Okay, so foreclosure’s not exactly a four-letter word, but it’s definitely the most dreaded 11-letter F-word for homeowners.  Foreclosures are at record highs and that doesn’t mean you have to be a part the statics.  There are 3 common reasons homes end in foreclosure and here is how to avoid letting your home become one.

1. You weren’t realistic and honest about your financial situation.  You were not completely honest or maybe you stretched the truth about your finances on your home loan application.

Solution:  It is important to view your financial situation honestly to succeed in the world of owning real estate.  Look at your budget and see if you can comfortably accommodate the monthly mortgage payment.  If it looks doubtful, wait a year, save your money, repair your credit history if necessary, and then try again.  Keep in mind that rates and payments can fluctuate depending on your loan type.  If you are already in the home, consider taking advantage of the recent Fed cuts and refinancing your current loan.

2. You signed a loan agreement without understanding it.  You signed where you were told to sign, but you have no idea when your rate will adjust or how your new rate is determined.

Solution:  It is important to read and ask questions when signing any mortgage loan agreement and additional documents.  Make sure you read disclosures and documents that detail any future mortgage rate adjustments and how they will affect your future payments.  You can call your lender and ask questions.  Knowing the details of your loan agreement can also help you make certain decisions concerning refinancing and pre-paying your loan.

3. You have been avoiding your lender for weeks or months.  After missing payments, lenders will attempt to contact you to retrieve their payments.  You avoid your lender as a way of avoiding your payments

Solution:  Keep your avenues of communication open.  Avoiding contact with your lender will not alleviate your problem.  Communicate with your lender even if you’ve only missed one payment.  Letting them know what is going on will demonstrate that you are making an active attempt to alleviate the issues.  Many lenders will be open to negotiating payment options and plans to keep you in your home.

Source: Informa Research Services

The final quarter of 2007 was a bleak one in the housing market, as foreclosures and delinquency rates reached record highs. The fourth quarter, from October to December, found foreclosures rising to 0.83 percent, passing the previous high of 0.78 percent set in 2007's third quarter, adding to the economic woes the U.S. is suffering, mostly onset from problems arising in the housing sector.

The data, from the Mortgage Bankers Association's quarterly report released this month, said that the delinquency rate -- the rate of those more than 30 days past due on their latest mortgage payment -- also climbed to a record high of 5.82 percent in the fourth quarter, up from 5.59 in the third quarter to reach the highest point since 1985.

The subprime mortgage mess continued to snowball, as the percentage of adjustable-rate mortgages entering foreclosure rose to 5.29 percent in the fourth quarter, and delinquencies rose to record-high 20.02 percent among subprime borrowers, up from 18.81 the previous quarter.

The MBA information includes data on 46 million home loans across the country, and suggests that the U.S., which many say is teetering on the brink of the first recession since 2001, is headed in that direction. The continuing wave of foreclosures will only add to the woes in the real estate market, as banks and lenders overtake the homes that delinquent borrowers are forced from, adding to the already large supply of houses on the market.

As the glut of homes continues to rise and the price values of homes continue to fall, the domino effect takes shape, as builders hold off on constructing new homes, driving down the amount of materials they buy. With the shape the market is in, it's also difficult for those looking for homes to get approved for the financing to get a new house, as lenders have pulled back and become more choosy about whom they'll lend to. The Federal Reserve's chairman, Ben Bernanke, has warned that the country may not have seen the worst of the mess yet, and cautions that the number of foreclosures and late payments could yet rise again.

The struggling real estate market took another dip this last month, according to the Commerce Department. Housing starts, a measure of new homes being constructed, fell 0.6%, while permits for new construction, an important indicator of future activity, fell more than anticipated, decreasing 7.8% in February to the lowest level in 16 years. The Northeast saw the worst drop, as new construction fell 27.7%. It remained unchanged in the Midwest, with a slight increase was seen in the South and the West.

Experts expect that the rates will continue to fall this year but expect them to rebound in 2009. Lasts year, residential construction fell by a quarter amid the slumping economy and the subprime mortgage mess fallout, as banks and other lenders have found many with credit scores below the prime rate who were granted mortgage loans struggling to repay them and unable to sell or refinance as the prices of homes have fallen drastically.

