March 22, 2013 § 2 Comments
Renegotiating home mortgages seems to be the name of the game these days, whether homeowners are behind on payments or underwater on your loan. Let’s face it, with these low interest rates now is the time to refinance if you can. But beware, not everyone who says they can help you find mortgage relief and renegotiate your loan are legitimate. The Federal Trade Commission offers consumers information on the most prominent scams that can separate a homeowner from their hard earned money, hope and in some cases their homes.
The first thing to remember is that although reputable realtors and loan modification specialists may contact you through advertising letters and postcards with wording like “Stop Foreclosure!” “Get a Loan Modification,” and/or “Keep Your Home” disreputable advertisements may also use these headlines, but often offer half-truths and outright lies to get your business. If postcards claim “90% of our customers get result,” “100% Money Back Guarantee,” or promise their special relationship with the banks can save you, they are most likely scams. Reputable realtors and loan modification specialists will not offer guarantees-with or without money back. Remember, if it seems to good to be true, it probably is. Check their track record by googling the company name and the word scam. You would be surprised how often disreputable companies are advertised as such through customer reviews and rip-off reports.
According to the Federal Trade Commission, the following scams are most prevalent:
Phony CounselingThe scam is you pay them a fee and they’ll negotiate a deal with your lender to reduce your mortgage payments and save your home. They may claim to be attorneys or representatives from a law firm. The big red flag is that they will counsel you NOT to talk to credit counselors, your own attorney or your lender. They will take your money and do nothing. Remember, if you do not have to do any part of the work, it is too good to be true. Fairy Godmothers who twinkle in to save the day are one of the “too good to be true” things.
The Forensic Audit
In an exchange for an upfront fee, forensic loan auditors (also called foreclosure prevention auditors and mortgage loan auditors) say they will have an attorney review your loan docs to insure your lender complied with the law. The auditors say you can use their reports to avoid foreclosure, speed loan modification process or even have the loan cancelled. There is, however, absolutely no evidence that forensic loan audits do anything to help you get mortgage relief. Direct that money towards your loan or a reputable attorney instead.
Con Artists tell you to sign over the title of your home to them as part of a deal that allows you to stay in the house as a renter and buy it back later. They will tell you surrendering the title allows you to avoid the hit to your credit rating so you can get a new loan at a better rate to repurchase the property. However, the deals are structured so they are so expensive buying the house back becomes impossible. Then they scammers raise the rent so you are unable to stay in your home so they are free to sell your house and keep all the profits. Again, too good to be true? Too easy? Just walk away. It’s a scam.
Bait and Switch
In this scam, you are given papers to sign, supposedly to get another loan to bring your mortgage payments current. However, buried in the paperwork is a document that surrenders title of your home in exchange for the rescue loan. Never sign anything without reading it first. If it effects your legal rights the phrase, “Don’t worry, it’s all boilerplate,” should mean nothing. Know what you are signing. If you don’t think you can make sense of the documents, hire a lawyer to review the docs. The extra $200-$450 could save your house.
Rule #1: Do not sign over the title to your home. Transferring title will not transfer what you owe on the mortgage. You will be out of a home and still on the hook for the loan.
Rule#2: If it sounds too good to be true. It probably is not true. Do your due diligence and check them out BEFORE you give them your time, your money or your home. Fraud happens. Protect yourself.
Rule #3: You don’t have to pay any money until the company delivers results. It is illegal for a company to charge you ANY money until they have either 1) given you a letter of offer for loan modification or other relief from your lender, or 2) you accept the offer and the company gives you documentation showing the changes to your loan. The company must also tell you the entire fee it will charge for services.
Rule #4: No company can stop you from talking directly to your lender. Try and get the best deal you can for yourself and check up on the proceedings regarding a loan modification/mortgage relief from your lender. Know your rights and stand up for yourself.
Rule #5: You may be behind on your payments. You may be drowning in an underwater mortgage. But you are no victim. You are not defined by the circumstances you find yourself in today. This may be today’s problem, but tomorrow’s solution is just around the corner.
