In some cases, mortgage loan modification only postpones the inevitable. Rather than helping you afford your mortgage payments, a modification can put your monthly loan payments out of reach and leading you to foreclosure anyway.
What Is Loan Modification?
Once you’ve become 2-4 months behind on your mortgage, you likely qualify for mortgage loan modification with your lender. If you’re approved for loan modification, your lender freezes your interest rate for a period of time to keep it from continuing to adjust upward. Then, your delinquent payments are added into your loan balance and your payments are recalculated. The loan is reset and you’re no longer behind. You continue to pay your loan off at the new terms.
How Can Loan Modification Hurt?
In some cases, interest rates don’t decrease with a modified loan, meaning your monthly payments would remain the same. However, once your delinquent amount is added back into the loan and your payments are recalculated, you end up with a higher monthly payment. You ward off foreclosure in the near future, but unless you increase your income, your mortgage payments remain unaffordable.
Choosing a Good Modification
Don’t make a loan modification decision based on desperation. Before you agree to a loan modification, make sure you understand how it will impact your monthly payments. If your payments are going to go up, ask your lender about other options.
Negotiate a lower interest rate as part of your modification terms. Unless your interest rate goes down, your monthly mortgage payments will remain the same or even increase. Sure, you avoid foreclosure for a little while, but without lower payments, the risk remains. You can also ask your lender to waive some of the late fees charged on your missed payments.
Get foreclosure-prevention counseling from a local consumer credit counseling. Advocates can sometimes help you negotiate better terms with your mortgage lender.
Showing posts with label mortgage payments. Show all posts
Showing posts with label mortgage payments. Show all posts
Monday, December 29, 2008
Friday, December 19, 2008
Few Days Left To Lower Your 2008 Tax Bill
As the year comes to a close, you may be looking for ways to reduce your taxable income to keep from handing more of your hard-earned dollars to the IRS next April.
Start by reviewing your year-to-date income for 2008, along with your expenses, and deductions. You can use an online tax preparation service like TurboTax.com to enter your information and gauge your potential tax liability. If it seems like you’re going to owe some taxes next year, you have a few more days left to do something about it.
To learn more about understanding your income taxes, please click here.
Defer your income. For most people, the year you receive income is the year you count it in your taxes. If additional income will put you in a higher tax bracket or make you owe taxes, you may want to defer that extra income until January 1.
Pay some medical bills. You can deduct all medical expenses that exceed 7.5% of your adjusted gross income. Add up the medical bills you’ve paid for the year and if they’re above or near the threshold, find some extra medical bills to pay. Prescriptions, eye glasses, and hospital services are included.
Pay January’s health insurance premium. Self-employed taxpayers can deduct 100% of the health insurance premiums paid during 2008. You can pay your health insurance premium for January and take that deduction for next year’s taxes.
Contribute to your 401(k). In 2008, you can contribute up to $15,500 to your 401(k). Contributions to your 401(k) are taken from your pre-tax dollars, so you can reduce your taxable income by maxing out your 401(k) contribution. If you’re younger than 49, you can also contribute $5,000 to an IRA ($6,000 for those 50 and older).
Make an extra mortgage payment. Mortgage interest paid is tax-deductible, so not only will an extra payment put you one step closer to having the mortgage paid off, it will also help out on your taxes. Watch out for prepayment penalties.
For more ways to reduce your tax bill, consult with a professional tax preparer, an accountant, or a tax attorney.
Start by reviewing your year-to-date income for 2008, along with your expenses, and deductions. You can use an online tax preparation service like TurboTax.com to enter your information and gauge your potential tax liability. If it seems like you’re going to owe some taxes next year, you have a few more days left to do something about it.
To learn more about understanding your income taxes, please click here.
Defer your income. For most people, the year you receive income is the year you count it in your taxes. If additional income will put you in a higher tax bracket or make you owe taxes, you may want to defer that extra income until January 1.
Pay some medical bills. You can deduct all medical expenses that exceed 7.5% of your adjusted gross income. Add up the medical bills you’ve paid for the year and if they’re above or near the threshold, find some extra medical bills to pay. Prescriptions, eye glasses, and hospital services are included.
Pay January’s health insurance premium. Self-employed taxpayers can deduct 100% of the health insurance premiums paid during 2008. You can pay your health insurance premium for January and take that deduction for next year’s taxes.
Contribute to your 401(k). In 2008, you can contribute up to $15,500 to your 401(k). Contributions to your 401(k) are taken from your pre-tax dollars, so you can reduce your taxable income by maxing out your 401(k) contribution. If you’re younger than 49, you can also contribute $5,000 to an IRA ($6,000 for those 50 and older).
Make an extra mortgage payment. Mortgage interest paid is tax-deductible, so not only will an extra payment put you one step closer to having the mortgage paid off, it will also help out on your taxes. Watch out for prepayment penalties.
For more ways to reduce your tax bill, consult with a professional tax preparer, an accountant, or a tax attorney.
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