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What You Need To Know Before Choosing Credit Counseling

couple discussing financesElon Musk’s SpaceX team just learned what NASA discovered years ago and that’s the task of sending rockets into space isn’t an easy one. In fact, sometimes it can be downright tough. It can also be tough to be heavily in debt. And don’t think that debt still isn’t a problem. There is nearly $1 trillion in consumer debt outstanding and close to 1 million personal bankruptcies every year. There are also a lot of people who can’t refinance their mortgages because either they have bad credit or they’re underwater – without enough equity in their homes.

Fortunately, there are some relatively simple answers to getting out of debt. One of the most popular of these is credit counseling. This is where you contact a credit counseling agency and are assigned a counselor who reviews your finances and helps you either develop a budget designed to get your bill paying back on track or what’s called a debt management plan (DMP) – depending on how serious are your financial problems.

How to know when you need credit counseling

There are some danger signs or red flags that will tell you that you might need credit counseling. The first of these is if you’re receiving calls from debt collectors. Of course, you should have probably sought out consumer credit counseling before you started receiving those calls. A second red flag is if you’re living from paycheck to paycheck. When you’re doing this it means that every cent you earn is spoken for and you’re on a slippery slope. Experience just a small financial slipup such as an unexpected auto repair or a medical emergency and you’ll fall way behind.

A third sign is that if you find you’re hiding financial information and bills from your spouse or partner. Maybe you have credit cards that he or she doesn’t even know about or you’re locking purchases in the trunk of your card because you don’t want your spouse to see you carrying them in the house. A fourth sign is that you’re using payday loans or cash advances because you’re trying to support a lifestyle you simply can’t afford. And finally, the fifth sign you need consumer credit counseling is if you don’t even know how much you’re in debt.

How to know who can be trusted

If you’ve seen many of these red flags in your life then credit counseling can definitely help. But how do you know whom you can trust? There are two credit counseling agency associations that can be trusted. They are the National Foundation for Credit Counseling (NFCC) and the Association of Independent Credit Counseling Agencies (AICCA). Both these organizations have local members that are required to follow the highest standards of credit counseling. This means this is where your search for help should begin.

Before you leap

Before you run off to one of these credit counseling agencies there are some things you need to know about credit counseling in general and how to avoid being ripped off. Here are the five most important of them.

It should cost nothing or very little

No legitimate credit-counseling agency would want you to pile up even more debt by charging you a big fee. The members of the NFCC and the AICCA (formerly known as Financial Counseling Association of America or FCAA) generally charge nothing or very little for their services. For example, if you call the toll-free number of one of these two organizations you will be connected to your nearest local agency where you will get free counseling over either the phone or in person. This can be helpful even if you are not in debt as these agencies can offer advice on saving, budgeting and organizing your finances. They will also counsel potential homebuyers and people looking for a reverse mortgage.

You may get help with a debt management plan

While credit counseling can’t do anything to reduce your debt there is some things it can do. For example a credit-counseling agency can make your debt easier to bear through negotiations with your creditors to reduce your interest rates and “re-age” your debt. It can also help you with a debt management plan (DMP). If you end up with one of these plans you will longer be required to pay your creditors. You’ll send one check a month to the credit-counseling agency instead and it will then distribute the funds to your creditors. If you sign off on a debt management plan you’ll be required to give up your credit cards and not take on any new debt until you complete your plan which typically takes five years.

It won’t affect your credit score

If you go to a credit-counseling agency for help with budgeting or to just get your finances organized so that you can better manage your money this will not show up on your credit report. On the other hand, if you enter into a debt management plan this may be reported to the credit bureaus. If so, it will at least show you are making an effort to repay your debts and it shouldn’t affect your credit score.

You could avoid bankruptcyman looking frustrated

If you feel that it’s inevitable you’ll have to file for bankruptcy a debt repayment plan could help you avoid this. If it won’t, most credit-counseling agencies will assist you with the bankruptcy process. For example, it will refer you to a competent attorney that will not make your debt problems worse. For that matter, recent revisions in the bankruptcy code require you to go through credit counseling from an approved agency before you can file.

Most are partially subsidized by major credit issuers

The credit card issuers support nonprofit credit counseling as they want to avoid the losses associated with bankruptcy as this enables them to recover at least some of the money owed them. So if you are told to stay away from a credit-counseling agency because, “its money comes from the credit card companies,” ignore this advice. Both you and your lenders want the same thing, which is to help you avoid bankruptcy and get back on your feet.

Consider the options

There are other options available in addition to consumer credit counseling. For example, if most of your debt is credit card debts you might be able to transfer all of your balances to a new card with a lower interest rate or better yet, a 0% interest balance transfer card. You would then have one payment in place of the multiple payments you’re currently making and it should be less than the sum of those payments. If you own your home and have some equity in it you could get a home equity loan or homeowner equity line of credit and use the proceeds to pay off your debts. This would consolidate them and, again, you should have a much lower monthly payment than the sum of the payments you’re currently making. Finally, there is debt settlement as available from companies such as National Debt Relief. This has become popular because it’s the only way to actually get debts reduced. In fact, a reputable debt settlement company should be able to get them cut in half and help you become debt free in just 24 to 48 months.

If you’d like some additional tips about choosing a credit-counseling agency be sure to watch this short video.

HARP Just Might Be The Best Gift Ever To American Families

happy familyThere is no question about the fact that our government often gets things wrong. Consider what’s going on with the Veterans Administration and its bungled attempts to build new medical centers for our veterans. Or think about the fact that our Office of Personnel Management allowed hackers to steal the personal information of more than 4.5 million government employees. Then there’s the ongoing flap over Common Core standards.

Fortunately, our government does get some things right and one of them is a little known program that could put anywhere from several hundred dollars to maybe $1000 a month in your pocket. It’s called the Home Affordable Refinance Plan or HARP.

How much would this program save you?

It’s impossible to say how much HARP would save you except that it has saved homeowners that have taken advantage of it an average of $275 a month. Since this is an average it’s clear that that many homeowners saved much more than this. Beyond this the answer to how much you would save will depend on a number of factors.

Before you start thinking what you would do with all the money you would save with a HARP refinance it’s important to determine if you’d be eligible.

Would you be eligible?

The first and most important eligibility requirement for a HARP loan is that your mortgage must be either owned or guaranteed by Freddie Mac or Fannie Mae. If you don’t know the answer to this question both Fannie Mae and Freddie Mac have toll-free telephone numbers you could call. Fannie Mae’s is 1-800-7FANNIE. To reach Freddie Mac call 1-800-FREDDIE. Both of these lines are open from 8:AM to 8:00 PM ET. Both of them also have web submission processes that make it easy to get this information. Just go to either of its websites, enter some information and you will see if either of these agencies owns or guaranteed your loan. However, this is not a guarantee that you will be eligible for a HARP refinance, as you must also meet the other eligibility requirements.

