FINANCIAL EDUCATION & TIPS
KNOWING THE FACTS CAN SAVE YOU MONEY
WHAT TO DO IF YOU CAN'T PAY YOUR MORTGAGE:
If you don’t pay your mortgage on time or if your payment is for less than the amount that’s due, you’re in default on your loan. The consequences of default can be costly.
The Federal Trade Commission (FTC), the nation’s consumer protection agency, says it’s important to understand the costs of default. The agency also stresses that if you’re having trouble making your mortgage payments, contact your loan servicer to discuss your options as soon as you can. The longer you wait to call, the fewer options you have.
What happens if I default on my mortgage?
Defaulting on your mortgage can add the cost of various fees to the amount you already owe. It also can damage your credit score. Ultimately, it can lead to you losing your home.
Late Fees. If your payment is late, you may be charged a late fee. Late fees can add hundreds of dollars to your mortgage bill.
Default-Related Fees. Your mortgage servicer is the company that manages your mortgage loan account. If you’re in default, your servicer may charge you for “default-related services,” which can add hundreds or thousands of dollars to your loan over time.
Default-related services can include:
Property inspections to make sure you are living in the home and maintaining the property.
Property preservation services, including lawn mowing, landscaping and repairing or boarding up broken windows and doors.
Foreclosure costs, which may include attorneys fees, property title search fees and charges for mailing and posting foreclosure notices.
Damage to Your Credit Score. Mortgage servicers provide information about your payment history to credit reporting companies, including whether you’ve been late with a payment or missed any payments. Even one late payment lowers your credit score, which affects whether you can get a loan in the future - and what your interest rate will be.
Foreclosure. If you are in default, your servicer may start the foreclosure process. Not only will this add to the costs you will have to pay to bring your account current, but the foreclosure filing will be a matter of public record. This will make it tougher for you to get credit and buy another home in the future. If you aren’t able to bring your loan current or work out another solution, your home could be sold at a foreclosure auction. In many states, you also may be responsible for paying a “deficiency judgment.” That’s the difference between what you owe and the price the home sells for at the foreclosure auction.
What should I do?
Pay close attention to your mortgage loan account. Review your account regularly to make sure your payments are credited on time and that there aren’t any unexpected or unusual fees or charges. If you don’t get monthly statements, check with your servicer to see if you can access your account online. Be assertive. Question any items you don’t understand and keep good records of communications with your servicer. Among the items to monitor:
Posting of Payments. Keep a record of the amount you pay and when. If you have made a full payment, your loan servicer must credit that payment to your loan account as of the day it is received. If you make a partial payment, the servicer is not required to credit the payment to your account. The servicer might return your payment to you or put it into a “suspense” or “hold” account: the payment sits in limbo until you provide the funds to equal a full payment.
Improper Late Fees. Most mortgage contracts include a “grace period” - the time you have to pay your mortgage without incurring a late fee. If you make your payment during the grace period, there shouldn’t be a late fee. The day your servicer gets your payment is the day that counts, not the day you send it.
Too Many Late Fees. You should be charged a late fee only if you don’t make a mortgage payment in full and on time. Some servicers have charged borrowers late fees on payments that were made in full and on time because the borrower didn’t include a payment for a previously unpaid late charge. This practice is called late charge “pyramiding,” and it’s against the law.
Default-Related Fees. Review your account for default-related fees. Make sure you understand what they’re for and why you’ve been charged. If mystery fees appear on your statement under headings like “other fees” or “corporate advances,” contact your servicer for an explanation.
Escrow Account. If you have an escrow account with your mortgage for payment of real estate taxes and homeowner’s insurance, review your annual escrow account statement. Make sure the amount for taxes and insurance on the statement are correct and that your tax and insurance payments have been made on time. If you have an escrow account, your monthly mortgage payment will increase if the amount you owe for taxes or insurance increases. If the escrow amount is short, adjust your monthly payments to cover it.
Bankruptcy Servicing. Some borrowers choose to file a Chapter 13 bankruptcy to stop foreclosure and stay in their homes. In Chapter 13, the court generally approves a repayment plan that allows you to pay your debts over three to five years. Your bankruptcy plan may include your past due mortgage payments, but it does not affect your obligation to make your current mortgage payments. You must continue to make those payments in full and on time or you may be in default. If default happens, you could be charged late fees and default-related fees, and the loan servicer may ask the court for permission to foreclose on your home.
It is important to continue to monitor your mortgage account, even during bankruptcy. Make sure your payments are credited properly and on time. Watch for any inappropriate late charges or fees, and keep an eye on your escrow account.
Where can I get help?
If you are struggling to make your mortgage payments or you’re in default, contact your mortgage servicer right away. Many people find it embarrassing to talk with their servicer about payment problems, or they’re hopeful that their financial situation will improve and they’ll be able to catch up on payments. Keeping the lines of communication open is critical to resolving issues with your loan. Options to help you bring your mortgage loan current and save your home from foreclosure include loan modifications, repayment plans, or a temporary reduction or suspension of payments. If you’re not eligible for any of these options, your servicer may be able to help you find a solution other than foreclosure, like a short sale or a voluntary transfer of the property through a “deed in lieu of foreclosure.”