The number of home foreclosures rose 60% in February, and bank seizures more than doubled from the same time last year, according to RealtyTrac Inc. The real estate market, which has been the biggest victim in the faltering economy, has continued to struggle to regain its strong foothold in the U.S. The Federal Reserve has been trying to combat the falling home prices and rising foreclosures by lowering its interest rate, cutting it again this week by 3/4 a percentage point to 2.25%.

Single-family home starts have fallen 62% since they peaked two years ago. Most experts say it is unclear when the housing debacle will subside and get back on track but some have estimated the bottoming out has to be near.

Get yourself a Lendron T-Shirts so you do not forget the real estate bubble and get burned in the next one.

Is the Fed Rate Cut What the Housing Doctor Ordered?

Today, the U.S. Federal Reserve slashed the discount rate by 75 basis points down to 2.25%.  But how does the Fed rate cut affect you and your search for a new home?  Is the Fed rate cut the miracle elixir to cure the real estate market pain?
 
When the Fed makes a rate cut, it actually doesn’t affect consumers directly since the Fed funds rate is the rate that financial institutions are charged for overnight loans to fulfill reserve funding requirements.  However, this does affect consumers indirectly by allowing financial institutions to offer more financing options, possibly at lower rates.

The Fed cut should not directly affect fixed rate mortgages, but it can have a more immediate impact on short term loans, such as adjustable rate mortgages (ARMs).  Check online rate comparison tables to stay up to date with rates in this volatile market.

This should be good news for responsible borrowers looking to purchase a home.  If home prices either continue to drop or stay put, and more financing options become available, the market may look like a buyers market soon enough.

But if you already own a home, don’t fret!  The Fed rate cut could mean an opportunity to refinance an existing mortgage at a lower rate or use your equity to fund home improvement projects.  However, be aware that some lenders will have set floor rates.  These floor rates may be set slightly higher than how the rate is typically calculated, which is prime rate plus a margin.  To be sure you are getting a good rate, check convenient home loan equity rate tables.

Source: Informa Research Services

As the real estate market continues to go through an adjustment period caused by the run up in prices from the early 2000 real estate bubble. The Federal Reserve chairman Ben S. Bernanke said “the government is pledging new regulations to stop predatory mortgage lending practices that are affecting so many families”.

He also added that “loan delinquencies and the foreclosure rates have substantially increased over the past year and half. Many neighborhoods may be looking at clusters of foreclosures and many families are facing financial hardships during the months to come.”

“It is the Federal Reserves goal to find ways to prevent unnecessary foreclosures and ways to ensure responsible lending practices” He also noted, “that it extends past sub prime market as well”.

“Far too much of the lending in recent years was neither responsible nor prudent,” he said. “The terms of some sub-prime mortgages permitted home buyers and investors to purchase properties beyond their means, often with little or no equity. In addition, abusive, unfair or deceptive mortgage lending practices led some borrowers into mortgages that they would not have chosen knowingly.”

Some of the states that have been most affected are California, Florida, Ohio, Nevada and Arizona. You can check out new foreclosures daily or get a RSS feed from National Relocation city or states pages.

Fed Rates Keep Falling on My Head:
What the Fed Rate Cuts Mean for Your Savings and Mortgage

CALABASAS, CALIFORNIA - Today, the Fed slashed the Fed funds rate by 50 basis points.  Like most things, dropping rates are a game of give and take; the lowering of Fed rates can be beneficial for some parts of your financial life and detrimental for others.  So how exactly can you make the most of the most recent Fed rate cuts?

What does the Fed rate cut mean for my mortgage?
Not all mortgages are directly linked to the Fed rate, but adjustable rate mortgages (ARMs) are one type that is influenced by the Fed rate.  Thus, ARM rates were affected by last week’s drastic Fed rate drop.  In fact, just within the past week since the last Fed cut, the APR on a 5/1 ARM dropped from 5.65% to 5.25% based on Informa’s National Averages (Source: Interest Rate Review®, Informa Research Services). 

What about my other loans?
Because the Prime Rate is the key index used to determine the variable rates, such as credit cards and home equity lines of credit (HELOCs), the rates associated with these types of loans can be affected by the change.

And what is going to happen to my savings efforts?
Since the Fed’s rate cut last Tuesday, average deposit product interest rates have dipped as expected, but there has been no uniform decrease across the board.  For example, the interest rates on 3-, 6-, 12-, 24-, and 36-month certificates of deposit (CDs) (at $25,000) dropped an average of 20-30 basis points according to Informa’s National Averages report.  On the other hand, the rates for checking accounts dropped only 2 basis points (Source: Interest Rate Review®, Informa Research Services).