The second of these requirements is that your mortgage must have been sold to either Fannie Mae or Freddie Mac before May 31, 2009. You cannot have refinanced under HARP unless it was a Fannie Mae loan that was refinanced under HARP from March through May 2009. Your current loan-to-value (LTV) ratio must be more than 80%. In addition you must be current on your mortgage at the time that you apply to refinance and have had a good payment history in the past 12 months.

How it works

Assuming you are eligible given the requirements you’ve just read there are three steps to get started on a HARP refinance.

First, you need to gather your financial information. This would include your mortgage statements and information on a second mortgage if applicable. You will also need your income information, which could be your tax return from the previous year or your pay stubs.

The second step is to contact your mortgage company and ask if it’s an approved HARP lender.

It’s best to start with your current lender because it will already have your loan information on file. But you will need to ask it to provide you with whatever information you will need to verify your current income.

If it turns out that your mortgage lender is not a HARP lender you’ll need to find one. You can find lenders that have been approved by HARP by clicking on this link. Call one, tell it that you’d like to finance and would like to see if you would be eligible for a HARP loan.

If a lender says you don’t qualify for one of these loans be sure to ask why. If you still believe you should qualify, ask to speak to the bank’s HARP specialist or talk with a different lender. It won’t hurt to get another opinion.

Finally, you will need to go through the application, approval and closing process. If the lender determines that you qualify for a HARP loan it will guide you through this process.

If you have a second mortgage

You could still be eligible for a HARP refinance if you have a second lien or mortgage on your house. However, your junior lender (the company that has your second mortgage) must agree to remain a junior and you must be able to show that you can meet the payment terms of the new first mortgage.

stack of cashWhy you will save money with a HARP refinance

The answer to this question is simple. You will have a lower interest rate. If not why would you choose to refinance? For a HARP refinance to be attractive you would probably need to have a mortgage interest rate of 6% to 8%. Some lenders are offering fixed interest HARP loans at 2.7% to 3.3%. However, the only way to learn how much lower an interest rate you could get with a HARP loan is to contact your mortgage company or a potential lender, and fill out an application. If it’s not significantly less than your current interest rate don’t bother to refinance.

Do the math

While you could save money with a HARP loan it’s important to do the math. For example, if you have a $125,000 loan at 6.5% interest and got a HARP loan at 5.375% you would only save about $90 a month. And your closing costs would probably be around $3200, which means it would take you almost three years to recoup that $3200. As you can see from this example it would probably not pay to get a HARP loan unless you owed significantly more than $125,000 on your mortgage or could reduce your interest rate substantially.

If you’re underwater or upside down

If you’re underwater – meaning that you owe more on your home then it’s worth – or upside down there is HARP 2.0. It’s designed to help people like you refinance their mortgages. And it’s especially good for people that are unable to find help elsewhere. HARP 2.0 is like HARP but with two key differences. First it will allow you to refinance if you have mortgage insurance and second the new mortgage lender is relieved of the responsibility for anything that happened on your first loan. This is due to the fact that there was massive fraud on the underwriting of many mortgages. If this is what happened to you, the new lender is not responsible. This puts more lenders in position to help.

The eligibility requirements for HARP 2.0 are the same as for the original HARP (as listed above).

Finally, here’s a two-minute video, courtesy of National Debt Relief, with more details about HARP 2.0.

Best Practices After Debt Relief

debt relief signDebt relief is a necessary step towards debt freedom. Of course, that is easier said than done. Although you are earning a lot of money, you cannot just dump all of that towards your debt payments. You have a lot of expenses to think about too. This is why a lot of consumers take forever to finally get rid of their credit obligations.

Depending on the amount that they owe, it takes them years and even decades to say goodbye to debt. For some, being free from debt will never be a reality. Even before they can completely pay off what they owe, some consumers continue to borrow more money. Some do it by choice, while others are forced into it. Those who are forced into it wait for a miracle to help them achieve debt relief. But miracles, when it comes to finances, are hard to come by right?

Not for the 350,000 students that will be granted debt relief by the US Secretary of Education. According to the news published on Gizmodo.com, more than $3.5 billion worth of student loans will be forgiven by the government. It is believed that the borrowers of these loans were victims of fraud. They were forced into taking huge student loans by the online schools owned by Corinthian Colleges. This for-profit college closed and filed for bankruptcy – in the midst of fraud charges. The Education Department will forgive a lot of federal loans owed by these students because of their enrollment to the schools of this college company.

We cannot really say that it was divine intervention that caused the forgiveness of this debt but one thing’s for sure, a lot of students will be feeling debt relief because of this event. It is great that these students were kept from financial demise caused by a loan that would apparently – do them no good.

Not everyone is as lucky as they are but this loan forgiveness is not the end of everything. If you want the debt relief to last, you need to maintain it. You can think of it as achieving your ideal weight after dieting so hard. Your efforts will not stop as soon as you see your target weight in the scale. You need to maintain that by eating right and continuing healthy activities like exercising.

What to do after you have paid off your debts

After debt relief, things will not be a tough anymore. But that doesn’t mean no effort will be spent. You need to exercise self control and discipline to maintain the financial state that you are currently in. For those who benefitted from loan forgiveness, the chances of going back into debt might be more likely to happen. That is because they did not work hard for their debt freedom. Those who worked hard and painstakingly saved every penny just to get out of debt would be more motivated to stay out of debt.

If you really want to turn your financial life around, you may want to follow these important activities that will keep you debt free.

Build up your emergency fund.

First and foremost, you have to make sure that you have an emergency fund. This is the money that you will put aside so you have something to spend in times of emergencies. This is a great way to stay out of debt. Usually people end up in debt because they were forced to borrow money after an unexpected expense arose. If you want to stay out of debt, you need to be prepared for these incidents. Since you no longer have debt payments, you can use the money allocated for this to grow your emergency fund.

Set up other saving goals.

Once you have enough emergency fund, you may want to set up other goals that you can save up for. If you want to buy your own house, you can save up for it. The more money you can pay towards the down payment, the lower amount is needed for your home loan. If you want to replace your car for a more fuel-efficient one, it is better for you to save up for it instead of getting a car loan. We all know that cars depreciate as soon as you drive it from the dealer. That means you will be paying way higher than the value of the car – especially if you add to that the interest that will be added to your loan amount. There are other saving goals that you need to look into like retirement or the college fund of your children. According to Bankrate.com, American families are still finding it hard to save money for a new car, college or retirement. But with some discipline, you can remove yourself from this statistic and save up for the right goals that you want to have in your life.

