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Mortgage debt moving in right direction

Henry Blodget highlighted this interesting chart from Bloomberg, which notes that American homeowners are nearly back in the black when it comes to aggregate mortgage debt. Read the article and you’ll see it’s still a complex picture, but rising home prices and the slow process of de-leveraging mortgage debt are definitely heading in the right direction. For many families, this will have a significant positive effect on their personal balance sheets.

Should you borrow money to pay for your wedding?

ID-100177638 wedding couple
Free image courtesy of FreeDigitalPhotos.net

The answer to this question is simple . . . No!

This was recently addressed recently in a newspaper advice column, and Teresa Dixon Murray gave a very logical answer. Starting off your marriage with debt is a terrible idea. Consider eloping, or instead a very frugal wedding.

Now, nobody is saying this will be easy. Grooms will have to deal with their bride’s fantasies about what their wedding should entail. But that also offers a perfect opportunity to discuss a budget. Many young couples don’t deal with this before marriage and that leads to a host of problems. Having these discussions now is critical and both of you will learn things about one another and how you might be able to manage money together.

Once you have a budget, you can do all sorts of research to find deals or creative ways to handle different aspects of the wedding.

These are big decisions, but taking the easy way out by getting a loan is the wrong way to handle it.

Places to retire abroad

This video covers 5 options for Americans who want to retire abroad, focusing on Costa Rica, Italy, Spain, France and Ireland.

Numbers of underwater mortgages plummets

The number of underwater mortgages is plummeting as the housing market continues to recover. This will have huge ramifications for the finances of millions of people and families.

Maggie Medved was stuck with her Phoenix house for two years after the market crash wiped out the equity in the property. Last year, as prices in the area rose by the most in the U.S., she and her partner were finally able to sell the 3-bedroom 1950’s style home and move to a larger place.

“We were counting the days for when we could move,” said Medved, 40, who trains employees for weight loss company Jenny Craig Inc. “We definitely knew it was a waiting game because it would’ve been financial suicide if we had sold earlier.”

Medved was among the 12 million borrowers in the U.S. who at the peak of the real-estate downturn owed more on their mortgages than their houses were worth, blocking them from moving or saving money by taking advantage of the lowest borrowing costs on record to refinance. As prices recovered, the number of underwater borrowers fell by almost 4 million last year to 7 million, according to JPMorgan Chase & Co. (JPM), and could drop to 4 million within 2 years.

The housing market is rebounding faster than anyone thought possible, according to Blackstone Group LP (BX)’s global head of real estate Jonathan Gray, as the Federal Reserve buys mortgage bonds to keep rates near record lows and investors sop up a diminishing supply of properties for sale. Housing construction could boost U.S. gross domestic product by 0.4 percentage point and home price appreciation may add another 0.2 percentage point, Bank of America Corp. (BAC)’s senior economist Michelle Meyer forecasts.

The housing recovery is one of the main reasons why we can now start getting optimistic on the US economy. So many people were stuck in impossible situations, and now that burden is being lifted. The Fed has been a huge driver of this improvement, along with the billions in private investment looking for deals on under-priced homes.

Buy? Hold? Sell? What’s the Answer?

The economic recession and resulting volatile stock market has almost become cliché. Advertisers overuse the situation and analysts overthink the problems until we almost stop listening – but still, we want answers. Being able to discern between the nonsense and the facts is an ability that can be quite beneficial. It’s necessary to understand the ways that a shaky economic system can affect your investments and the actions you can do to counteract the effects. What can we do to protect our financial security and future in a market such as this?

Don’t Panic

People who lose huge sums of money in a volatile market are the ones who sell as soon as stock prices start to fall. This is the exact opposite of everything we know to do, yet we still see it time and again. Yes, it’s scary when the stocks you bought at $52 per share suddenly plummet to under $20, but most of the time these stocks rebound eventually. Instead of dialing your stock broker and issuing the order to retreat, hold on to your stocks. Better yet, buy more. It’s easy to say and hard to do, but the wisest advice when it comes to investing is buy low and sell high. If you think about it, it’s the only way to actually make money in the stock market at all.

Think Long Term

Too many investors look at gains monthly or yearly. The real value of our investments isn’t short-term; it’s the value they accumulate over decades of solid investing. We know the concept of diversifying investments, but we don’t recognize the importance of diversifying our investment plans. Invest some money for short return, say five years from now. Make other investments for a return in 10 years, 15 years and 20 years. This strategy hedges investments in the same way as diversifying our portfolios with a mix of high risk and low risk stocks.

Turn Off the News

Up, down, up, down…. we know how it goes. Once you’ve made sound investment decisions, ignore the buzz of the day and concentrate on the future of your investments. Historically, the market sees solid gains after a recession subsides. Even this world leading financial adviser Kenneth Fisher can’t say exactly when things will level out, but almost all economists believe the market will eventually recover. Instead of fretting over market swings due to daily news events and political situations, keep your eye on the end goal.

Is it easy to turn a blind eye when it seems like the global marketplace is in turmoil? No, it isn’t. But investors who keep their cool and continue to make sound investments not only see returns financially in the long run – their investments are helping drive the market forward into a better, more sound future for us all.

New mortgage rules released


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We’re starting to see new regulations from the Consumer Financial Protection Bureau trying to regulate the mortgage market and prevent some of the outrageous abuses we saw leading up to the 2008 financial meltdown.

The government is establishing new rules for mortgages that will make it harder for some borrowers to qualify but that are designed to prevent the kind of risky lending that nearly caused the housing market to collapse during the financial crisis.