March 13, 2013 § Leave a Comment
Well, it’s tax time. Some of you have been early birds who have filed and already accounted for your refund. Others are just coming to the “do or die” April 15th tax deadline. We’ll provide some information you should consider whether you are filing for 2012 or making some financial decisions now that could impact your taxes for 2013.
Each day, I will give you some examples offered up by the IRS to help consumers like us figure out the difference between a schedule C, a 1099 and the hole in the wall. Here’s today’s example one:
Home Loan Modification, Debt Forgiveness and Taxable “Income”
SPOILER ALERT: If you have taken money out of the house in a refi and used for non home items and renovations, like paying off credit cards, when the loan is modified, you are responsible tax-wise as though you had received that money in income. See a real world example below. (Complete with link to tax form)
These examples use actual forms to help you prepare your income tax return. However, the information shown on the filled-in forms is not from any actual person or scenario.
In 2012, Nancy was unable to make her mortgage loan payments. On August 31, 2012, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy’s bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. Nancy was neither insolvent nor in bankruptcy at the time of the loan modification.
Nancy received a 2012 Form 1099-C from her bank in January 2013 showing discharged debt of $40,000 in box 2. Identifiable event code “F” appears in box 6. This box shows the reason the creditor has filed Form 1099-C. To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion.
Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was no qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt).
Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21.
February 26, 2013 § Leave a Comment
With gas prices rising above $4.50 in some places in the U.S. due to refinery issues and a world-wide uptick in consumer demand, everyone is looking for ways to save on gas. Some people are willing to drive several miles out of their way to save a few pennies a gallon.
There are, however, a few things you can do to guarantee lower fuel consumption–whether you can find the thrifty gas station or not. Consumer Reports say, there are two things you can do that are guaranteed to lower your gas bill, “You can control how you drive and take care of your car. Do very simple things to improve its fuel economy performance.” Check out Bankrate.com online calculators that can show you if the changes to your drive patterns saves you money and how much.
Speeding, rapid acceleration and jerk -to-a-stop braking wastes gas. It can lower your gas mileage by 33 percent at highway speeds and by 5 percent around town. I know we are all in a rush most of the time, but it is wise to remember how long it can take to deal with an accident–even a little fender bender–and additional repair costs (human and monetary).
While each vehicle reaches its optimal fuel economy at a different speed (or range of speeds), gas mileage usually decreases rapidly at speeds above 50 mph. You can assume that each 5 mph you drive over 50 mph is like paying an additional $0.26 per gallon for gas. Also using cruise control on the highway helps you maintain a constant speed and, in most cases, will save gas.
|Fuel Economy Benefit:||5–33%|
|Equivalent Gasoline Savings:||$0.19–$1.24/gallon|
Remove Excess Weight
Avoid keeping unnecessary items in your vehicle, especially heavy ones. An extra 100 pounds in your vehicle could reduce your MPG by up to 2 percent. The reduction is based on the percentage of extra weight relative to the vehicle’s weight and affects smaller vehicles more than larger ones. Even bike racks not used regularly should come off the car. They cause extra drag. So now we know sometimes extra junk in the trunk is just procrastination that’s costing you more money.
|Fuel Economy Benefit:||1–2%/100 lbs|
|Equivalent Gasoline Savings:||$0.04–$0.08/gallon|
Avoid Excessive Idling
Idling can use a quarter to a half gallon of fuel per hour, depending on engine size and air conditioner (AC) use. Turn off your engine when your vehicle is parked. It only takes a few seconds worth of fuel to restart your vehicle. By the way, you’ll enjoy the fresher air, as well the extra bucks in your pocket.
|Fuel Cost Savings:||$0.01–$0.03/min. (AC off)|
|$0.02–$0.04/min. (AC on)|
February 19, 2013 § 2 Comments
Clark Howard offers this inciteful piece on the prices we pay for shopping online. Turns out retailers assume if you are using a Mac browser like Safari that you have more money to spend and they might as well charge you more up front! Of course, that means they are not taking into consideration those of us working on some outdated machine because we can’t afford another computer. What about the single mom with two kids who may get a graphic arts position at $45,000 a year who still has to pay for rent, school and everything else and barely breaks even. should she pay more for her kids shoes just because she orders them on a Mac?