Despite some drastic rate drops due to the emergency Fed rate cuts last Tuesday, it is very unclear whether or not the most recent reduction will incur the same reaction.  Because today’s Fed rate cut was widely anticipated, some of the slashed rates over the past week may have been anticipated and incorporated into the rates offered today.  However, one thing that may be expected is the volatility of today’s rate environment.

“One thing we’ve noticed is that [financial institutions] are quicker to drop rates than to raise them,” said Ray Montague, Deposit Research Manager at Informa Research Services.  Looking at historical trends, when the Fed drops rates, deposit product rates tend to follow the Fed’s moves very closely and drop rates quickly.  On the other hand, when the Fed raises rates, deposit product rates tend to stray behind and raise their rates slowly.

So what now?  What should I do with my savings and deposits?
Despite falling rates, there is still hope for those looking to save.  Regardless of where Fed rates stand, financial institutions will continue to offer promotional and teaser rates to attract new customers.  If you are finding it difficult to judge what is competitive in the current rate environment, remember to use the sorting feature available on many of the online rate tables.  Additionally, checking rates regularly and staying informed of what rate changes mean for you can help you properly gauge what is best for your situation.

Source: Informa

The Fed Cuts Rates Again: What You Should Do Now?
Today, the Fed decided to cut the Federal funds rate a whopping 75 basis points to a scant 3.5 percent, the lowest its been since August 2005 (Source: federalreserve.gov).  Although talks in the news and among policymakers have been centered around countering a potential recession, the unabashedly selfish (nonetheless, important) question for you may be “What does this mean for me?”  Here’s a quick cheat sheet for managing your finances after the Fed’s decision:

Loans

• The effects of the Fed funds rate cut should be seen most noticeably in short-term adjustable rate mortgages (ARMs).  While a drop in rates will be more evident over the next few months, those who will benefit most immediately will be those with ARMs whose introductory fixed rate period is ending.  Because the rate adjustment period is beginning on these loans, the rate cut will be reflected in the newly assessed rate.  However, those with ARMs who are in their introductory fixed rate period could potentially see the benefits of the lowered rates over time.

Savings

• Think about locking your money into a CD today before rates have an opportunity to adjust to the Fed rate cut.  Because CDs flaunt fixed rates, this may be a smart move if you suspect rates will drop further.  Due to the volatile stock market, be sure to choosing a savings product with an FDIC-insured institution to ensure that you never lose your initial deposit.  Check online for the most competitive offers.

Pay close attention to promotional and teaser rates from various financial institutions.  Regardless of the rate environment, banks almost always offer impressive rates on CDs, money market accounts, and high-yield savings products to attract new customers.  Even if you have an institution you already enjoy banking with, do your research and check online for current promotions.  Be sure to use the tools available to you to stay up-to-date with the most current rates being offered.

This should also stimulate the real estate market as mortgage rates reach historic all time lows. New home hunters now can afford more home for their money.

Checking rates regularly and staying informed of what rate changes mean for you can help you properly gauge what is best mortgage for your situation.

Source: Informa Research Services

Everyone knows that the standard is to put 20% down when purchasing real estate.  But is this my best bet?  In making this choice, do the math and ask yourself the following 3 questions:

1.  How long do I plan on living in the home?
Depending on how long you intend on living in the house, you may or may not choose to make a substantial down payment.  If you plan on staying in the home for a longer period of time, you may want to look into making a larger down payment if possible.  However, because you don’t get your down payment back, you may want to think about putting less money down if your plans are still up in the air.

Also, figuring out whether you plan on staying in your home for 3 years or 30 years will help you decide what kind of loan you should get.  For instance, if you plan on staying in your home for a shorter period of time, you may consider looking for an adjustable rate or interest only mortgage loan.

2.  How much can I afford to spend on my monthly mortgage payments?
Because your down payment affects the amount you are borrowing, it affects the size of your monthly payments as well.  Typically, when a larger down payment is made (and as a result, a smaller amount is borrowed), monthly payments are smaller.  However, if this is not one of your options, then be sure that your monthly payments fit into your budget.  Think about what kind of loans are available because your monthly payment will be determined by the type of loan you have.  For instance, if you choose a 30-year fixed mortgage over an adjustable rate mortgage (ARM), your payments will stay the same for the life of the loan where as the payments on an ARM may change after the initial term of the loan.