The Consumer Financial Protection Bureau on Thursday will roll out the first of several far-reaching changes to the nation’s mortgage market, limiting upfront fees and curtailing practices such as interest-only payments that can leave homeowners stuck with unsustainable loans. The agency also will set standards for how much income a consumer must have to obtain a mortgage.

This marks the first time the government has spelled out what constitutes a “qualified mortgage,” an effort to prevent the widespread toxic loans that hurt millions of Americans during the housing crisis.

Banks that offer qualified mortgages will be protected from lawsuits if they adhere to the criteria. The consumer agency hopes that will drive the entire industry to live by the tighter standards that have taken hold since the crisis, ensuring safer loans but potentially limiting the number of people who can qualify to buy a home.

This will make it harder for some people to qualify for mortgages, but that’s reality. There will be a phase-in period. I’m also curious to see how people in markets like New York react where prices are so high. But in the grand scheme of things these reforms were needed.

Should you consider a biweekly mortgage?

This video does a pretty good job of explaining exactly how a biweekly mortgage works and the benefits. The benefits really go to making extra payments each year which can cut years off of your mortgage. It also aligns well with your biweekly paychecks, so it’s extremely convenient.

Just be careful in case you bank ties fees to this payment structure.

Refinancing made simple

Getting your finances in order can be stressful, but it doesn’t have to be. There are simple steps you can take to prevent or cure a financial letdown. One of the options you can take to get back on track, and stay there, is by refinancing your auto loan. Here’s how the process works.

Much like when you refinance a home mortgage, refinancing your auto loan pays off your existing vehicle loan. But it’s much faster and simpler to refinance the loan on your car or truck. During the process, your new lender pays off your old loan and the title to your vehicle is transferred to your new lender.

Refinancing your auto loan can lower your interest rate, decrease your monthly payment by changing your terms, or both. Most often, people refinance when interest rates are low to reduce the amount of interest they’re responsible to pay. You can also lower your monthly payments by extending the duration of your auto loan to break your payments up over a longer time frame.

You could potentially enjoy significant savings by refinancing your vehicle loan. Exactly how much you’ll save depends on the remaining balance of your current loan, the difference between your old and the new interest rates, and the terms of your new loan.

No matter what motivates you to do it, refinancing your vehicle loan is an option that’s well worth your time and effort. A little extra research now could blossom into huge savings over the remaining months or years of your auto loan.

Check Your Books Before Heading to the Casino

Nobody who plans on an evening at the casino expects to lose money. The vision that runs through everyone’s head is of loud noises and colorful lights heralding them as the next big winner. Just to be safe, you should check your financial books before heading out to the casino.


(image courtesy of geek7 at Flickr)

Whether you are going to a physical casino or you are getting ready to enjoy the convenience of an online, no-deposit casino, you should still keep close track of your finances. A fun night at the casino can be ruined if you realize that you just gambled your mortgage payment away.

Create A Monthly Budget

Developing a monthly budget is good financial advice. But if you intend to make frequent visits to the casino, then balancing a home monthly budget will allow you to see how much you have to gamble with each time. This is how you prevent yourself from gambling away the mortgage payment or losing the grocery money for the week.

Plan On Losing

It is entirely possible that you will win some money at the casino. But if you really want to keep your casino visit checkbook friendly, then you should only take as much money as you can afford to lose. Check your monthly budget and set aside monthly gambling money that you can afford to do without.

Leave The Plastic At Home

When people head out to the casinos, they will sometimes take their ATM or credit cards with them. This defeats the entire purpose of setting a budget and staying with it. Limit your spending by taking cash from your bank account and using that for your gambling. Once your cash is gone, you are done. Leave the plastic at home.

Walk Away A Winner

If you can walk away from the casino a winner, then consider yourself lucky. When you start winning on the slots or at the tables, try to limit how much of your winnings that you put back into the casino. If you can come home with half of your winnings, then you can use that for your next casino trip. It will also help you to keep your personal budget balanced.

Adjusting your finances prior to heading out the casino can seem like it takes the fun out of gambling. But gambling can be a lot more fun when you plan it right and avoid losing money you cannot afford to lose.

Payday lenders support Mitt Romney

Since Barack Obama passed financial reform that included the Consumer Financial Protection Bureau, it’s no surprise that payday lenders are coming out for Mitt Romney who opposes more regulations to protect consumers in this area.

Major payday lending companies and their owners contributed more than $250,000 last month to a super PAC supporting Mitt Romney for president, federal reports show.

The contributions to Restore Our Future come from some of the largest players in the industry, which is coming under increasing scrutiny from federal regulators. The Consumer Financial Protection Bureau, created by Congress in 2010, recently released its examination manual.

“They’ve never been subject to federal supervision before,” said Jean Ann Fox of the Consumer Federation of America, an industry critic. “The industry has always written big checks for state-level fights, but now the federal government is suddenly much more important.”

Romney has not addressed payday lending issues on the campaign trail, but he has been critical of regulations in general. “Under President Obama, they are multiplying like proverbial rabbits,” he said Monday.

There is a big philosophical difference between Mitt Romney and Barack Obama on financial regulation, so this is just corporations putting money out there to protect their self interest. The question then becomes what is in the public’s interest?

Payday lending is a huge ripoff for consumers. If this is something your do – be smart and stop it. Get a bank account and start using direct deposit of your checks. Create a budget so you aren’t living paycheck to paycheck.

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