Do You Really Need a Home Warranty?

If you are buying a new home it should come with a builders warranty so you shouldn't have to purchase a home warranty insurance plan. If you are not buying a brand new home, I would strongly recommend making a home warranty a part of the transaction. Often a real estate agent with convince the seller to offer a home warranty as an incentive, but even if they don't offer one, you can write it into the contract. Sometimes (depending on the size of the transaction) the agent may even offer to purchase one for the purchaser as a settlement gift.

Even if you have to pay out of pocket, the cost is relatively inexpensive with most plans running between $250 and $600 per year. Many people don't realize that you can renew the home warranty after the first year.

But What Does it Cover?
Please know that a home warranty does not cover anything that could go wrong with your home. Typically, a home warrany covers major systems and applicances, but you will want to read the fine print to know exactly what is covered on the plan you are considering. Also, keep in mind that often there are deductibles or service charges in conjunction with claims.

The goal of the home warranty is not to eliminate every possible expense, but to help a new homeowner not have any costly surprise expenses after spending most of their savings on closing costs to get into their home.

For more information or to purchase a home warranty, visit American Home Shield.

Record Foreclosures Lead to Record Bankruptcies in 2008

2008 saw the greatest increase in personal bankruptcy since the bankruptcy laws were reformed in 2005 (33% according to MSN Money). Given the increase in the number of foreclosures, it was to be expected in that a bankruptcy is often a homeowners only option when faced with overwhelming debts, a mortgage shortage, or job loss. A confirmation of the connection of record foreclosures to record bankruptcies is the fact that 3 of the top 4 states for increased bankruptcies are also in the top 4 states affected by foreclosures; California, Florida, and Nevada.

Bankruptcy is not the end of the world. In fact, for many filing bankruptcy can be a relief. It means an end to outstanding debts, no more collection calls, reduced stress, and a chance to start over. I am not encouraging you to go our and file for bankruptcy to get rid of your problems. It is a huge decision and requires serious thought because it is certainly a mark that will stick with you forever even though it will eventually come off of your credit report.

Many ask the question "if they will ever be able to buy a home again?" and the answer is absolutely. It won't be the next day or even the next month or the next few years before a bank will underwrite their loan, but there are several options for those that have filed for bankruptcy to get into a home. A great resource for bankruptcy recovery is The Bankruptcy Mortgage Book, which is an A to Z guide to getting a mortgage after bankruptcy.

If you have not filed for bankruptcy yet, I strongly encourage you to do research some bankruptcy information resources online before you do.

These are challenging times indeed, but I have full confidence that as a nation we will weather this storm as we have in times past. My only hope is that we all learn from this and become better at saving and not living on credit or beyond our means.

MORTGAGE SCANDAL - Mortgage Company Giving Insider Info to Consumers!

We have always been committed to educating consumers and what we are now sharing with customers does not sit well with the big mortgage companies. We are sharing with consumers how to pay off their mortgages WITHOUT REFINANCING and in many cases WITHOUT SPENDING ANY MORE MONEY OUT OF POCKET.

The mortgage companies don't want you to know this stuff because the sooner you pay off your mortgage, the sooner they lose their monthly revenue stream AND they realize that you may never need them again! They are afraid that this will ultimately take MILLIONS of dollars out of their coffers.

If you are interested in learning what the mortgage companies have been keeping from you and specifically how you can use this information to pay off your mortgage in 1/3 to 1/2 of the time, please call Consumers Advantage Mortgage at 800-757-9704.

For those that are wondering, this is NOT a bi-weekly mortgage program.

Wishing you financial freedom!

Getting a Home After a Bankruptcy or Foreclosure

While the rules have changed drastically with regard to mortgage lending, it is still possible to get a home after a bankruptcy or foreclosure. The three keys to this are:

1. Credit Restoration. Goes without saying.

2. Documentation of what caused you to have the bankruptcy or foreclosure.

3. A new positive house payment history. Before you get a mortgage, the best thing to do is find a home with creative financing to re-establish yourself. Save all of your cancelled checks as this will be your new "alternative" credit.

A few great creative financing options are:

1. Owner Financing. If the owner has equity, and a heart, you might land a deal here. The best about this is that you will likely have equity when you go to refinance, and a refinance loan is scrutinized less than a purchase loan.

2. Renting With the Option to Buy. You will likely pay slightly above market rent with a rent credit going towards your down payment. Ideal for those who need to save towards a down payment.

3. Lease-Purchase. Similar to a rent with option, in a lease-purchase, you normally establish the price up front, and you become responsible for the property as if you owned it. The key to success here is having enough time to get your credit cleared up to get approved for a traditional mortgage at the end of the lease term.

