at a loss.

The current interest rate on loans of 2% is being paid by the federal Government has reached 5.25%. He opined that although this program is meant to benefit the economy at large, the costs of lending such loans would have to be borne by the lenders hence hindering the participation of lenders in this program. Parker remarked that the loans would be granted on a case-to-case basis and that they would like to do it without having to absorb costs.

Silva has been hearing of similar concerns being expressed by a couple of bankers. He said that he would be willing to provide 100% guarantee on defaulters and as they also pay the lenders interest on the same as well and this should encourage banks to lend.

However, he said that loans have to be assessed by a bank according to its lending standards and make the business feasible in the long term. He said it has to be sensible lending not because there are provisions for lending. He added that several such companies agreed that this would be of great support to them.

Parker cautioned that small enterprises should not mistake this loan for a cure-all for the hick ups it might currently be experiencing. He said that businesses should know about their feasibility and long-term growth, as not knowing so would land them in a deeper debt.

Byrd remarked that this loan would be a great support as in recent times district schools and bookstores have reduced their orders for their books including their bilingual books that Cinco Puntos publishes. He added that it’s necessary to maintain a good rapport with writers and creative artists. Byrd opined that the loan programs would help his businesses and several other businesses to catch up with their long due bills.

President Obama’s program for making homes affordable got a further thrust with Freddie Mac’s last week announcement of changes aplenty in its offer for refinancing.

Mortgage plan which is known as Freddie Mac relief refinance has been contrived to aid home owners who are currently paying out on their the mortgages but would gain by refinancing the mortgage under plans that would encourage their long term ownership.

Borrowers could now refinance their Freddie Mac guaranteed/owned mortgage with lenders who are affiliated to Freddie Mac. Borrowers previously had no choice other than using the services of the lender who they approached initially. In a move to maximize their reach among borrowers, Freddie Mac has increased the sum of closing cost which could be incorporated into the refinanced mortgage.

Freddie Mac, Executive Vice President of Don Bisenius said that this was a move to respond to the desire of customers who wanted a variety of options for refinancing. He further went on to say that it was an added benefit as this gives borrowers more higher flexibility to finance their closing costs and by expanding the program to have more reach.

Mr. Mac is dedicated to bring the benefit of president Obama’s making home affordable program to reach out to a large number of borrowers. Homeowners could also choose to retain their current lenders to refinance mortgage following which the lender need not to underwrite the borrowers again. Borrowers could also choose to switch to another lender affiliated to Freddie Mac; however mortgage would have to be underwritten again.

Borrowers will now be able to roll into their refinanced mortgage, amounts less than 4% on the refinanced amount or $5,000 of closing cost, prepaid/escrows and cost of financing. A set post settlement delivery fee up to 2% would be levied on the Relief Refinance Program.

To know more about this program and to determine if Freddie Mac owns their mortgage borrowers can visit: https://www.freddiemac.com/corporate/ and fill up the online form.

Freddie Mac was founded by the Congress in the year 1970 with the vision to provide affordability, stability and liquidity to residential mortgage markets in the U.S.’s. This includes support to communities nationwide by making mortgage capital available to the lenders. In the past 3 decades Freddie Mac has enabled 1 in 6 homeowners to purchase homes and made homes possible for more than 5 million tenants.

Starting June 1 one in four homes in the market would sell at a lower price after a price slash. Backed by its data, real estate online firm Trulia.com confirmed this last week.

Houses on sale underwent a whopping 23.6% price cut with an average reduction of 10.6% on the sale price. This would bring down the average price of a house to $43,650 says Trulia.com in its exclusive report sourced from Reuters.

Pete Flint, Co Founder and CEO of Trulia.com in an interview with Reuters opined that such price cuts would work like an effective bailout for the real estate market.

Confirming the real estate market’s woes, Mr. Pete said that several real estate firms are offering special deals and discounts on the houses up for sale. He said that such deals may work positively for the real estate market as they bring an impetus on consumer purchases and easy movement of inventory.

Trulia.com reveals an astounding $27.4 billion reduction of prices on all homes nationwide due for sale starting this June. Of this, Luxury homes costing $2 million and above have seen prices fall by 24% with an average price cut of 14.3% on the original price. In contrast to this 23.6% homes costing less than $2 million have seen a drop of 9.7% on the original asking price.

Mr. Flint said that the financial markets have seen a considerable amount of wealth eroding in the last year or two with sellers of luxury homes finding their potential buyers decreasing in number. Flint says that with the recent upward trend in the stock market, luxury home owners might find some relief as buyers will increase over time. The CEO’s advice for luxury home owners was to sell only if necessary.

26.2% of the detached homes on sale have seen an average reduction of 10% on their sale price. Condos for sale have experienced similar cuts with 27% in the market experiencing an average cut of 10.6% on original price.

Speaking on the recent real estate trends, Mr. Flint said that a home owner needs to understand how their home measures up to buyers in the market in a residential area, how critical and hence the urgency to sell the house fast and why they are putting up the house for sale.

Regions of Miami, Detroit and Las Vegas witnessed the highest reductions in selling price with an average cut of 15%, 16% and 23% respectively as per the report.