Invest your money.

Another task that you can do after debt relief is to invest your money. The first two are tasks that you need to do so you can protect yourself from the uncertainties of the future. This task, investing, will help you grow your personal net worth. You can choose an amount that you are comfortable risking and invest it in stocks, bonds and mutual funds. These will help grow your money better than a regular savings account will. The interest rate of investments is bigger than that of savings accounts.

Reward yourself.

Once you have taken care of the first three, you can think about rewarding yourself for freeing yourself from debt. Allow yourself to feel that debt relief is the secret to a happier life by rewarding yourself. You can buy yourself something that you have been depriving yourself for so long. Of course, you need to make sure that the reward that you will buy yourself is reasonable. And that you will pay for the reward in cash. Do not splurge too much that you will put yourself in a dangerous financial situation again. Buying a luxury car may be too much of a reward. A vacation with the family should be a great prize for what you have achieved too.

Spend smartly.

Now that you have achieved debt relief, you need to maintain it so you will no longer be burdened with debt again – at least, not unless you really have to. That means you need to spend your money wisely from now on. Be careful with your decisions. If you think that a purchase is unnecessary, do not buy it even if you know that you can afford to pay for it in cash. There are better places to put your money in – like your savings account or investment.

How to use credit without falling into a financial crisis

Truth is, although it is very hard to get debt relief, you should not be afraid of debt. Believe it or not, there are good and bad debts. According to an article published on BusinessInsider.com, a debt is categorized as good or bad depending on how it affects your credit reputation and finances. In other words, any debt that you should take from now on should be something that will improve your financial life. If it puts money in your pocket, borrowing money makes sense.

Instead of being scared of debt, you need to learn how to manage it so it works in your favor. Here are some tips that you need to follow when borrowing money.

  • Borrow so you can put more money in your pocket. This simply means you need to choose the debt that you will borrow. Credit card debt is fine but you need to consider what you are using it for. If it will be used to buy a product that will help you function better at work, then you can go ahead and use it. Just try to pay it off in full when the bill comes so you do not have to pay interest on it. Spending on updating your knowledge and skills is also a great reason to be in debt. As long as it can help increase your ability to earn money.
  • Have a plan to pay it back. With any debt that you will borrow, make sure that you have a repayment plan in place. It does not have to be detailed but you need to know where you will get the money to pay it off. If you do not know where to get the payment for the debt you will take, then do not borrow the money.
  • Include the debt payment in your budget. As soon as you know the amount that you need to pay off on a monthly basis, include it in your budget. That way, you will never forget it. This will also allow you to consider how your income will deal with this additional expense. If this expense is beyond your income, you can immediately choose another expense that you can give up so you can afford your debt payments. One of the budgeting mistakes that you can commit is failing to include debt payments. You will be charged with late penalty fees if you fail to pay on time.
  • Limit new credit until you pay your current. Lastly, you need to limit any new debt until you have paid off your existing. Even if you know that the bank will approve your loan, do not borrow money. Leave some room in your budget for your savings. It is better to pay for purchases in cash rather than credit. You can really enjoy your purchases if you know that you have paid for it in full before using it.

“I’m Gonna Get Out of Debt Or Die Trying”

Has your financial situation gotten so bad that you actually feel this way? Struggling to pay off debt can take a serious toll not only on you emotionally but even physically. The stress caused by trying to cope with debt can cause heart disease, diabetes, asthma, headaches and more. It can even shorten your life.woman drowning in debt

So what can you do if you’re desperate to get out of debt?

For one thing you could declare bankruptcy. A chapter 7 bankruptcy, which is often called a liquidation bankruptcy, would get rid of all or most all of your unsecured debts such as credit card debts, personal lines of credit and medical debts. It typically takes about three months to get through bankruptcy after you’ve filed. If you hire an attorney to help you he or she will probably charge you somewhere around $500 to $1000. Be aware that it’s not as easy to qualify for a Chapter 7 bankruptcy as it was until just a few years owe. The rules were tightened when Congress passed The “Bankruptcy Abuse Prevention and Consumer Protection Act” in 2005. For example, you now must attend and complete a credit-counseling course that’s been approved by the US Trustee’s office, the purpose of which is to give you an idea as to whether you really need to file for bankruptcy. There is now also a means test that would be applied to see if your income and ability to pay would exclude you from filing a Chapter 7 bankruptcy and force you instead into a chapter 13 bankruptcy.

A fresh start but at a cost

Bankruptcy is something that’s guaranteed in the United States Constitution as a way to give people a fresh start. And it can do just this. But that fresh start comes at a high cost. For example, a bankruptcy will stay in your credit reports for 10 years. Many employers now routinely check the credit reports of prospective employees so a bankruptcy could keep you from getting a job.

Filing for bankruptcy will drop your credit score by as many as 200 to 250 points. This will make it very difficult for you to get new credit for two or even three years after the bankruptcy. When you are able to get new credit it will have a very high interest rate. Your insurance premiums will probably go up and you could have a hard time renting a house or an apartment as your prospective landlord is sure to review your credit report and your bankruptcy could be a real deal breaker.

Here, courtesy of National Debt Relief is a short video of an attorney with more information about a chapter 7 bankruptcy and what your life will belief once you file.

A better alternative

If you’d rather not have the stain of a bankruptcy in your credit reports for the next 10 years there is a better alternative. It’s called debt settlement. And it’s been used by literally thousands of people to achieve debt relief. Spoiler alert – debt settlement will also have an adverse affect on your credit score but it won’t be as severe as a bankruptcy.

Would you be a good candidate for debt settlement?Video thumbnail for youtube video How To Be A Smart Credit Card User

Unfortunately, debt settlement isn’t for everyone. To be a good candidate for debt settlement you must have a legitimate financial hardship which has caused you to fall behind on your bills or that will cause you to fall behind in the near future. You must owe at least $7500 in unsecured debt and unable see any way to pay it off in two or three years. And you must have money to send the debt settlement company each month to fund your program.

How debt settlement works

The idea behind debt settlement is pretty simple. You hire a company to get your debts paid off by offering your creditors lump sum payments but for less than your balances. In fact, in most cases debt settlement companies are able to settle debts for roughly fifty cents on the dollar. If you owed, say, $20,000 this could mean your debts would be reduced to $10,000. Just think how much easier it would be to repay that amount of debt.

You pay the debt settlement company instead of your creditors

Once you sign an agreement with a debt settlement company you will no longer have to pay your creditors. In fact, you won’t have to have any interaction with them at all. What you’ll do instead is send a check once a month to the debt settlement company. Once there is a sufficient amount of money in your account the debt settlement company will begin negotiations with your lenders.