Remember, if you do not put 20% down, you may need to pay private mortgage insurance (PMI), which will be added to your monthly payment.  Unlike the interest paid on most mortgages, PMI is not tax-deductible.  The alternative to paying PMI is to get a “piggy back” loan, or taking out a second loan to help finance the 20% down payment.

3.  What options does my credit score provide me?
It is important to see what options are available to you depending on your credit score.  Good credit can save you money by qualifying you for better interest rates on your mortgage loan.  For instance, let’s take a person with a credit score under 620 versus a person with a credit score of 720 or higher (assuming a standard 30-year fixed, $300,000 mortgage loan).  The person with the lower credit score would qualify for an annual percentage rate (APR) of 9.715% while the person with a higher credit score would qualify for an APR of 6.080%.  In this example, having a better credit score could save you approximately $756 a month, or $9,072 a year (Source: MyFico.com).

Credit Score APR Monthly Payment
Less than 620 9.715% $2,570
700 and higher 6.080% $1,814
Total Savings 3.635% $756/month
(or $9,072/year)

This applies not only to first mortgages, but second ones as well.  For those with impressive credit, getting a “piggy back” loan can be less costly than paying private mortgage insurance.  The rates available depend on your credit score, so be sure to use available resources to research rates.

Source: Informa Research Services

The Federal Reserve finally got around to tightening mortgage lending standards, in hopes to eliminate some of the shady practices that have made purchasing a home very expensive. Allot of the Fed’s changes make sense, especially the ones that require hidden broker and junk fees to be clearly disclosed.

To drive the mortgage scammers out of business, obviously, you need to enforce the current regulations already on the books. Hopefully enforcement from the Fed and others will follow after all this regulatory talk.

National Relocation mortgage section offer a great way to compare mortgage points, interest rates and fees. They want to empower consumers to make informed real estate decisions and help them cut their mortgage transaction costs.

Whether you are refinancing or doing a home purchase. It is very important to do your research ahead of time like school districts and neighborhood information about the areas you are considering. National Relocation can also help you with other great relocation services and providers.

If you are moving locally or across the country you can get moving quotes from multiple moving companies and save big! Always ask for references from any mover you are considering.

If you are in search of a great Realtor you can find one on the site as well. They can help you locate a foreclosure or give you home values of any area they serve. It is important to interview the Realtor you are considering and ask for references of past clients to see how they have performed in the past.

We stumbled across another site that is in Beta - FeeDisclosure.com.  This web site is supposedly helps consumers protect themselves from excessive fees and hidden relationships that can drive up the costs of buying a home. The founders of this Westlake Village, Calif are: Michael A. Kratzer, 42, and Mark Zimmerman, 35. They have spent four years developing the software upon which it is built. Both men have spent many years in the business. This site might be worth researching further.

If you are like most people, you talk about all the things you need to do like get life insurance to protect your loved ones in case of a tragedy, but with a busy life style it is easy to procrastinate. (After all, there is always tomorrow, right?)

The truth of the matter is that you DO need life insurance, and tomorrow may not be soon enough if something horrible happens to you and your loved ones are left without a security blanket (to pay off your real estate investments, mortgage and other liabilities). There are two main types of life insurance, whole life and term life. The less expensive of the two is term life insurance.

Term life insurance is meant to provide insurance for a specified period of time, for example, during the time when the children are still dependent on you. Term life insurance generally the least expensive form of life insurance, term life insurance covers an individual for a nominated period of time (term). If the person insured dies while covered, the designated beneficiaries will collect a death benefit. There are no other associated benefits.

Whole life insurance, or Whole of Life Assurance, refers to a policy that pays a lump sum on death or, in some cases, the earlier diagnosis of a critical illness whenever it occurs provided the contract is kept in force through the required payments being made. Life insurance that remains in force during the insured's entire lifetime, provided premiums are paid as specified in the policy. Whole life insurance also builds a savings elements: called the cash value as a result of the level premium approach to funding the death benefit.

You will have to talk to a financial advisor to see what life insurance policy will be best for yourself and your family. You can also check out Google News for the latest information about what is happening in the insurance industry.