Archive for January, 2010
Wondering about a deed in lieu of foreclosure?
Real property foreclosures are still front page news. The pace of foreclosures may be slowing a bit, but there’s no doubt that we’re going to continue to see a historically disproportionate number of property owners who are unable to meet the requirements of their mortgages in 2010. There are those who barely managed to survive ARM resets in 2008 and 2009 who are approaching the end of their ropes. Then, there are those who are struggling with prolonged periods of unemployment thanks to our record unemployment levels.
No one wants a foreclosure. Even if you divorce the matter from issues of personal pride and the strong desire to experience the home-owning element of the American dream, foreclosures are a rotten prospect. They’re stressful and they can gut your credit like a professional fishing guide attacking a walleye with an electric knife.
That’s why so many people are interested in finding alternatives to foreclosure when it becomes clear that they’re not going to find a way to meet the requirements of their loan and discover that they’re not able to refinance or engage in some kind of productive mortgage renegotiation. The deed in lieu of foreclosure is one option.
What is a deed in lieu, anyway?
In a traditional foreclosure, the lender (usually the bank) eventually reaches their wits’ end with the homeowner who is unable to make his or her payments. The bank opts to legally assert ownership of the property in hopes that they may sell it it as a way of recouping some or all of the moneys advanced on the loan. Foreclosure is a carefully governed legal process. It’s time consuming and it can cost lenders a great deal of money. One estimate maintains that it can cost a lender between $40,000 and $90,000 to foreclose on a property.
This creates an incentive to find a more efficient solution to the problem. That’s what the deed in lieu of foreclosure represents. HUD defines a deed in lieu (DIL) like this:
A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.
In simple terms, it basically means that the defaulting home owner voluntarily relinquishes ownership of the property to the bank instead of forcing the prolonged legal process of foreclosure.
Why would a homeowner consider a DIL?
It’s easy to see why a lender might be receptive to the deed in lieu. They don’t need to follow through on the foreclosure process and they save time and resources in the process. Why would the defaulting homeowner be interested, though?
There are a few reasons.
One is efficiency. There’s a benefit to biting the bullet and getting things resolved quickly instead of letting them linter.
Finally, a deed in lieu offers some additional flexibility. One may be able to negotiate renting the property on an interim basis, securing the time necessary to find alternate housing and to move and other benefits to which one won’t usually have access during a foreclosure.
More than sending your keys to the bank…
A DIL is simpler than a foreclosure, but you can’t just mail your house keys to the bank with a note that says, “Take it, it’s all yours, Mr. Moneybags!”
A deed in lieu is a legal process and the right paperwork must be completed. Additionally, not everyone who may be otherwise facing foreclosure will automatically qualify for the option. Some lenders don’t like the idea, because it leaves them vulnerable to junior leans in ways that a foreclosure does not. Additionally, the lender may have special requirements for a deed in lieu:
Typically your Mortgage Company will require that your home has been listed with a Real Estate Agent for at least 30 days and there are no other liens on the property for them to approve you. Some Companies may also require that the property be vacant, an interior appraisal of the property and a minimum of 60 days prior to a Foreclosure sale.
A deed in lieu isn’t a solution for foreclosure, it’s an alternative. It has advantages to both parties, but it isn’t always easy to arrange.
Travel rewards credit cards are another popular option. Right up there with the rewards credit cards and the cash back credit cards, travel rewards cards has to be a hugely popular category. In the top three I’m pretty sure. I’m going to give you some valuable insight into these cards with the rest of this article. I hope you enjoy it. I’ve used travel credit cards for many years. I love them and if I was only allowed to choose 2 credit cards that I could have, then a travel rewards card would certainly be one of them.
You’ve seen as the economy is taking a dive lately that the price of airline tickets is coming down too. This is great news if you can afford to travel. And if you have been using a travel rewards credit card for some time then you are well aware of the benefits that these cards offer. The great thing about travel cards is that it doesn’t matter if a ticket goes through the roof, most of them are based on actual air miles and so as long as you have enough air miles you’re good to go.
However this is not always the case, and you need to read the fine print. Just because a credit card talks about air miles or travel miles, does not necessarily mean that 1000 miles equates to actual air travel miles. It might equate to a cash value of around $100 or it might be an actual travel mile but a fraction of what you actually have.
You could end up sitting next to the dupe who paid thousands of his or her hard earned money to get to the same place that you’re getting to for free.
Travel rewards credit cards have come a long way, and this is great for us as consumers. A lot of the airlines have joined forces and alliances so that you are no longer stuck with just one airline. This is hugely beneficial.