These deals exist, especially now that there are so many sellers trying to unload investment properties. Just make sure you do your homework so you know you are dealing with the owner and not a "contract owner" as this could cause you more trouble than it's worth - including the loss of your money and the house.

For the A to Z guide to financial recovery after a bankruptcy or foreclosure, I recommend getting a copy of The Bankruptcy Mortgage Book.

Government Aids Investors and Struggling HomeOwners in One Move

Today the Bush Administration announced a suspension of an "anti-flipping" rule as a means of helping those facing foreclosure proceed with quick sales.

This is good news for both investors and homeowners facing foreclosure.

Read the full story at Yahoo News

How to Buy a Home After a Foreclosure

This seems to be a very hot topic these days given the massive numbers of people that have been forced into foreclosure. First, let me say, you are not alone. Please don't let this get you down or get depressed - you can recover.

You need to ask yourself if you are ready to jump back into the market anyway. Renting can be a big relief in that you will spend less money out of pocket on repairs and maintenance, so while you are recovering this will keep your expenses down. Also, the market is still volatile; the worst thing you could do is put good money down on a home that once again loses value - that would be discouraging. Make sure you work with a trusted local real estate agent, that know what the market is doing in your area.

Do not attempt to purchase a home if you are buried in debt, have poor credit (middle score below 620), or don't have any money to put down. These are the kind of situations that led to the foreclosure crisis as we know it. There are hard money lenders out there that might seem to be helping you, but trust me the high fees and high monthly payments will make you wish you never bought another home. Take this time to repair your credit, so that when you are ready, you will have the best possible terms.

Perhaps you had a setback and you have recovered, but you don't want to wait the required 36 months following your foreclosure? Here are a few options:

1. If you are married and bought your home in only one spouses name, then congrats you are much closer than you thought. Simply work with a mortgage lender that will help you know what you need to do to obtain a loan with your spouses credit profile.

2. Find a Lease-Purchase home. This is a deal where the owner credits you some of your monthly rent towards the future down payment. Make sure they know that you need how every many months to recover from your foreclosure and don't let them sell you on the fact that they can "help you get a loan". The sad story is they may not care because if you can't buy the property after the lease term, you will lose all of the option money. Also, find a way to make sure they are current on their mortgage. You may want to write it into the agreement that they have to send you their monthly mortgage statement. There are too many cases of rental homes being foreclosed out from under the tenants. This is also a good reason to work with a realtor at a property management firm because they will make sure the rent is paid.

3. Owner Financing. Provided you can find an owner that doesn't need to get the equity out of their home and isn't going to take advantage of you, you can do a transaction where you pay them until you can qualify for a traditional mortgage. Document EVERYTHING including your payments (with canceled checks ONLY).

Before you know it, you'll be back on track just make sure not to buy above your means and get yourself in trouble a second time.

How to Get Rid of Private Mortgage Insurance (PMI)

PMI, or private mortgage insurance is required on any 1st mortgage with a loan to value of 80% or greater. Contrary to what many believe, its purpose is to protect the lender (not the mortgage holder) in the event of a default on the mortgage. As you pay down your mortgage to below 80% LTV (most require you to pay down to 78%), you should consider what your options are for getting rid of this extra payment.

1. Keep up with homes are selling for in your neighborhood. If you are at 78% loan to value based on what comparable homes are selling for, then simply call your lender to discuss this with them. Personally, I would call even at 80%. They may require you to put your request in writing and they may require an appraisal which you will need to pay for.

2. Refinance. If you know that your home would appraise for at least 20% more than you owe, then perhaps a refinance should be considered. This can accomplish many goals such as reducing your rate or converting an adjustable rate to a fixed rate at the same time. Just know that you will incur fees so make sure there is room for those fees within the 80% loan to value ratio.

3. Pay Down Your Mortgage aggressively. If you aren't close to being at the 80% LTV, then you need to look at how you get their as quickly as possible. You can pre-pay principal to make this happen, but the absolute best way to pay down your principal in the fastest amount of time is with a Money Merge Account. The Money Merge Account is a new system being used by thousands of homeowners across America to reduce their mortgage by 1/3 to 1/2 with out refinancing. It's not for everyone, but currently, you can get a FREE Mortgage Savings Analysis from MortgageZapper.com. I highly recommend the Money Merge Account as a valuable financial planning tool. It will not only help you reach your goal of paying down your mortgage to reduce PMI, but will help you achieve the seemingly unattainable goal if paying off your mortgage completely.

Once you get that extra $50 - $200+ in your pocket every month, I strongly recommend speaking with an investment advisor to discuss the best way to make it grow even further.