Debt Consolidation For Christmas Debt?
A Mortgage Checking Account can be a useful method of controlling the debt that accumulates from holiday spending. Like most shoppers, we find it’s easy to accumulate debt during December. Everyone enjoys shopping, and during this unique month, one feels as if they are shopping for all their loved ones.
Debt consolidation is a simple method of consolidating all expenditures into one interest rate. One can do so by combining the debt into a HELOC.
Debt under a set interest rate, rather than a ballooning Credit Card rate can serve to greatly ease the worries debtors feel, as it allows one to manage debt and easily gauge it’s accumulation.
Getting out of debt feels good, and helps one to learn to be financially independent.
Bi-Weekly Mortgage Opportunity
Often firms offer the opportunity to pay off a mortgage early in the form of bi weekly mortgage payments, but do so at an extreme cost to the consumer. Such plans must be carefully evaluated prior to selecting one.
Your mortgage lender may offer you the option of making extra payments towards your mortgage principle in return for paying certain fees. Avoid this!
Paying fees for the right to make extra mortgage payments is illogical and bad business. Why should a bank charge you for the priviledge of paying them back the debt they lent you faster than normal.
Consumers are often persuaded to pursue such a fee-laden plan because of prepayment penalties. Due to their own ignorance while purchasing their home they now worry that they cannot pay down their mortgage without paying fees of some sort. Often there are more logical options (such as saving the money you wish to pay down your mortgage with in a high yield savings account or CD)
Another option is to simply communicate with your lender and refuse to pay any fees for making extra payments towards the principal. Asking for a supervisor may help you get past the usual ‘no’ people, and get permission to get that mortgage loan paid off.
Remember, while a bi weekly mortgage option can be beneficial for reducing a loan’s life, it can also be a trap used by a lender to extract as much money as they can out of the borrower.
Why the Bailout?
A priceless quote from PrudentBear is worth repeating here:
There are those who can afford their adjusted interest rate; these homeowners need no assistance. There are also a substantial number of homeowners who haven’t been making payments at the starter rate on their subprime loan and may not have the financial wherewithal to sustain home ownership; some of these homeowners will become renters again.[ Bold added] A third category of homeowners might choose to refinance their mortgage - putting them in a sustainable mortgage while keeping investors whole. This is the first, best option. Servicers should move quickly to assist those who can refinance. And the fourth category is those with steady incomes and relatively clean payment histories who could afford the lower introductory mortgage rate but cannot afford the higher adjusted rate. We are focusing on this group,[Bold added] determining who they are and what steps may appropriately assist them. December 3, 2007 Remarks by Treasury Secretary Paulson
And yet, we now the find the government preparing to bail out those who least deserve it and ignore those that could use some legitimate help. Thanks, that’ll certainly serve as a home ownership accelerator for the needy…
People Stop Paying Auto Loans, What’s Next?
America continues to struggle with it’s easy credit problem, as auto loan defaults have started to skyrocket. So much for debt consolidation! The WSJ writes:
First came housing loans and the subprime-mortgage crisis.
Now, signs of stress are creeping into another key consumer area: auto loans.
Delinquencies in the auto-loan market are ticking up to their highest level in several years. Lenders are tightening terms in some cases, and interest rates have risen from the rock-bottom levels of a few years ago. About $575 billion in loans for new and used cars are made annually, according to the National Automotive Finance Association.
About 4.5% of auto loans made in 2006 to top-rated borrowers were at least 30 days delinquent as of the end of September, up from 2.9% the previous month, according to a Lehman Brothers survey of companies servicing these loans. That is the biggest one-month jump in at least eight years. Lehman says 12% of subprime borrowers, who have poorer credit records, were delinquent on their 2006 auto loans as of September. That is the highest level since 2002 and up from 11.1% the previous month.
While one can easily write these defaults off as a symptom of homeowners unable to afford their home payments, it seems that there may be a deeper problem within our economy.
Are We Having Fun Yet?
Those not using a bi weekly mortgage plan may be seeing their equity dry up faster than they can blink in certain housing markets. FxStreet writes:
The amount of equity homeowners hold in their homes slipped in the third quarter to the lowest level on record, just above 50 percent, according to a report from the Federal Reserve Thursday.
In its quarterly U.S. Flow of Funds Accounts, the central bank reported that homeowners’ percentage of equity dipped to 50.4 percent from 51.1 percent from the previous quarter. On average, housing is Americans’ single largest asset.
Economists expect this figure, equal to the percentage of a home’s market value minus mortgage-related debt, to tumble even further as falling home prices eat into equity. It could easily drop below 50 percent by the end of next year, some experts say, marking the first time homeowners will owe more than they own since the Fed started recording the data in 1945.