The best known of the travel rewards cards is the air miles. And all of the major credit card companies carry a version of this card. But there are others to choose from. And as I keep telling you, you need to research and figure out your own needs before you sign up for any credit card but especially a travel rewards card.
Travel rewards credit cards are obviously a fine choice for the frequent traveler, and many travel rewards cards give bonuses on other aspects of travel not just the flight. You’ll find with some of the best credit cards out there that you’ll get great discounts on hotel rooms. And many of these travel rewards credit cards actually excel at offering decent hotel rates and car rental rates too.
In fact it is important to determine if the travel rewards credit card that you are getting is an airline based card or is it more of a hotel based credit card. Most folks automatically assume that a travel rewards card is airline based, but just as often they can be affiliated with a hotel or car rental company too.
The benefit of an airline travel card is that you will get access more often to several airlines. This is where these cards differ from airline rewards credit cards. But if you are more interested in getting great rates on car rentals or hotel stays be sure to choose a travel rewards credit card that is geared more to that industry. This is where you need to spend your time beforehand determining what your specific needs are.
Travel rewards credit cards are geared towards the jet set traveler. You know who you are. But even for those of us who don’t travel as much as we’d like, a travel rewards card can be a great addition to our arsenal. The benefits can be well worth it.
But it is important to understand that travel rewards credit cards come in basically two flavors. Those that are more focused on giving you great deals for airplane tickets and those that are focused more on the other aspects of travel such as hotels and car rentals. So be sure you know which ones you are most in need of and choose the right set up for you. Either kind can be a great addition to your travel plans, but be sure to research ahead of time so you know what it is you’re getting into.
Travel rewards credit cards continued…
Prepaid credit cards have their uses just like any of the categories of the credit cards that are out there. I’ve used these credit cards myself and I’ve given them as gifts. I liken them to gift cards and I’ll explain why a little later on. Most of the major credit card companies offer prepaid cards and you might be wondering why if there isn’t any interest to be charged to you. What’s in it for them? Plenty as you will see soon enough.
You might be wondering why someone would choose to get a prepaid credit card and the answer could be for any number of reasons. Most often a prepaid credit card is used if accessing an unsecured credit card is too difficult. In today’s society not everyone is able to gain access to a regular credit card. And yet it is becoming increasingly more difficult to go about daily living without a credit card of some sort.
Ever tried to access a rental car or book a hotel room? And these are common events for even the most cloistered of us in today’s world. Bottom line is that you need to have some sort of credit card to find your way around modern society. But if your credit is in the gutter then it can be hard to get a regular credit card.
In addition, prepaid credit cards are a great way to have a single source of funds at your disposal. Some folks don’t want or can’t afford a regular checking account. And with a prepaid credit card you can have your paycheck direct deposited onto the prepaid credit card. And most of these prepaid cards also allow for bill payments, so you really don’t need a banking account if this is your choice. I knew a guy like this who just had a prepaid credit card and used it for everything. The great thing that he liked about it was that he would never get dinged interest and late payment charges.
And this friend of mine was a man of small means. So each month he’d top up his card and then empty it out as the month went by. The fee for the prepaid credit card was less he figured than having a checking account. His landlord charged his rent to the card. In addition there are hardly any places around that don’t take credit cards nowadays, and he’d been using it for months and never had a problem with not being able to buy what he wanted.
But like with all cards you should search around for the right one for you. Prepaid credit cards are just like the others and they come in all shapes and sizes. One of the big benefits of a prepaid card over a secured credit card is that you don’t have to come up with the minimum amount of $500 that secured credit cards require from you. This can be a plus if you want one now but only have a hundred bucks or so.
Some of them are free and some have fees associated to them and others will wave the fee if you have your paycheck direct deposited onto the prepaid card.
I personally like to give them as gifts to my nieces and nephews at Christmas time. They love it because it makes them feel all grown up when mom or dad takes them out shopping and they get asked how would they like to pay and they say credit. Additionally I really think they are learning some valuable lessons about the use of credit even if a prepaid credit card is used more like a debit card. It helps teach them financial responsibility which I don’t think can ever be flogged too much.
Prepaid credit cards are a great option if you want the comfort and security of a credit card without the problems of late fees and interest rates. I’ve used these credit cards often for a variety of purchases and I find that they work just like regular credit cards. I also like to give them as gifts to loved ones for birthdays and Christmas. And I love receiving them in return. Nothing is worse than having to return a gift because Aunt Mildred got me a pink sweater that’s as tight as Uncle George’s socks.
