Low mortage rates increasing 15 year mortgage affordability
Record low mortgage rates are making mortgage loans more affordable than ever. Evaluate your current financial situation along with your goals for future relocation and retirement. A fifteen year mortgage provides debt help with meeting your goal of retiring debt free.
Mortgage benefits from a 15 year plan
Use a free online mortgage calculator for estimating savings associated with a 15 year mortgage. Estimate and deduct closing costs from potential savings on interest. With this calculated figure in mind, consider these benefits:
- Pay off your mortgage faster: Refinancing might mean making higher payments with a 15 year mortgage, but the benefit of paying it off sooner is a great plus if you’re concerned about retirement assets and rising expenses.
- Lower mortgage rates: 15 year mortgage rates are typically lower than 30 year fixed rate mortgages. A shorter repayment term translates to less risk for mortgage lenders, and your ability to qualify for the higher monthly payment required of a 15 year mortgage suggests financial stability.
- Potential savings on interest: Estimate interest savings using an online mortgage calculator. Enter your current mortgage balance, interest rate, and repayment term for each loan. Subtract the lower amount from the higher amount; the result represents potential interest savings.
Drawbacks to a 15 year loan
- Higher monthly payments: Your monthly mortgage payments will likely increase. For example, a 30 year mortgage for $200,000 at 4.25 percent has a monthly principle and interest (P&I) payment of $983.88. A 15 year mortgage of the same amount and interest rate has a monthly P&I payment of $1504.56, a difference of $520.68. Meeting the higher payments for a 15 year mortgage might mean less money for other essentials and savings.
- Higher risk of financial hardship: Substantially higher mortgage payments can increase the risk of foreclosure or bankruptcy in the event of long term hardship.
Consult a financial advisor for recommendations based on individual circumstances and financial goals.
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Loading ...Want a student loan? Where’s your budget?
Student loan defaults have become such a concern that one community college is now requiring students to complete personal budget worksheets in order to receive loans. Tidewater Community College, based in Norfolk, Va., wants students to outline a realistic picture of their financial situation before and after graduation, including a repayment plan for student loans, according to Inside Higher Ed.
Making students accountable
The move goes beyond requirements set forth by the U.S. Department of Education for receiving federal loans. The school hopes making students more accountable will help them make more responsible decisions about borrowing money for education expenses. Deborah DiCroce, president of Tidewater Community College, told Inside Higher Ed that student loans are “not a handout.” She went on to say:
It’s not something that goes away when the college experience is completed or not completed. There’s a commitment to repay a loan that has as much weight to it as any other kind of borrowing one might do. My concern, as we are ramping up our financial aid program, is keeping a close eye on our default rates, as one of our measures of accountability. It just became clear that we needed to take a step beyond what the feds require. Where is our responsibility to educate a borrower on this type of investment?
Looking for debt solutions
Many students need debt help because of high student loan balances they can’t pay back. Not only are many recent graduates having a tough time finding jobs that allow them to afford student loan payments, but they are also carrying high levels of credit card debt.
Tidewater Community College has the right idea with having students put together a financial plan that involves paying back any money borrowed. More students need to be educated about the consequences of taking on student loan debt and combining it with high-interest credit card debt, auto loans, etc.
(No Ratings Yet) Loading ...Should you cosign for a student loan for Junior?
Many young people are unable to get private student loans without a cosigner. Their parents may step in to help them get the loans the need, but end up putting their own financial security at risk. Here are some things you should think about when weighing the pros and cons of co-signing for student loans.
Federal vs. private student loans
Your kid should always apply for federal student loans before turning to private loans. Federal loans such as the Perkins or Stafford are not based on credit scores, so there is no credit check. Students also do not need a cosigner to qualify for federal aid. However, private student loans do require a credit check, and your student probably won’t qualify without a cosigner. Depending on the lender the borrower may be required to get a cosigner even with a healthy income and credit score.