Staying in touch with your servicer also could save you money and make it easier to bring your mortgage loan current. For example, although servicers have different policies about when they will order default-related services, some may not order property inspections or property preservation work if you let them know each month that you are still living in the home and maintaining the property. They also are more likely to delay a foreclosure sale if they are working with you to find a better solution.
If you are having a hard time reaching or working with your loan servicer, talk to a certified housing counselor. Call 1-888-995-HOPEfor free personalized guidance from housing counseling agencies certified by the U.S. Department of Housing and Urban Development (HUD). This national hotline - open 24/7 - is operated by the Homeownership Preservation Foundation, a nonprofit member of the HOPE NOW Alliance of mortgage industry members and HUD-certified counseling agencies. For free guidance online, visit www.hopenow.com.
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DO YOU KNOW YOUR MORTGAGE REFINANCING OPTIONS?
The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month--lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.
For example, compare the monthly payments (for principal and interest) on a 30-year fixed-rate loan of $200,000 at 5.5% and 6.0%:
Monthly payment @ 6.0% $1,199
Monthly payment @ 5.5% $1,136
The difference each month is $ 63
But over a year's time, the difference adds up to $ 756
Over 10 years, you will have saved $7,560
Adjusting the length of your mortgage
Increase the term of your mortgage: You may want a mortgage with a longer term to reduce the amount that you pay each month. However, this will also increase the length of time you will make mortgage payments and the total amount that you end up paying toward interest.
Decrease the term of your mortgage: Shorter-term mortgages--for example, a 15-year mortgage instead of a 30-year mortgage--generally have lower interest rates. Plus, you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month.
For example, compare the total interest costs for a fixed-rate loan of $200,000 at 6% for 30 years with a fixed-rate loan at 5.5% for 15 years:
Monthly payment Total interest
30-year loan @ 6.0% $1,199 $231,640
15-year loan @ 5.5% $1,634 $ 94,120
Refinancing is not the only way to decrease the term of your mortgage. By paying a little extra on principal each month, you will pay off the loan sooner and reduce the term of your loan. For example, adding $50 each month to your principal payment on the 30-year loan above reduces the term by 3 years and saves you more than $27,000 in interest costs.
If you have an adjustable-rate mortgage, or ARM, your monthly payments will change as the interest rate changes. With this kind of mortgage, your payments could increase or decrease.
You may find yourself uncomfortable with the prospect that your mortgage payments could go up. In this case, you may want to consider switching to a fixed-rate mortgage to give yourself some peace of mind by having a steady interest rate and monthly payment. You also might prefer a fixed-rate mortgage if you think interest rates will be increasing in the future. ( If your monthly payment on a fixed-rate loan includes escrow amounts for taxes and insurance, your payment each month could change over time due to changes in property taxes, insurance, or community association fees.)
Getting an ARM with better terms
If you currently have an ARM, will the next interest rate adjustment increase your monthly payments substantially? You may choose to refinance to get another ARM with better terms. For example, the new loan may start out at a lower interest rate. Or the new loan may offer smaller interest rate adjustments or lower payment caps, which means that the interest rate cannot exceed a certain amount. For more details, see the Consumer Handbook on Adjustable-Rate Mortgages.
Tip: If you are refinancing from one ARM to another, check the initial rate and the fully-indexed rate. Also ask about the rate adjustments you might face over the term of the loan.
Getting cash out from the equity built up in your home
Home equity is the dollar-value difference between the balance you owe on your mortgage and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash-out refinancing). You might choose to do this, for example, if you need cash to make home improvements or pay for a child’s education.
Remember, though, that when you take out equity, you own less of your home. It will take time to build your equity back up. This means that if you need to sell your home, you will not put as much money in your pocket after the sale.
If you are considering a cash-out refinancing, think about other alternatives as well. You could shop for a home equity loan or home equity line of credit instead. Compare a home equity loan with a cash-out refinancing to see which is a better deal for you. See What You Should Know about Home Equity Lines of Credit.
Tip: Many financial advisers caution against cash-out refinancing to pay down unsecured debt (such as credit cards) or short-term secured debt (such as car loans). You may want to talk with a trusted financial adviser before you choose cash-out refinancing as a debt-consolidation plan.
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HOW TO SAVE ON AUTO INSURANCE:
Low cost automobile insurance is the goal for most families, particularly if teen drivers are in the picture. The more you know automobile insurance the more likely you will be able to make the necessary decisions that lead to low cost automobile insurance. Here are some common questions about car insurance that seem to confuse many drivers.
Do I need an agent or broker to help with car insurance? Any driver willing to do a little research can find low cost automobile insurance. There's no doubt that insurance agents have expertise in the area and can be helpful. But remember that direct agents are working for only the company you called. That means they are not likely to suggest that their company's insurance isn't best for you. Independent brokers can represent a number of companies and can be extremely helpful as well. But there are no secrets with car insurance and individuals can get quotes over the phone or online and end up with low cost automobile insurance.