Prepaid credit cards can work just like gift cards and I love that. And if you don’t have good enough credit for a regular credit card or you don’t trust yourself with paying the balance off each month, then you should consider a prepaid card.
Prepaid credit cards continued…
The banks know that even in these times of economic uncertainty, job losses, and rampant financial difficulties, there is still a great need for credit tools to be available to people who might have a less than stellar credit history or for those who are just establishing their credit.
Secured credit cards are the banks answer to this growing market need. Having access to credit cards, means that people can book travel arrangements, rent cars, and hotel rooms, etc. without a credit card, many of these regular activities are either difficult or impossible to do. The card doesn’t just provide purchasing power, but it also provides freedom of choice and movement to people in these situations.
Secured credit cards may or may not come with an annual fee attached, and the interest rates charged on outstanding balances can vary somewhat, so it pays to do your homework. The range of interest rates that are typically available on secured credit cards are from 9.99% all the way up to 19.5%. If an annual fee is charged, it is generally between $50-$60. That fee would be on top of other requirements such as the deposit.
When comparing the interest rates on various cards, pay special attention to the fine print. Many people have got caught with an interest rate they thought was their permanent rate, only to find out later on it was only for the first few months, and then the rate went up substantially after that. It is also worth noting that a number of these credit cards do not require a minimum income or previous credit history from the applicant. In some cases, the lending institution may not even check your employment history or credit score.
With secured credit cards, there may be certain limitations attached such as a lifetime credit limit, no protection in the event of fraud, and deposits are sometimes required. In those instances, the lending institution may only allow credit to be granted to the extent of a deposit made. Generally speaking, credit limit increases will also only be allowed up to a certain point. However, credit limits can range quite widely, for example some have $5000 limits, some have $10,000 limits, all the way up to $25,000.
The great news about secured credit cards is that some of them are offering additional services such as travel accident insurance, FDIC insurance, the ability to make an emergency transfer of cash, and auto rental options. Certain cards that require you to make a deposit before you can be granted credit, may pay you interest on that deposit.
Unlike in the past when secured credit cards came with no additional features, there are even cards that offer rewards programs for airlines and hotels, and rebates on the booking of travel condos. There is even a new feature being offered by Visa that is what they call a “credit-on- demand” program, which may provide up to $25,000 of available credit. Secured credit cards now more than ever, are offering competitive features, which makes doing your own research on them very important.
Certain types of secured cards will guarantee your application will be approved, again regardless of your employment, income, or past credit history. These types of cards are usually accepted anywhere unsecured credit cards are, making them a valuable financial tool for people who may have limited options otherwise.
Now that you know all of the great options and benefits that secured credit cards can offer, you don’t have to allow your poor credit history or lack of a financial track record to be a barrier to your purchasing, travel, or other credit needs. You can enjoy the freedom a credit card can provide and be confident in knowing that your past financial options are now much wider. Browse the various options to choose the card that is right for you.
Secured credit cards are a valuable tool for people who are just beginning their credit history or those who may have a poor credit track record. But for people in these situations, it can be challenging to find a regular credit card debt that is unsecured.
Believe it or not, there are great options to choose from, so people who are just trying to establish credit or get back on their feet following a difficult credit history, can also find competitive credit card choices to meet their needs. It is no longer the case that the only options available are those with an exorbitant interest rates and tiny credit limits.
Secured credit cards continued…
Low interest rate credit cards are an excellent tool for people who either want to reduce the interest they’re currently paying on outstanding balances, as well as those who don’t require all of the additional features that the higher interest rate cards offer. Switching to one of these cards can save you a bundle of money in the long run. There are a number of choices in this category, so it pays to do your homework to find the combination of interest rate, credit history requirements, additional features, and balance transfer options that suits your needs.
As with any agreement that you enter into, you need to read the fine print on the card offers. For example they may advertise a certain rate of interest, but that may only be an introductory rate. After a certain point in time, that interest rate may be much higher. Typically if you see an annual interest rate of 1.99-5.99% that will only be for a certain amount of time after which you will likely end up paying a much higher rate such as 19.8%.
Many people get caught thinking that the introductory rate, which is almost always highlighted in bold print, is the actual rate on the card. Unfortunately a lot of the time, the credit card companies will only show the actual interest rate for the card in tiny print three quarters of the way down the page of terms and conditions.
Generally speaking low interest rate credit cards offer rates from between 7.25% to 9.99%, so if you see something much lower than this it will almost always be an introductory rate only.