Parents’ financial profile
As a parent you should ask some questions about your financial situation–now and in the future. Use the following questions as a starting point:
- Do you have a lot of credit card debt and other bills?
- Are you having trouble making your mortgage payments?
- Are you worried about your future job security?
- Have you experienced a recent drop in income?
- Is it difficult to make your income stretch between paychecks?
- Have you saved a substantial amount for retirement?
Do you need debt help?
If you are already struggling to handle all your household expenses, co-signing for a student loan is probably not a good idea–if you can even qualify. If Junior defaults on a loan, as the cosigner you would be responsible for paying it back. Many recent graduates are coming out of school with no job prospects in sight, and that could happen to your kid as well. So think about whether heaping a student loan payment on top of all your other obligations would push you to a financial breaking point. If your finances are too out of control, it may be time to get help with debt from a debt counseling firm.
(No Ratings Yet) Loading ...Consumers in the U.S. are still in financial distress, but their overall financial situation seems to be improving. The CredAbility Consumer Distress Index tracks the financial condition of the average U.S. household each quarter. CredAbility, a nonprofit credit counseling firm, measured employment, housing, credit, how households manage budgets and net worth.
Index score rises
U.S. households had a score of 68.1 on a 100-point scale in the first quarter of 2011, which was up from 67.2 the previous quarter. It was the highest score since the financial crisis escalated in the third period of 2008. A score below 70 indicates that households are experiencing financial distress.
Debt management
However, many consumers are getting their acts together and improving their finances. For instance, many people are doing better at managing their household budgets. They also are showing some improvement in debt management, reflected in the fact that there were fewer bankruptcy filings, which fell 6 percent from the year-earlier quarter.
“The good news is that the full-time labor force grew by more than 540,000 people in the first quarter and consumers with stable incomes have a handle on their credit and household budgets,” said Mark Cole, chief operating officer for CredAbility and author of the report. “While the housing category continues to deteriorate, a gain of four points in the index during the past five quarters indicates that the majority of consumers are on the right track.”
Distressed southern states
Some areas of the country fared better than others. North Dakota (82.35) and South Dakota (81.23) were the states with the highest individual scores. Overall those two states have not been hit as hard by the economic crisis as some other parts of the country. Six states in the Southeast were among the 10 most distressed states in the country.
Help for your household
If you find yourself feeling overly stressed by credit card debt and other bills, it may be time to get help with debt. Consider finding a reputable debt counseling firm to work with you to better manage your household budget.
(No Ratings Yet) Loading ...Government cracks down on more student loan defaulters
The government is going after more student loan defaulters and suing to recover the money. The Education Department referred 5,393 loan defaults to the Justice Department last year, compared with 2,596 in 2009, according to USA Today. There were 918 referrals in 2006.
Too much debt
Many people who used student loans to pay for college have found themselves struggling to pay the bills along with credit card debt and other financial obligations. In many cases defaulters go for years with unpaid loans without the government coming after them. But now the government is filing lawsuits against more people with large amounts of unpaid debt.
“The most important thing to remember is we want the loans repaid,” Education Department Spokesman Jane Glickman told USA Today. “Borrowers can work on repayment plans ranging from deferments to extended grace periods. We try to do everything possible to come up with a repayment plan before taking the step of seeking a lawsuit.”
Ask for help with debt
If you find yourself juggling too many student loans, here are four things to try to get help with debt:
- Contact your student loan company and ask for debt help. Avoiding the problem will only make it worse.
- Ask for a loan deferment, which would allow you to postpone repaying it for a period of time. Depending upon the type of loan, you may still have to make interest payments.
- Ask for forbearance on a loan. This would allow you to suspend or reduce loan payments for a period of time. Interest would continue to accrue during the forbearance.
- Look for loan forgiveness programs if you work in select fields in certain types of communities, such as medicine, teaching or the military. Read through program guidelines carefully to determine eligibility.
Get help with student loan debt before it gets out of control and you end up defaulting. Also remember that having larger amounts of debt could also increase the odds of a lawsuit being filed against you.