Debt settlement will eliminate most or all your debts

As we mentioned in an earlier paragraph to be a good candidate for debt settlement you must have a lot of unsecured debt such as medical debts, credit card debts and personal lines of credit. The reason for this is that secured debts such as automobile loans and mortgages cannot be settled. There are also some types of unsecured debts that can’t be settled including spousal support, child support, alimony, tax debts and student loan debts. You can’t get these types of debts discharged in a chapter 7 bankruptcy either.

The negatives of debt settlement

While debt settlement represents an excellent way to get relief from your debts it does come at a cost. Debts that have been settled are never reported to the credit bureaus as “paid in full.” They will be reported as “settled,” “settlement” or some similar verbiage. This will drop your credit report by maybe as many as 80 points – or far fewer than if you were to file for bankruptcy. Of course, if you’ve missed payments on your credit cards or other debts your credit score is already in the tank so an 80 point hit might not make that much of a difference.

The cost of debt settlement

As a very wise man once said, “there is no such thing as a free lunch.” And there is no such thing as free debt settlement – unless you do it yourself. Debt settlement companies are a business no different from an automobile dealer or an accounting firm. What the debt settlement company will cost you will depend largely on the size of your debt. Some settlement firms will take a percentage of the amount of money that they are able to save you but the better ones charge a flat fee. This fee will range from 15% to 25%. Most experts consider this to be a better option because it allows you to know going in exactly what the debt settlement company’s charges will be. Ethical debt settlement companies prorate their fees and will incorporate them into your monthly payments. However, they won’t actually take the money until all of your debts have been settled. This means that the good debt settlement companies such as National Debt Relief cost you nothing until they have settled all of your debts. Most also offer 100% satisfaction guarantees so that if you were to become dissatisfied with your program for any reason you could drop out, get all of your money back and end up not paying a single dime.

9 Ways To Earn Extra Money to Pay Down Debt You’ve Never Thought Of

College student catching money in the airWhen you think about earning extra money to pay down debt, what do you think of? Most people would think about things such as having a garage sale, selling stuff on eBay or horror of horrors, getting a second job. The problem with options like garage or estate sales or selling stuff on eBay is that you probably have a limited number of items available to sell. So what would you do when you run out of that stuff?

Getting a second job is one of the best ways to earn extra money to pay down debt but it just doesn’t work for everyone. We live pretty much in a 24/7 world now and the hours you’re working at your primary job just might preclude you from getting a second gig. For example, we know of tech support people that work shifts like 10 AM to 6 PM or even 10 PM to 6 AM. It’s just not possible for people like that to take on second jobs. Even if you have a traditional 8 AM to 5 PM job you might find that there are many days of the week when the job just doesn’t end at 5 PM.

So if you fall into one of these categories what could do to earn extra money?

#1. Put your car to work

If you own your car you could put it to work earning money for you. In today’s sharing economy there are numerous people looking to rent other people’s cars instead of purchasing their own. There are sites such as RelayRides and GetAround where you could connect with people that might be interested in renting your car by the day or even a week. If you’re not in a position where you could rent your car you could pick up extra money through Lyft or Uber where it’s possible to earn up to $35 an hour by taxiing people around. Plus, you get to set your own hours.

#2. Do mystery shopping

Here’s another part-time gig you could do where you get to choose your own hours. If you’re not familiar with mystery shopping it’s where you go into restaurants, stores and other places of business and then report on your experiences to help the companies determine how well they’re doing in customer service. You not only make your own schedule as a mystery shopper but you could take on as many or as few assignments as you chose. Some people who do mystery shopping take just a few assignments a week and make maybe $100. If you were to treat mystery shopping more like a full-time job you could earn up to $500 a week.

#3. Become an eBay drop shipper

If you don’t have stuff of your own to sell on eBay you could become a drop shipper or middleman. This can be a great gig because you don’t even have to ship stuff yourself. You find companies that are willing to use drop shippers and then list their products on eBay along with some good sales copy. When you make a sale, you notify the company that has the product and it ships it to your buyer for you. There is an online wholesale directory called SaleHoo that has listings for more than 8000 prescreened suppliers including companies like Playskool and Gap. Sign up for some of these companies and you would then become a storefront selling their products. The money you earn would be the difference between their wholesale prices and what ever it is you sell the merchandise for.

#4. Do affiliate marketing

Many different companies including well-known ones such as Amazon and Starbucks are looking for new customers and are willing to pay to get them. The way affiliate marketing works is that you promote a company’s’ products or services using a unique URL. When a person uses that link to buy the company’s products, you get a commission. Sites such as Share a Sale and Rakuten Affiliate Network are affiliate consolidators where you can find many different companies willing to pay you a commission to help sell their products or services. If you’d like to know more about affiliate marketing, go to the website Affilorama where you’ll find training information that could help you be successful.

#5. Become a direct seller

Thousands of people make extra money by direct selling for companies such as Avon and Mary Kay. Direct selling has earned a sort of poor reputation but does offer the opportunity to make an enviable amount of money while still working a full-time job. Direct selling isn’t just about cosmetics, either. You could earn a nice extra piece of change selling wellness products like Advocare, pet products, Tupperware or accessories.

#6. Join focus groups

Companies that would like to improve their marketing and advertising periodically conduct focus groups consisting of potential customers to help them understand what’s working and what’s not working. If you have the time necessary to participate it’s a good way to earn extra money. There are many companies that are actually anxious to pay you for your insights as a consumer and in some cases they’ll even come to your home. One company recently held a focus group that lasted two hours and consisted of talking with just several people about snack foods and tasting some cookies. The person hosting this group earned $250. The website FindFocusGroups.com has listings of companies looking for people that would like to participate in focus groups. Alternately you might search Craigslist using keywords like “paid study,” “market research” or “surveys.”

#7. Become a consultant

Many small companies need help but can’t afford to work with one of the big, well-known consulting groups. Instead, they look for individuals like maybe you where they can get the same skills cheaper and on an ala Carte basis. For example, HourlyNerd connects well-educated professionals with small companies that need consulting help. If you have skills in areas such as marketing, social networking, search engine optimization or program management you could pick up a nice bit of change by consulting with companies that need these types of skills.

#8. Be an online jurist

There are trial attorneys that look for people to judge cases that haven’t gone to court yet. They use online jurors to help figure out what an average group of people might think about the merits of their cases or how they might respond to the attorney’s concepts or tactics. Companies such as Online Verdict enable attorneys to access regular people to serve as online jurors. If you meet the criteria to sit on one of these juries you would likely earn between $10 and $60 for your time.