Is anyone who drives my car protected? For the most part, the answer is yes. As long as someone is driving your car with your permission, they are protected under your insurance coverage. However, if live with your girlfriend and let her use your car, she will not be covered because insurance companies will require her to be included as part of the coverage.
How much coverage do I need? This is a fairly complicated question and the answer varies for every person. Part of the answer is you can only get the insurance you can afford. In most states, there is a minimum amount of liability coverage every driver must maintain. Beyond that, you should set liability limits to levels that you believe will be sufficient to pay off most claims, and will be something you can afford. If the liability limits, which pay for bodily injuries and property damage in accidents that you cause, aren't high enough to handle a claim, you can be personally sued for the difference. The same goes for deductibles, which can be set to $1,000 or $1,500 to save the most money. But you can't do that if you can't afford to pay the deductible in the event of a claim.
Is insurance mandatory? In a word, yes. There are different penalties around the country, and the penalty is different if you are caught for a minor driving violation without insurance, as opposed to creating an accident without insurance. But you can face fines, penalties, loss of driving privileges and even risk jail time.
Can I do anything to lower the cost of insurance? One great way to get low cost automobile insurance is to stay out of accidents and avoid tickets. As described above, drivers can choose higher deductibles or lower liability limits in an effort to get cheaper insurance. Drivers can also refuse certain coverage, such as rental or emergency roadside services for low cost automobile insurance. Collision and comprehensive coverage can also be refused, but that would leave you without any coverage to repair your vehicle in an accident that was your fault.
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DAILY TIPS BY RADARSCREAM.COM™
CBS2 CHANNEL AND SHOWS:
Late Show with David Letterman is an American late-night talk show hosted by David Letterman on CBS. The show debuted on August 30, 1993, and is produced by Letterman's production company, Worldwide Pants Incorporated and CBS Television Studios. The show's music director and band-leader of the house band, the CBS Orchestra, is Paul Shaffer. The head writer is Matt Roberts and the announcer is Alan Kalter. Of the major U.S. late-night programs, Late Show ranks second in cumulative average viewers over time and third in number of episodes over time. The show leads other late night shows in ad revenue with $271 million in 2009.
In most U.S. markets the show airs at 11:35 p.m. Eastern/Pacific time, but is recorded Monday through Wednesday at 4:30 p.m., and Thursdays at 3:30 p.m and 6:00 p.m. The second Thursday episode usually airs on Friday of that week.
In 2002, Late Show with David Letterman was ranked No. 7 on TV Guide's 50 Greatest TV Shows of All Time. CBS has a contract with Worldwide Pants to continue the show through 2015; by then, Letterman will surpass Johnny Carson as the longest tenured late-night talk show host.
Daytime programming is also provided from 10:00 a.m.-3:00 p.m. weekdays (with a half-hour break at noon ET/PT for local stations to air news or other programming such as syndicated shows; usage of the 10 a.m. and 3 p.m. hours for network programming vary depending on the affiliate) featuring the game shows The Price Is Right and Let's Make a Deal, soap operas The Young and the Restless and The Bold and the Beautiful, and talk show The Talk. CBS News programming includes CBS This Morning from 7:00-9:00 a.m. weekdays and Saturdays; nightly editions of CBS Evening News (whose weekend editions are occasionally subject to abbreviation or preemption due to sports telecasts overrunning into the program's timeslot), the Sunday political talk show Face the Nation, early morning news programs Up to the Minute and CBS Morning News and the newsmagazines 60 Minutes, CBS News Sunday Morning and 48 Hours. Late nights feature the weeknight talk shows Late Show with David Letterman and The Late Late Show with Craig Ferguson.
Sports programming is also provided weekend afternoons at any time from between noon and 7:00 p.m. (9:00 a.m.-4:00 p.m. PT). Due to the unpredictable length of sporting events, CBS will occasionally delay scheduled primetime programs to allow the programs to air in their entirety (this is particularly prevalent on Sunday evenings during the NFL season, on weeks when CBS is scheduled to broadcast a late afternoon game).
ABOUT NEW YORK WHERE CBS IS HEADQUARTED::
New York has architecturally noteworthy buildings in a wide range of styles and from distinct time periods from the saltbox style Pieter Claesen Wyckoff House in Brooklyn, the oldest section of which dates to 1656, to the modern One World Trade Center, the skyscraper currently under construction at Ground Zero in Lower Manhattan and currently the most expensive new office tower in the world.
Major destinations include the Empire State Building; Statue of Liberty; Ellis Island; Broadway theater productions; museums such as the Metropolitan Museum of Art; greenspaces such as Central Park and Washington Square Park; Rockefeller Center; Times Square; the Manhattan Chinatown; luxury shopping along Fifth and Madison Avenues; and events such as the Halloween Parade in Greenwich Village; the Macy's Thanksgiving Day Parade; the St. Patrick's Day parade; seasonal activities such as ice skating in Central Park in the wintertime; the Tribeca Film Festival; and free performances in Central Park at Summerstage. Special experiences outside the key tourist areas of the city include the Bronx Zoo; Coney Island; Flushing Meadows-Corona Park; and the New York Botanical Garden.