Debt-To-Income Ratio (DTI) and your mortgage situation: Why you need to understand that your DTI is as important if not more than your credit card score.
Monday, June 22nd, 2009
Your debt-to-income ratio is the amount of debt you have in the form of mortgages, car loans, student loans and credit card debt. It is essential to understand this if you have mortgage problems or are in danger of foreclosure.
To figure out your overall debt-to-income ratio add up all of your monthly debt obligations including your mortgage (principal, interest, taxes, and insurance) and home equity loan payments, car loans, student loans, your minimum monthly payments on any credit card debt, and any other loans that you might have. Do not include expenses such as groceries, utilities and gas. Take this total and divide it by your gross monthly income from all sources. For example, if your total family income is $83,000 per year or $6,916 per month. Your total mortgage payment is $1,350, your car loans total $365, your minimum credit card payments are $250 and your student loans add up to $300. That equals a recurring debt of $2,265 a month. Divide the $2,265 by $6,916 and you'll find your DTI is 32.75 percent.
As for your Credit Card Score, this only shows your payment history and not your income. You can have a very high credit score but still have a very low income. On the other hand, you can have very high income and a very low credit score.
That is why a good debt-to-income ratio can strengthen your negotiations even if your Credit Card Score is weak. Since the DTI shows how strong you are financially it is important to keep that ratio low."
Don't Fall Victim to Distractions From Reality. Take Stock of Your Own Personal Economic Situation
Tuesday, June 16th, 2009
Don't be fooled by distractions. Too many government plans are placebos. While companies higher up the food chain await bailouts, and individuals and families try to understand the terms "economic stimulus", many of you are still in danger of losing your homes. The waves of distracting panaceas and cure alls are still just that-distractions from reality.
First, you must take stock of your own assets and income. If you and or members of your family are still earning income on a regular and predictable basis, it is definitely possible that you can forestall the potential loss of your home.
Check out your own personal options.
As we have written before, chapter 13 is a special situation bankruptcy that may help you.
Is Your Mortgage Loan in Foreclosure or Threatening to be?
Thursday, June 11th, 2009
If so, you need to look to mediation services, loan counseling and other resources. Do not wait if you are behind in your mortgage payments or already in foreclosure. Do not wait if you in the foreseeable future may be in a situation that will keep you from making your payments on a regular basis.
While the mortgage industry claims it's working to prevent foreclosures, in June of 2008, NBC's Lisa Myers reported that the numbers show that many people whose mortgage loans have entered foreclosure are not getting long-term relief to help them save your homes. NBC also had several web-only reports that offer a detailed look at mediation services, loan counseling, what Iowa learned from the farm foreclosures of the 1980s and what public servants who are working in the trenches make of the current crisis.
Are you in that situation? Are you behind on your mortgage payments, or already in foreclosure? Or have you just experienced a life change which will affect your ability to pay? Consumer advocates, loan counselors and government housing officials support these recommendations about what to do:
1) Ask for help. Don't wait.
2) Contact your loan servicer. Check the servicer's website to see what help is available for borrowers needing assistance.
3) Contact a mortgage help hotline, your state's department of housing and/or a HUD-approved mortgage loan counseling service.
4) Get a HUD-approved counseling service to take your case and work with your servicer to try and get it resolved without foreclosure.
Avoid foreclosure services that charge you a fee. HUD-approved counseling agencies are generally free of charge.
5) Ask the counselor about the possibility of getting a loan modification - changing the terms of your existing loan to terms you can afford.
6) Attend a foreclosure prevention workshop event in your area to get additional information face-to-face.
7) Don't apply for more credit.
Mortgage Defaults Spread Across Country without State-Specific Help
Tuesday, June 2nd, 2009
Connecticut foreclosures are not a state phenomenon. Across the country mortgage defaults continue to rise with no sign of slowing down. Even after their loans have been modified, US banking regulators still see an increasing number of delinquencies. In fact, after six months, nearly 37 percent of mortgage loans modified in the first quarter were 60 or more days delinquent. After three months, 19 percent were 60 or more days delinquent or in the process of foreclosure.
According to John Dugan, head of the US Office of the Comptroller of the Currency, "One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months," While many members of Congress and the head of the FDIC (Federal Deposit Insurance Corp) urge lenders to modify mortgages, even if this should occur it will take time.
In the meantime, in our state many owners seeking to stay in their homes have been consulting foreclosure attorneys, debt attorneys, bankruptcy lawyers, and other professionals who have a specific understanding of Connecticut mortgage problems and Connecticut bankruptcy laws.