#9. Rent out a room or your househouse with cash in it

If you have a spare room in your house why not rent it out using a site like Airbnb that connects travelers with people that are willing to rent out a room or an entire house. There are also sites such as the VRBO (Vacation Rentals by Owner) and HomeAway where you could rent your house to paying guests when you’re away from home. In the event you have a friend that would let you sleep on his or her couch you could rent your house for a period of time without even leaving town.

How To Cope With Huge Medical Bills

woman looking at a lot of billsGetting sick with a life altering disease is bad enough as it is but it can feel even worse when the bills start rolling in. We have a friend that had emergency intestinal surgery last year and his hospital bill was over $120,000. Fortunately he had insurance that covered the majority of this cost. What can you do if you’re staring at a huge stack of medical bills and they add up to much more than you can afford? Here are six things you could do that might help.

Negotiate

A good first step would be to pick up the phone, call the hospital or doctor and offer to pay a smaller amount that you could manage. You will need to make sure that you’re speaking with someone that has the authority to negotiate with you. The simple fact is that if you don’t get the right person you won’t get the right answer. Experts in this area say that the best time to call to negotiate is first thing in the morning and early in the process – or soon after you get the bill or bills. It’s important to remain civil and not lose your temper. For example you could say, “Gosh, I just lost my job and I can’t afford this $100,000 bill. What would you do if you were in my situation?”

The reason why it’s important to negotiate early on in the process is because you don’t want to wait until the doctor or hospital turns your bill over to a debt collection agency. These agencies generally get 50% of what you agree to pay. This would leave the healthcare provider getting only 50% of your debt. Why not offer your provider 50% of what you owe? It might agree because it would end up getting the same amount of money.

Request a repayment plan

A second option would be to work out a payment plan with the medical provider. This would likely have either very low or no interest. The important thing is to negotiate for what you can afford. If your provider asks for $100 a month but you could pay only $50, let the provider know. That way you would be able to maintain your payments. Most hospitals are willing to work with people because they would rather get the money a little at a time than not get any at all.

Hire a professional negotiator

There are professional companies such as CoPatient that will negotiate in your behalf in order to reduce your bills. These companies will also review your bills looking for errors. As an example of this CoPatient says that it has saved its customers an average of 40%. It charges clients a fee equal to 35% of the amount of money it saves them. In addition, these companies know the lingo and how to work the system. If you were to try this on your own you would probably need to have a completely different dictionary just to understand all the medical technology.
The Patient Advocate Foundation could be another source for help. And it doesn’t charge anything for its services. It reports that its customers that have had an average of $1800 in debt have been able to get this reduced by 20% to 30%.

Look for financial assistance

If the healthcare provider or hospital is a nonprofit, check to see if you might qualify for financial assistance. One of the directives of the Affordable Care Act is that non-profits need to have formal policies on the financial help that’s available. If it turns out that your eligible you could have all or a large part of your bill waived. Even if you aren’t technically eligible for this assistance you should apply if you can’t afford the debt because it never hurts to ask.

smiling family with cash at the backgroundTry crowdfunding

While crowdfunding could help, you might find it a little distasteful because what it really amounts to is begging. You could go to Kickstarter, GiveForward or another similar site and create a campaign where friends, family members and sympathetic strangers could donate money to help you pay your bills. For your crowdfunding campaign to be successful you need to show why you’re deserving and you will need to outline specific needs. Successful crowdfunding efforts also include:

  • Personalization, persistence and promotion
  • Keeping potential donors abreast of what’s happening with your campaign
  • Creating new reasons for people to give
  • Setting incremental deadlines designed to encourage people to donate

Do be aware that these sites do charge fees. For example, Kickstarter takes 5% of whatever amount of money you raise and also charges $.20 for each pledge plus 3%. The fee on Give Forward is 7.9%, plus $.50 for each transaction. This is to cover the costs of its online payment service provider and also to pay the company’s developers and coaches.

Plastic it

Maybe this seems obvious but you could always put those medical bills on a credit card to satisfy your debts. If you choose a card with cash back, points or airline miles you could get some nice rewards in the process. However, this is not the best first step. Once you put your medical debt on a credit card you will no longer have any negotiating power. Plus, it’s more than likely that you’ll end up paying more in interest. Medical debt on a payment plan is generally interest-free. If you switch that debt over to a credit card you’re turning interest-free debt into an interest-barring debt. This means it will end up costing you more.

Look for help from a charity

There are a number of charities focused on specific illnesses or conditions. This is true of Crohn’s disease, HIV, diabetes, breast cancer and many more. If your illness falls into one of these categories you should definitely contact the appropriate organization to see what financial help it might have available. In addition, there are government programs that could help. For example there are government programs that offer cash monthly for people that have disabilities and are having a problem making ends meet. The Social Security Administration offers a good deal of user-friendly information on the disability benefits it offers. It’s available at www.SSA.gov/dibplan. You might be eligible for this program if:

  • You are unable to do the work you did before you became disabled
  • The SSA determines that there is no other work you could do because of your medical condition(s)
  • The disability you are experiencing is expected to last for at least one year or result in death.

Simple Tricks For Cutting Costs And Fattening Up Your Piggy Bank

woman with a full grocery shopping bagWe’ve always find it ironic that when the government reports that the cost of living or Consumer Price Index has increased only +0.4% (Feb 2015) that this does not include the cost of gas or food. And while the cost of gas has dropped recently, the cost of food continues to increase every month. If yours is a typical family you’ve probably also seen increases in the cost of your cable or satellite service and your utilities. It’s tough these days to just stay even let alone save money. Fortunately there are some simple tricks that you could use to cut your everyday costs and fatten up your piggy bank.

Let’s work on that grocery bill

If you grow pale and faint when you see the total amount you’ve just spent on a week’s groceries, take heart. There are some simple things you could do to cut down the cost of your groceries. It begins with making a grocery list. The simple fact is that you should never go to the grocery store without a list. This accomplishes two things. First, it ensures that you’ll get everything you need, which will cut down on those trips you have to make to get the stuff you forgot. Second, having a grocery list will keep you from spending money on all those tempting things you see at those aisle-and displays.

Next, become an avid coupon clipper. You’ll find them in your newspaper – probably on Wednesday — as this is normally food day. If you don’t get a newspaper go online and sign up for your favorite supermarket’s newsletter. There are also tons of websites that offer coupons, many of which are printable. Some of the best include Shopathome.com, Thecrazycouponlady.com and, of course, Coupons.com. Always look for stores that offer double coupons on the stuff you need and for coupons that align with sales that are going on at your supermarket. And, finally, try to buy as many store brand items as you can, as this should save you up to 25% vs. brand name items.