(No Ratings Yet) Loading ...Even celebrities need debt help
Does it sometimes feel like you’re alone in the struggle to pay credit card debt and other bills? You are not alone. Americans of all ages, professions and backgrounds are racing each other on the debt treadmill. And if you think that all your debt woes would be solved by getting your hands on more money, think again. Even some of the biggest celebrities out there who receive millions each year need debt help.
Help with debt
Film director Martin Scorsese owes $2.85 million in taxes to the Internal Revenue Service (IRS) and actor Al Pacino owes $188,000 in back taxes to the IRS. Recently, Duchess of York Sarah Ferguson recently got in trouble over accepting help–with debt totaling around $70 million–from a convicted sex offender. The list of celebrity debt stories is endless.
Do you need debt counseling?
As these cases show, having a high income is no guarantee that you won’t have debt problems if you never learn to manage money properly. Whether you earn $50,000 or $500,000 it’s important to have a solid budget to keep expenses under control. If you are in over your head with debt, it may be time to get debt counseling.
Other tools that can help with debt reduction include asking for a debt settlement from creditors and consolidating credit card debt. A debt counseling firm can discuss all the options available that might help with debt reduction.
(No Ratings Yet) Loading ...Are you still paying for the holidays?
The average consumer owed more than $4,200 in credit card debt at the end of 2010, according a report from Experian. Residents of San Antonio had the highest average credit card balance of $5,177, followed by $5,115 in Jacksonville, Fla., and $4,960 in Atlanta. The consumer credit reporting agency said many people may even still be feeling the squeeze from credit card purchases made during the holidays.
Too much credit card debt
Maxine Sweet, vice president for public education at Experian, said in a statement: “We want consumers to understand that spending at the holidays or at any other time of the year can often have broader implications to their overall fiscal fitness.
“By carrying over credit card balances and utilizing a significant portion of their available balance, they can potentially negatively affect their credit scores, which can in turn hurt them when it comes to applying for other types of credit down the line including mortgages and car loans. It’s important for consumers to get that debt under control before it has a lasting impact on their credit scores.”
Credit debt relief
If you are looking for credit debt relief from hard credit card balances, even small changes in your spending habits can help jump start a debt reduction plan. Adding extra money to the minimum payment for just one credit card can help you knock down that balance faster. Use any tax returns or bonuses to pay off credit card debt. Finally, it’s important to review your finances every few months to adjust spending so that it advances your debt reduction strategy.
(No Ratings Yet) Loading ...Credit card delinquency rate fell in 4th quarter of 2010
The national credit card delinquency rate in the fourth quarter of 2010 was down nearly 32 percent from a year earlier, according to TransUnion. However, 32 states saw an increase in average credit card borrower debt from the previous quarter. The biggest gains in average credit card borrower debt occurred in the District of Columbia (4.17 percent), Iowa (2.84 percent) and Mississippi (2.7 percent).
The credit card delinquency rate measures the ratio of borrowers 90 or more days delinquent on one or more of their bank-issued credit cards.
According to Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit: “From a delinquency perspective, 2010 was an excellent year for consumers as they showed continuing fiscal responsibility in working to pay down their credit card debt. Even in the presence of falling home prices, the accumulation of negative real estate equity and high levels of unemployment, consumers still have been placing a premium on paying off their credit card obligations and maintaining the health of their card relationships.”
The national average credit card borrower debt, which is defined as the aggregate balance on all bank-issued credit cards for an individual borrower, dropped 8.62 percent from a year earlier. Alaska had the highest average credit card borrower debt at $7,010, followed by North Carolina ($5,680) and Tennessee ($5,605). Iowa had the lowest average credit card borrower debt at $3,915, followed by North Dakota ($4,181) and South Dakota ($4,248).
