UKmortgageadvice

Lending Company Puts Forth A New Philosophy

An interesting concept is being put forward by a company called Global Equity Lending which,
according to them,is rooted in the fact that building a secure financial future is more difficult than
ever.The rules are changing and perhaps the old practices need to be revamped.GEL calls its new
philosophy, “Harnessing The Power of Your Mortgage”

In 2004,credit card debt accounted for over half of the 2.1 trillion of consumer debt in the U.S.,
quadrupling over the last decade.Today,the average American household has 9,000 of credit card
debt at 16% interest.To pay that average off,at that interest rate would take ten years,totaling over
8,000 in interest when all is said and done.The financial impact of this,which is virtually unrealized
is devastating.GEL claims to have a better way.Their thinking is that since you must borrow money
over the coarse of life,why not borrow it as inexpensively as possible.Credit cards,auto loans,and
personal loans are all high interest and non deductable.So why not harness the power of your
mortgage?

According to GEL,Americans operate under a mindset,when it comes to personal finance,that
has been burned into our country’s psyche from the days of the great depression.That philosophy
is as such:First get the lowest rate mortgage,then,set up a bi-weekly payment plan,and,whenever
possible send in additional payments.This way you pay off your mortgage as soon as possible.
Sound good to me,right?Well,much to my suprise,this company claims that is exactly what we
should NOT be doing!On the contrary,their idea is one which is echoed by New York Times Best
Selling author of “The New Rules Of Money”,Rick Edelman,who says,”You should get a big,30
year mortgage and never pay it off.”Edelman and GEL put rules forth which read like this:

1.Never send extra money to your mortgage
2.Stay away from bi-weekly plans.
3.Make the smallest payment with the biggest tax break.
4.Putting extra money toward your mortgage is like putting it under the matress.

To back up his claim,Edelman offers five distinct reasons why you should carry a long loan:

1.Mortgages don’t lower your homes value.Your home will grow in value whether or not you
have a mortgage.
2.Your mortgage is the cheapest money you’ll ever buy.Why pay credit card at 18%,when
you can borrow at rates under 7%.
3.Your mortgage is the best way to lower your taxes.There aren’t many tax breaks left.
Mortage loans,unlike credit cards and car loans are fully tax deductable.
4.You should get cash out of you house while you still can.You may find it difficult to
get a loan if something like a loss of job comes up.
5.Mortgages become cheaper over time.Most times your payment will stay the same
over the years while your income rises,making it easier to pay over time.

To further illustrate their beliefs,GEL presentations include a case study called,”The Tale of Two
Brothers”, where they do a financial comparison of two fictional brothers.In the story,Brother A,as
he is called follows the “old” way of thinking,while his brother(yes,you guessed it,brother B)uses
GEL and Edelman’s theory.The results of the study find Brother B with almost a one million pound
advantage over Brother A.The full hypothetical can be viewed on http:yourbighouse.com, but the
jist is that the second brother used the money he saved carrying an interest only loan,or GEL’s
famous “power option”loan to invest in other places.That,combined with the mortgage tax breaks
lead to the million pound separation after 30 years.

So,if you believe in this new way of thinking,and are ready to follow the model(in other words,
REALLY, put that extra money to work for you),then I believe an interest only loan or GEL’s power
option loan is the way to go,but be careful.

For more info on this new philosophy,go to http:YourBigHouse.com

Act Now to Forgo Foreclosure

The subprime mortgage crisis has been on the tip of everyone’s tongue lately, and the housing market has cooled. Rather than being discouraged by this, smart investors realize that this is the time for deals to be had. We’re in a buyer’s market, which is an enormous relief for buyers who have watched the market balloon over the last decade. But what if you are one of the thousands of people who got caught up in the low-interest madness, thinking you’d be making enough money to cover the difference when your rates reset?

If you are facing difficulties with your loan, remember that the ultimate goal is to maintain your credit rating. You may be able to negotiate with your lender, you may be able to refinance or you may be forced to sell your home now in order to buy one in the future, but the sooner you address the issue the more options you will have. By getting your finances in order you will be able to get on with your life sooner. Don’t add to your stress by ignoring your fiscal situation; follow these steps to getting back on track:

Know the details go over all your loan documents so that you are prepared for any upcoming resets or changes. When will your payments increase? By how much? Can you refinance? What kind of penalty would you face, if any? Cut in other areas can you take a roommate or a second job to help make your payments? You may need to look at significant changes in your spending and lifestyle. Do not make any major purchases at this time, and look at liquidating other assets, such as cars or boats, to help meet your payments.

Contact your lender You should take the initiative with your lender. Contact them before the problem becomes overwhelming. If you receive calls or letters from your lender respond to them as soon as possible. Do not wait to get too far behind lenders are less likely to move quickly into foreclosure if you are proactive. You want to speak to the right people ask for the loss mitigation or collections department. Be honest with them about your situation and don’t make promises you can’t keep.

Beware of foreclosure “rescue” rackets There are a number of scam artists targeting people in neighborhoods where foreclosure rates have been high. They approach troubled homeowners with promises to help them keep their houses. These “rescues” often come with payments that are out of reach of the average homeowner and result in homeowners being defrauded of their homes, sometimes still owing the original mortgage amount. Any company that approaches you with such an offer should be checked out through the Better Business Bureau, your state real estate commission and Attorney General. Do not sign anything without reading it all, get all promises in writing and ask your attorney or a financial professional to review any paperwork before you sign it.

Call a nonprofit group offering free housing advice for more information and counseling. They may be able to help you with your options. If you took out a loan between Jan. 1 2005 and July 30, 2007, are current on your loan payments and your mortgage has not yet reset to a higher rate, you may be eligible for a five year rate freeze.

If all else fails, negotiate a short sale – if you have missed more than two payments but your home has not yet gone into foreclosure you may be able to sell it for a price that falls short of what you owe the lender. If your mortgage holder agrees to accept the price and forgive the rest of your debt, they forgo the pricey foreclosure process and you walk away with minimal damage to your credit score. You can chalk it up to experience, save up a down payment and buy low.