Small changes can mean a lot

As an example of this the stuff that you drink can really add up. If you’re using bottled water, stop it. Those bottles are not only costing you money but they’re not good for the environment. Buy one of those bottles that filters water and then just fill it up with tap water. Believe it or not this can save you hundreds of dollars over the course of a year. Also, stop buying those lattes and brew your coffee at home. This alone could save you more than $700 a year. If you eat out a lot you can save big money by not doing it. Half of the average American’s budget goes to eating meals out of the home. If that’s typical of you just think how much you could do in cutting costs simply by eating at home instead of going to restaurants or getting takeout.

money and measuring tape

Slash your cable bill

Did you know that the average American spends $86 a month on cable or $1032 a year? If you have a digital TV you could buy an antenna for $30 or less which would get you all your local channels free. If your TV is analog all you would need to do is buy a cheap converter. We have a small antenna next to one of our digital TVs and we get more than 30 local channels. Not all of these are ones you would watch on a regular basis but we were surprised at what’s available and you might be, too.

If you do decide to ditch cable or satellite TV you could get movies through a subscription service such as Netflix or at one of those kiosks at your supermarket. You say you just can’t give up cable entirely? Then call your cable company and see if you couldn’t negotiate a better deal. Most of these companies will offer you a nice discount if you bundle, which means getting television, Internet and phone service all together. Or go online and check to see what packages your cable provider has available, as you might be able to save money by downgrading to fewer channels.

You can also save money by changing your movie going habits. Matinees and early shows always cost less than if you were to go to the same film at night. And the same holds true of restaurant meals. When there’s a hot new restaurant in town that you would like to sample, have lunch there instead of dinner.

Chop down that energy bill

If you’re like the average family you spend $1900 a year on energy. You could knock that down a few dollars simply by shutting off the lights in rooms you’re not using. If you don’t have a programmable thermostat you should certainly get one. It shouldn’t cost you more than $60 and will pay for itself in just a few months by automatically turning down the temperature during those times of the day that you’re not there. You might also do a home energy audit. The Environmental Protection Agency has a free calculator that would help you see where you could achieve some savings. It’s available at EnergyStar.gov.

For that matter, this short video show how you could actually cut your electric bill in half and just think how much that could save you …

Do you commute to work?

Another great way to save money if you commute to work is by getting into or forming a carpool or by taking public transportation. This would not only cut your gas costs but also the wear and tear on your car.

The big stuff

There are some changes you could make that would result in some really big savings. If you have a mortgage, think about refinancing your home. Last week we heard that one of our local mortgage brokers was offering fixed rate mortgages at less than 4%. If you have a mortgage at 5% or higher and you were to refinance you could put a couple hundred dollars a month in your pocket. If you rent try negotiating with your landlord for a cheaper rent when you next sign a lease or offer to sign a longer one in return for a discount.

Get creative

If you stop to think about it there are probably dozens of other ways you could cut your spending. Just get creative. And be sure to get your entire family involved. We know of families that have a meeting once a month where everyone contributes their ideas for saving money with a prize to the person that comes up with the best suggestion. Be sure to make a budget so that you can keep track of your spending, as you might be amazed at how little changes along the way have helped fatten up your piggy bank. And when it gets right down to it, what’s better than a fat, happy piggy bank?

Tips For Managing Too Much Debt

frustrated woman with a paper and calculatorConsumers today regardless of their social status are being stretched like never before. Consider the fact that the average American household owes more than $16,000 just in credit card debt – meaning that this doesn’t include debts such as their mortgages, auto loans and student loan debts. You must have an inkling that you have too much debt or you wouldn’t be reading this article. But if you’re not sure, here are a few signs that you’re in over your head.

• Your creditors have been calling you
• You’ve left this month’s bills piled up in a corner because you’re afraid to open them
• You’ve been turned down for a consolidation loan
• You’ve tried to borrow money from family members
• You’re taking cash advances on your credit cards to pay other bills
• You’re finding it difficult to make just the minimum payments on your debts
• You’re constantly juggling bills trying to keep all of your creditors happy

Step #1: Determining where you stand financially

There’s not much you can do about getting your debts under control until you figure out where you stand financially. This means you need to determine how much you actually spent in the past month relative to what you earned. If it turns out – as it is almost certain to – that you spent more than you earned this means you’re basically trying to finance a lifestyle you can’t afford.

The first thing you should do is order copies of your credit reports from the three credit reporting bureaus – Experian, Equifax and Transunion. These reports will give you an excellent idea of how you’ve been managing your money, how much you owe, whether you’re over your credit limits, whether any of your debts have been sent to collection and so on. Next, get your FICO score. If you’re not familiar with this score it’s a three-digit number that ranges from 300 to 850. You can get your score on the website www.myfico.com, from any of the three credit reporting bureaus or from websites such as CreditKarma.com. This will give you a picture of how your creditors view you and why you may be having a problem getting new credit.

Step #2: Make a budget

We can guess with almost 100% certainty that you don’t have a budget because if you did you probably wouldn’t be struggling with your debts. The reason you need a budget is because it’s the only way you can allocate your spending in such a way that you will have the money to meet your debt obligations. To make a budget you must track your spending for at least 30 days. This means writing down everything you spent money on right down to the pack of gum you bought yesterday. Next, you’ll need to organize your spending into categories such as food, entertainment, clothing, eating out, insurance and so forth. When you finish this exercise go through it carefully looking for places where you could cut costs. Most people find that the areas where it’s easiest to reduce spending are groceries, clothing and entertainment. So you might take a hard look at these categories first. The objective here is to find ways to cut your spending to the point where you can get your debts caught up to date.

Step #3: Contact your creditors

Just making a budget – and of course sticking to it – could be enough to help you get out of debt. However, if you’re really seriously in debt there are some other things you must be prepared to do. For example, you could contact your creditors and try http://www.instantcheckmate.com/to cut deals. Trust us, they’re just as anxious as you are to get your debts straightened out. You could ask them to lower your monthly payments on either a temporary or permanent basis. You could ask to make interest-only payments for some period of time or have your interest rates reduced.

Step #4: Get your debts under control

One solution to managing your debts is to get a debt consolidation loan – assuming you could get one. If your credit isn’t totally trashed you might be able to get an unsecured loan where all you would be required to do is sign for it. Conversely, if you have poor credit you would probably be asked to put up some asset as collateral to secure the loan. In most cases that asset will be your house in the form of a home equity loan or home equity line of credit. If you are able to get either one of these types of loans you could then use the money to pay off your creditors. It’s almost certain that you would have a lower monthly payment and you would have only the one payment instead of the multiple payments you’re currently making.