(No Ratings Yet) Loading ...Credit card debt: Don’t follow in the government’s footsteps
The New York Times reports that Congress is gearing up to debate whether or not to increase the federal government’s debt ceiling. Hello? Isn’t it about time for our elected officials and so called leadership to start setting an example for we, the consumers? We are constantly reminded of the importance of financial prudence; meanwhile our government is spending like a fleet of drunken sailors. At some point, the government and debt-ridden consumers have to know when to say “when.” The government’s balance sheet is too big to tackle here, so let’s concentrate on reducing personal credit card debt.
Drowning in debt: Has this become America’s new favorite past time?
Recent reports of increased credit card usage among consumers seem to suggest a revival of consumer confidence, if not carelessness. Carrying credit card debt doesn’t make sense, particularly in uncertain economic times. Here are some reasons to think twice before running up credit card debt:
- Variable interest rates: Many credit cards carry variable interest rates, which can go up if the financial index the card is tied to increases.
- Minimum payments and unpaid interest: Minimum credit card payments typically do not cover all of the accrued interest, and unpaid amounts are added to your unpaid credit card debt.
- Finance charges: Although legislation has limited how and when credit card companies can impose penalty fees, these fees can add to your debt if you forget to make a payment or exceed your credit limit. If you incur a penalty fee for the first time, it’s worthwhile to call your credit card company and request a waiver of the fee.
- Job insecurity: Financial analysts and economists report that the economy is rebounding, but unemployment remains high. Carrying credit card debt takes a bite out of your budget that can be disastrous if you lose your job or your income is reduced.
- Temptation: Somehow paying with credit cards can lead to more spending. Avoid the temptation to spend lavishly or unnecessarily by carrying cash or a debit card instead of credit cards.
- Emergency savings: Relying on credit cards for emergencies can create costly debt. It’s important to establish and fund an emergency savings account. The amounts you’re paying toward credit card debt could have gone to savings instead of debt.
- Credit scores: Like it or not, credit scores can impact more than your ability to qualify for loans and credit. Employers and insurance carriers may check your credit scores as part of their approval processes. Although the bad economy has thrown a monkey wrench into the allegedly reliable models used by credit scoring companies to predict consumers’ creditworthiness and overall reliability, the system remains unchanged, and poor credit scores can create more than financial problems.
Seeking debt help is essential if you’re struggling with credit card debt. Contacting consumer credit counseling and debt consolidation programs is the first step toward finding affordable debt management solutions. Insurmountable debt causes physical and emotional stress, can strain interpersonal relationships and cause problems at work. Don’t wait. Please get the debt help you need today.
(No Ratings Yet) Loading ...3 scams that can leave you with credit card debt
Scams aimed at swindling consumers out of their money are perpetrated every day. The Internet Crime Complaint Center (IC3), a partnership between the FBI and the National White Collar Crime Center, recently logged its 2 millionth complaint about online criminal activity. Other scams are perpetrated by phone or even with letters sent through the mail.
Among the scams making the rounds that can boost your credit card debt or empty a bank account are:
- Debt settlement services. So many Americans are desperate to get out of debt that they become easy prey for people claiming to offer help with debt. While there are legitimate agencies offering debt help, there are others out there looking to prey on people. Avoid working with companies that make outrageous claims about their success rates or require large upfront payments before providing any services.
- Hijacked email and social network accounts. Someone hacks into an individual’s account and sends messages to all the contacts claiming that the account holder has been robbed and stranded in a foreign city. The desperate plea for help asks recipients of the message to send money.
- Solicitations from charities. Many charitable organizations step up efforts to solicit donations at the end of the year. Callers urge you to support their organization and try to convince you to use a credit card to make a donation. Fake organizations often use a name that sounds very similar to legitimate charities. Anytime you receive a solicitation from a charity verify that it is a legitimate group before donating.
Show restraint when giving money
Be skeptical of individuals or companies that approach you unsolicited and ask for money. While many legitimate companies are constantly marketing their services and products, it always pays to check out any unfamiliar organization you are thinking of supporting before handing over any money.
(No Ratings Yet) Loading ...- This blog covers a wide variety of debt consolidation and loan topics.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.
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