Interesting stuff. But Clark Howard gives us some ways around the broken, greedy system. Read more. This article is also available at clarkhoward.com.
Should you pay more when you’re shopping online simply because of the browser you’re using? Some popular online retailers think so!
The New York Times reports shoppers are getting widely different prices based on whether they use Chrome, Firefox, Internet Explorer, or Safari. Here are just two examples:
For the same Samsung TV on NewEgg.com, a Chrome user was offered a price of $997. Meanwhile, the price was $1,399 when using Firefox or Internet Explorer.
Another Samsung television model at Walmart.com was offered for $199 on Firefox and $168 on Chrome and Internet Explorer.
Meanwhile, Mac users could be paying a higher rate for hotel rooms on Orbitz.
According to The Wall Street Journal, Orbitz has been experimenting with a 30% premium on Mac users when they search for select hotel rooms versus PC users. That effectively works out to be around $20 to $30 more than a PC user.
When asked for explanation, Orbitz basically stated that Mac users make more money and are interested in fancier hotels. (There were no happy campers in the Apple world based on those comments!)
The best way for you to stay one step ahead of online retailers who are manipulating price is to use technology to fight back.
Another alternative would be to install a browser plug-in like Invisible Hand that automatically pops up an alert while you’re shopping if a better price is available on another website.
Finally, Amazon customers can typically get a better deal if they put something in their cart and then abandon it before the final purchase. That usually signals to Amazon that you’re willling to walk away and triggers a lower price the next time you put it in your cart to checkout. Give it a try!
January 31, 2013 § Leave a Comment
It is easy to look out the window across to neighbors houses and wonder how they have so much more money than we do. Do they come from a wealthy background? Are they trust fund babies? Is that how the afford the designer purses, the cool cars and all those trips and entertainment expenses?
My first comment is “the grass is always greener,” and “you don’t really know a person till you walk a mile in their shoes.” Designer or no, you have no idea what is happening in the neighbors world, below the surface. Maybe they’ve taken out a second mortgage to keep their lifestyle going. Maybe they have 2nd and 3rd jobs you don’t know about. Maybe they pay on a psycho-emotional level every time their family gives them money. You don’t know. And assuming won’t do any good for you.
In this life there is only you. You can fantasize about another life, idealize a neighbor’s life, but in truth, the only life you can live is your own. Meaning: who cares what crazy time the neighbors are doing? What are you building in your own life? What are your priorities and how are you supporting them, whether those priorities be a new Prada purse or a paid off mortgage? How are you supporting your dreams?
Here’s a great article from Moneyning.com. It’s a great look behind the “Joneses curtains,” and an important look for anyone who still worries how their financial picture looks to the outside world. Enjoy.
January 30, 2013 § 1 Comment
How much are you paying for tv service? Satellite TV, like Dish and DirectTV, can cost as much as $100 per month. Cable can run you even more. And though bundling telephone and television service may be cheaper, you may not have those service options in your area. So how do you enjoy some good old fashioned TV downtime without having to work an extra job to afford it?
Streaming television services like Netflix and Hulu Plus may provide the savings and entertainment you are looking for. Netflix will run you $17 per month for two television streaming and a single disk via mail, as often as you like. That’s right, movie rental and your favorite television programs for pennies on the dollar of regular satellite or cable service. The only issue with Netflix is that streaming shows are at least a season behind. Of course, a season behind to watch Weeds and your other favorite Premium Channel shows is still a bargain.
Hulu Plus offers more recent television offerings, though you must wait till watch till the next day. So if your favorite show comes on Thursday, you get to watch on Friday. This service is also only $17 per month.
Though streaming tv means you may have to go out to watch the big game or other live event, it also means watching your favorite shows for about $800 less per year. Now that’s savings that can mean a new HD television or a vacation in the real world. Cause let’s face it, with $800 more per year in your pocket, there is sure to be more real life you can afford to enjoy.