A second option is to get help from a credit-counseling agency. If you have a lot of debt and are struggling with it the assistance and advice you would get from a credit-counseling agency could be a godsend. It could help you set up a household budget, evaluate your current budget (if appropriate), negotiate lower payments with your creditors and teach you better money management skills.

The third or what some people refer to as the nuclear option is to file for bankruptcy. If you owe way too much given your income this could actually be your only option. And this will be especially true if you think that one of your creditors is about to seize an asset you don’t want to lose. Bankruptcy would definitely damage your credit score severely and would stay in your credit reports for 10 years. If you’re in such bad shape financially that you think bankruptcy is your only option, the damage it would do to your credit might not be that big a deal.

man shouting at phoneStep #5: Learn how to deal with debt collectors

It’s likely that you’re being hassled by debt collectors and as you well know that’s no fun at all. If you didn’t know this debt collectors are usually compensated on a commission basis. This gives them a big financial incentive to collect from you – regardless of what’s required. But if you’re being threatened or abused by a debt collector it’s important to know you have rights. You probably don’t know about the Fair Debt Collection Practices act (FDCPA) but it gives you certain rights if a collector is harassing you. As an example of this, you can ask him for written proof that you actually owe the debt that he’s trying to collect. The law obligates him to comply with this request. If you don’t think you owe the debt or if you believe that the amount is not correct, you can dispute it. You must put your dispute in writing and send it to the debt collector’s agency within 30 days of when you were first contacted. You also have the right to send the debt collector a cease and desist letter telling him to not contact you again about that particular debt. Be sure to send the letter certified and return receipt requested. When the collector receives your letter he can communicate with you again only for two reasons – to let you know that he won’t be calling you again or to inform you of some specific action he’s about to take to collect the money such as suing you.

Step #6: Give special attention to your most serious debts

Not all debts are created equal. Some deserve special attention because the consequences of falling way behind on them are very serious. Depending on the type of debt, you could lose an important asset, be evicted or see your income tax refunds taken. In a worst-case scenario you could even end up serving jail time. So what are the serious debts?

• Your mortgage
• Car loans
• Rent or utility bills
• Court-ordered child support obligations
• Federal student loans
• Federal income taxes

If you have debts that fall into one or more of these categories you need to focus your attention on getting them caught up. We’ve already discussed one way to do this, which is a debt consolidation loan. Unfortunately, none of these debts can be “settled.” This means that if you can’t get a debt consolidation loan the bad news is that you will either have to find a way to catch up on your payments or file for bankruptcy.

Best Strategies When Dealing With A Big Debt Amount

big debt pushed by a manDealing with a big debt is not something new. In fact, a lot of consumers are probably suffering for it. What is even more troubling is the fact that these people who are burdened with a lot of debts do not see anything wrong with it. Some consumers willingly borrow money to buy a new car even if they still owe hundreds of thousands on their mortgage loan. That is just how the consumerist society in the US works today. It does not matter if we do not have the cash on hand to buy things to improve our standard of living. We have credit anyway. We can always take on more debt just to finance the affluent lifestyle that society thinks we should brag about.

According to Nerdwallet.com, the average debt of an American household is at approximately $200,000. This is a combination of mortgage, credit card and student loan debts. That is definitely, a huge amount of debt for one household to carry. Imagine how long it will take for you to finish paying off that big debt? You will probably be about to retire and you still have yet to reach the maturity date of all your debts.

Probably what is worse that having all these debts per household is the fact that it has become the norm in American consumers. Big debt is a terrible thing for a family to share and for your children to grow up in. But since a lot of people have it, this terrible thing becomes something that is acceptable. Instead of working hard to get rid of it, we accept our fate and just live day by day with huge credit balances over our heads.

There are three important strategies that you need to work on separately to deal with your big debt.

  1. Pay off your existing debts aggressively.
  2. Know how to avoid incurring huge debts.
  3. Manage your budget carefully.

How to pay off your huge debts aggressively

Regardless of how much you owe or the reasons behind your loan accounts, you need to start paying off your debts more aggressively. Fortunately for you, there are several ways for you to do just that. Here are a couple of them.

  • Do not run from the problem. Looking at a big debt is scary. It shows you the reality of how much you have failed when it comes to managing your finances. However, we all know that ignoring the balance that you owe will never solve anything. It will never give you the peace of mind that you deserve. So the first thing that you need to do before you can aggressively tackle your debts is to face it and look at how much you really owe.
  • Pinpoint the cause of the problem. The next thing that you need to do, after facing your debts, is to find out what caused you to be in debt in the first place. Was it living beyond your means? Or was it because you did not have an emergency fund? Sometimes, a big debt is not caused by being irresponsible with money. There are times when you are in debt because you were simply not prepared for an emergency. One serious illness can put your stable finances over the edge and into a huge debt. Knowing the cause of your debts will allow you to bring about the change that will turn your financial life around.
  • Choose a debt relief plan. There are so many debt solutions out there. If you know your debt situation and your capabilities to pay off your credit, it should be easy for you to choose a solution to your money problems. You have debt consolidation loans, debt management, credit counseling, debt settlement and even bankruptcy. The important thing is you should choose a plan that you will follow. That way, you will have more focus and direction as you pay off your big debt accounts.
  • Set up automatic payments. This is one way for you to make sure that your payments will always be met. Aside from setting aside a specific amount for debt payments on your budget, you may want to set up an automatic transfer with your lenders. Sometimes, they offer interest rate discounts if this will be your chosen mode of payment.

Tips to stay out of too much debt

As you work on aggressively paying off your debts, you need to simultaneously work harder to stay out of debt. Here are some tips that you may want to look into.

  • Stop incurring high interest debts. This is actually referring to credit card debt. This is the easiest debt to fall into and the hardest to get out of. If you still have big debts to pay off, it is better to stop adding to your balance – at least until you have lowered your overall debt amount. Fixed rate credit cards, according to Bankrate.com, is currently at 13.02%. That is the average. Some banks have as high as 20% on their credit card interest rates. Think about how much money you are wasting by paying these huge interest rates.
  • Monitor your accounts. It is important that you always look at your accounts. This is does not only mean your budget. You need to constantly check your automatic payments to ensure that it is meeting the contribution requirements. You should also check your credit report. Sometimes, people suffer from a big debt burden – not because they spent on credit, but because they had been victims of identity theft. You need to be vigilant about this and guard your credit report. If a transaction comes up that you did not take part in, report it immediately.
  • Setup spending rules and punish yourself if you disobey anything. Lastly, you may want to set some rules that will keep you from spending beyond your means. Be strict about what is a necessity and what is a luxury. Once you have set the rules, you may want to note the punishment that you will impose on yourself for disobeying any of them. That should discourage you from going against your rules.
  • Build up your reserve fund. According to Investopedia.com, this fund will help you meet unexpected costs. Sometimes, these unforeseen expenses are the ones that can really drag your finances down. So just set aside even a s small amount of money and consistently put that in your reserve fund.