No one likes to see their home losing money, sadly the government is going to do little to help those that truly need a bailout.
Alliance Title Bites The Dust
Another company has failed to accomplish simple debt consolidation as a result of the housing crisis. News10 reports:
Sources told News10 Alliance Title Company is shutting down operations in the Sacramento area effective immediately.
At one time, Alliance was the number one title company in Sacramento based on market share according to one longtime employee.
According to the company’s Web site, Alliance Title was founded in 1996 and at its peak operated nearly 200 branches in 34 California counties with 2,000 employees.
It’s unclear what other Alliance offices in the state, if any, are also affected.
One employee who was laid off Monday said she was told there’s not enough work to continue supporting office operations.
“I’ve never seen it this bad,” she said.
A receptionist at the company’s headquarters in Campbell said no one was available to offer additional information.
“They’re all out in the field right now,” she said.
So many companies closing up shop is going to have a severe effect on the housing market, and hurt the economy as well.
Freddie Mac Expects MAJOR Losses
Even as the government promises more easy credit in order to freeze mortgage rates, Freddie Mac is announcing plans to lost $10 to $12 BILLION Dollars. Get your mortgage acceleration plans together now, we’re in for a recession. Reuters is writing:
“We would expect that our total future credit losses on our current book of business would total approximately between $10 billion and $12 billion,” Chief Executive Officer Richard Syron told an investors conference sponsored by Goldman Sachs.
Freddie Mac has already recorded many of those losses from recently failing loans and had previously disclosed its expectation of multi-billion dollar write-offs, said analyst Jim Vogel, who tracks the companies for FTN Financial in Memphis, Tennessee.
“The 10 to 12 billion dollar headline number was as disclosed on November 20 and ‘about half’ that number (was) reflected” in a previous statement, Vogel said in a note to clients.
I’m not sure what else to say…and we wonder why taxes are so high? Does the government really have to waste so much money?
Fannie Mae To Face Tough Times
Despite being promised and misguided by the government, Daniel Mudd (CEO) announced amidst a dividend cut that everything was ok. Reuters quotes:
Fannie Mae is “being conservative, keeping dry powder (in capital), preparing for a pretty long winter, a long 2008 and then some recovery” in 2009, said Mudd, who was interviewed in New York.
The Washington-based, government-sponsored enterprise has also raised fees for guaranteeing mortgages to compensate for the increased uncertainty in the housing market, where defaults are rising across all types of loans, Mudd added.
Conservative can generally be interpreted as meaning losses to no profits…might as well read what a money merge account is while learning such useful terms…
Florida Crashes From Property Taxes
Florida is a mess right now. Those living there might be well advise to use a mortgage acceleration plan of some sort in order to pay down their home and be able to actually afford the insane property taxes. Here’s the latest happenings, straight from Bloomberg:
Florida schools and towns pulled more than $1.7 billion from a state investment pool in the two days since a freeze on their accounts was lifted, as local governments remained wary of keeping money in a fund with subprime mortgage-tainted holdings.
The withdrawals amounted to 15 percent of the portion of the fund’s assets to which local governments were given access under a restructuring by BlackRock Inc. Investors removed $560.7 million today, compared with deposits of just $8.5 million since yesterday, according to the State Board of Administration, overseer of the Local Government Investment Pool.
“People are still in the calming down phase, when we fully expect there will be withdrawals,” said Simon Mendelson, managing director and chief operating officer of cash management at BlackRock, in a telephone interview from Tallahassee.
Sadly, government’s solutions to problems they’ve caused is to generally raise taxes. Think of it as passing the blame on to the tax payers…hey it’s your fault for living there right?
Analysts Want You To Lose
Many are encouraged to invest in the stock market rather than in mortgage acceleration with the promise of greater dividends. Such advice should always be approached with caution. Here’s a good take from StockMarketImplode:
Flippin through the channels last night I came across Cramer on Mad Money. When I first became interested in the market I used to be fond Of Cramer or so they tell me. Anyway he suggested buying a gold stock as a hedge against inflation “when the FED lowers interest rates next week”. Great idea Jim Ive been doing that for the last two years welcome to the party. You see what Jim isn’t telling his good audience is that he’s also been buying gold and gold stocks, that the rate cut will already be priced in and that he and his pals will be locking in profits as the market sells the news. Then gold falls along with the gold and silver stocks and the retail investors come up short again.
While investing in the stock market is a good thing, a healthy portfolio is a diverse one. Never put all your eggs in one basket, particularly if someone is begging you to load up theirs.