Finding a low interest rate credit card doesn’t always mean you can’t have some common features of other cards such as cash back on your purchases, travel accident coverage, travel rewards, and fraud protection. The growing market for these types of cards has meant the banks have had to offer competitive products, which is great news for you.
In many cases, credit limits that are granted will be very similar to those offered with the higher interest credit cards. There are certain cards that to entice people to switch over will offer attractive balance transfer options, such as low introductory rates to be applied to the incoming balance, and/or no transfer fees. This means that you can even start saving money right away.
Many of these credit cards don’t require an annual fee. Those that do may offer other options such as lower variable rates going forward, no fees to make a balance transfer, or no minimum requirements for income or credit history. Most of the low interest rate cards will still require you to go through an approval process, so they are not always suitable for people with a poor credit history. Those cards that do not require a minimum income or previous credit history will likely mandate a minimum deposit instead. In those cases the credit you will be granted will be equal to the deposit that you make and you will not qualify for fraud protection coverage. The more attractive annual rates, such as 7.25%, will generally only be available to people with a solid credit history.
These credit cards are an appealing choice for consumers who already carry debt as well as those who are just beginning their credit history. The combination of a low interest rate and in most cases no annual fees, make these types of cards highly sought after option in our current economic climate.
Cards that come with more extensive rewards programs have a cost to them, and these days that is simply a luxury that most people cannot afford. Why have incentives to spend more money with your credit card when you need to tighten your belt? In that regard, having this type of card is a prudent financial decision for people who want to save money by keeping their spending under control and their interest payments as low as possible.
Many people who have had high interest credit cards in the past want to find a way to reduce the interest they’re paying on outstanding balances, and save money each month. Low interest rate credit cards are hugely popular item, especially within the current recession.
They can literally save you hundreds, if not thousands of dollars over the course of time that you’re carrying a balance. In these challenging economic times, finding ways to save money each month can make a big difference in being able to meet financial obligations. Saving money is just smart, and low interest rate credit cards are an excellent way to do just that.
Low interest rate credit cards continued…
Charge cards are similar to credit cards but they have some fundamental differences. And this article will talk about those differences and what some of the benefits and negatives are about these cards and how it compares to a credit card.
Charge cards have been around since almost the turn of this century, from when the automobile was struggling to make inroads against the horse and buggy. When top hats were still all the rage. You get the idea. They were the first ones in on this race to offering consumers some sort of credit. But it seems that at least since the seventies they have lost out to the credit cards and I think there is a good reason for this which I’ll talk about below.
Let’s talk a little bit about the history of charge cards so that the rest of the discussion will make sense. It was in 1914 that Western Union offered what most of us would consider as this kind of a card, but this one of course was printed on paper. But it was nonetheless the first charge card to be offered to consumers.
So in 1914 charge cards made inroads into allowing consumers to buy on credit. But it wasn’t until 1957 and Frank McNamara’s Diners Club that the official charge card industry took off. Many of you are probably familiar with Diners Club though they don’t have as big a share as they used to back then. Primarily because less and less businesses are accepting them.
But probably the best know charge card is issued by American Express who in 1959 issued the first plastic embossed card of this kind. And to this day they are the biggest issuer of charge cards in the world.
So, what exactly is a charge card and how does it differ from the normal credit card that most people have? That is a great question, I am going to tell you gentle reader exactly what this card is.
It is a card that allows you to buy products on credit. In this way it is similar to a credit card. But unlike a credit card, a charge card requires that the full amount be paid at the end of each short term loan period. Usually this loan period is for one month but it can be longer. In addition to requiring that the loan be paid off at the end of the loan period, these cards also very often don’t have a limit depending on your credit score and other factors. Want that yacht? Buy it now, but be sure you have half a million dollars at the end of the month.
So what are they going to do if I don’t pay it off in full you might be thinking? You are a wise one young grasshopper. But the charge card companies are wiser. You will be dinged with a huge penalty that can be as much as 5% of the balance. In addition they will ding your credit score and likely cancel your account. Ouch, is right.
Charge cards are very useful and an inexpensive way to buy on credit. But you’ve got to make sure you have the money to pay the balance in full each month. These are certainly not for the footloose and fancy free. But they are worthy of your consideration if you have a will of iron and are very financially astute. They aren’t as popular as credit cards, because sadly in today’s age not many of us have the fortitude to be able to use these cards appropriately and wisely. However, if you are one of the few who are not afraid of handling vipers bare handed, then I would strongly recommend you take a look at them.
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