Manage your budget better

The last thing that you need to do in order to deal with your big debt once and for all is to manage your budget better. You may want to try to simplify your financial life so you can be a better money manager. Here are a few tips to help you do this.

  • Use technology to your advantage. There are so many personal finance tools on the Internet. You may want to utilize one of two of them to make budget monitoring easier to do. With all the capabilities of your smartphone, you can easily look at how your money is doing.
  • Keep your budget updated. Our expenses vary over time. This is a fact. As we get older, our priorities change and that includes where our money is spent too. You need to constantly check you budget to see if it is still aligned with your current financial goals.
  • Budget for the fun things. People make the mistake of leaving entertainment expenses out of the budget. This is wrong. We need to budget for these costs because we need to have fun every now and then. If you limit yourself, there might come a time when you become so frustrated that you throw caution out the window and splurge your money. You do not want that to happen.

While the big debt that you have is daunting, following all of the tips in this article should be able to help you pay them all off. It is admittedly not an easy task but if you exert some self control and have the right habits, then you can rise up from your difficult financial situation.

Can’t Make Your Mortgage Payments? Our Government Wants Help

man balancing a checkbookhouse is more than just wood, nails, shingles and siding. It’s your home. You’ve spent years furnishing and decorating it. It might be where your children live or where they grew up. It’s the place you come back to after a hard day’s work. It’s your refuge from the world. But you’ve been unable to make your mortgage payments for many months. Your mortgage company has been calling you weekly – to the point where you’re at your wit’s end. This might be because you lost your job or had some other financial disaster. But that doesn’t matter. The point is you’re about to lose your home.

Take heart

You may be able to avoid this because our government wants to help people like you that are in danger of losing their homes. The program is called Making Homeownership Affordable. All it takes to get started is to call 888-995-HOPE (4673). Do this and you’ll be connected with a housing specialist from a HUD-approved housing counseling agency that will talk with you about your specific situation. He or she will be able to offer you a variety of services such as identifying those mortgage assistance programs that might be suitable given your situation. Your counselor will also explain the documents you’ll need and in certain circumstances may even submit those documents to your mortgage holder for you. You will be given help in creating a budget that would allow you to cover your mortgage payments and other expenses. And you will be provided with information regarding local resources that could be of help.

The documentation you will need

If you want to get help through the Making Homeownership Affordable program, you’ll need to have the following documents available:

• Your monthly mortgage statement
• The last two years of your tax returns
• If applicable, information about a second mortgage or any other encumbrances on your home
• If you are self employed your most recent quarterly or year-to-date P& L statement
• The two most recent pay stubs for all members of your household that contribute toward your mortgage payment
• Documentation of any income that you receive from other sources such as Social Security, child support, alimony, etc.
• Your two most recent bank statements
• A utility bill showing your name and property address
• An unemployment insurance letter (if applicable)
• The minimum monthly payments and account balances for all of your credit cards
• Information regarding any other assets and your savings
• A letter describing what happened that caused your income to be reduced or that you lost your job or that your expenses were increased due to illness, divorce etc. (optional)

What you’re housing expert will do

If you choose to work with a HUD-approved housing counselor you can expect that person to work as your advocate and advisor. He or she will need as much information about your situation as possible to help decide which MHA option would be best for you. When working as your advocate your counselor will need the documentation described above to champion your cause. This will not only be documented information about your current mortgage loan but also your overall financial situation and your prospective income in the future. The more of this documentation you can provide, the easier it will be for your counselor to find the best solution given your situation.

Programs that could help you reduce your monthly payments

There are a number of government-sponsored programs available to help people like you. Some of these are designed to help you reduce your monthly payments. This includes HAMP (Home Affordable Modification Program) and the Principle Reduction Alternative (PRA). HAMP could be helpful if you’re not unemployed but are struggling to meet your mortgage payments. If you’re underwater, that is your home is currently worth a lot less than what you owe on it, you could be eligible for PRA. There is also the Second Lien Modification Program This is designed to help people whose first mortgage had been permanently modified under HAMP but have a second mortgage on the same property. If your mortgage loan is insured or guaranteed by the Federal Housing Administration, it’s possible you could be eligible for the FHA Home Affordable Modification program (FHA-HAMP).

Programs designed to reduce your interest rate

Many people have a problem making their monthly payments because they’re trapped into a mortgage with a very high interest rate. If you fall into this category, there are two programs that could lower that interest rate. The first of these is the Home Affordable Refinance Program (HARP), which is designed for people who are not behind on their mortgage payments but have been unable to refinance their mortgages through traditional means. The second is the FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance). It is for those who are not behind on their mortgage payments but are underwater and their mortgage loans are not guaranteed or insured by the FHA.

If you’re unemployed

If you’ve been unable to make your mortgage payments because you’re unemployed there is the Home Affordable Unemployment Program (UP). This would depend on your situation but it’s possible that your mortgage payments could be reduced to 31% of your income or even suspended altogether for a year or more.

Finally, there is the Hardest Hit Fund (HHF) that has more than $7.6 billion to help borrowers in states that were hardest hit by the recent economic crisis.

It will take time and effort

If you believe that Making Homeownership Affordable could help you, do understand the program will take some time and effort. The more prepared you are, the more positive an outcome you can expect. A good start is to spend some time on the MakingHomeAffordable.gov website to learn about your options, your eligibility and what you’ll need to do to apply for assistance. Review the various programs available and the features they offer so that you can choose the one you think will best fit your situation.

Your mortgage company wants you to stay in your house

Believe it or not, your mortgage loan servicer wants to keep you in your house. One of the efforts you will need to make is showing it that you are committed to helping with your modification. Of course, if your loan servicer agrees to modify your loan, it will get lower returns on its investment but this will be far less than what a foreclosure would cost. This means your mortgage company’s biggest concern is whether or not you would be able to comfortably make the payments under your new modified terms. You will need to submit an Initial Package of documents and the more information you can offer assuring your loan servicer that you will be able to make the new, modified payments the easier it will be for it evaluate your modification application.

House with cash on the roofYou could save your home

As you have read, our government does want to help you stay in your home and it is possible – regardless of how severe your situation might be. The important thing is to get started. Make that phone call to 888-995-HOPE (4673) today and talk with an HUD-approved housing counselor.

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