Joe Sangl, financial guru at my church, recently posted advice on paying down your mortgage. I’m sure we’d all like to learn how to work on eliminating this large debt looming over us. It’s a pretty monumental occasion when you buy you first house or any time you buy something that is such a large sum of money.

When Joe set out to buy his first house, it was a bit of a shocker realizing how much it was really going to cost him each month. He says he found that if he paid  the scheduled payments for the entire 30-year term,  he would pay more in interest than he actually paid for the house.

He looked for ways to eliminate the mortgage as soon as possible so more of his hard-earned money would go toward the principal balance. So, here’s what you can do.

Lower the Interest Rate:

Mortgage rates are still at historic lows, he says. CNNMoney has a great calculator to help you see if refinancing your home makes sense. By lowering the interest rate by even 1 percent on a $100,000 mortgage is nearly $1,000 per year. Check out Joe’s “Early Pay Off Calculator”. It will show you how much more quickly you can pay off your loan if you get a lower interest rate.

A new report released today is the first state-level study into negative equity single-family homes. The study found that 23% of Americans– nearly one in four– have mortgages where they owe more than their home is worth. According to a CNN news report about the study, almost 10.7 million mortgages were deemed “underwater” by the report as of the end of September.

The First American CoreLogic Negative Equity Report includes information on more than 45 million properties that have a first and/or second mortgage as of September 30, 2009. The study includes properties with values between $30,000 and $30 million. To determine how many homes are “underwater” First American CoreLogic subtracted the property’s current value from the remaining mortgage. If that was a negative number then that property is among the millions with negative equity.

There were millions of Americans who weren’t upside down in their mortgages, but were very close. About 2.3 million homeowners were within 5% of having negative equity. Some states were far higher than the national average of 23%:

Nevada: 65%
Arizona: 48%
Florida: 45%
Michigan: 37%
California: 35%

The reason these states have a much higher rate of negative equity mortgages, experts say, is because they have higher rates of prime loans that went bad including adjustable rate or interest only mortgages. The problem for many homeowners comes when the accumulated debt reaches 10-25% more than the principal loan amount. That’s when Adjustable Rate Mortgages are typically transferred into a fixed-rate mortgage, driving their monthly payments up significantly. At that point many homeowners aren’t able to make their monthly payments and are forced to consider foreclosure.

Image courtesy of respres

I have to admit that I am just so excited to have found all of these websites in magazines that I regularly read. I’m always looking for more resources when it comes to saving money. Here is the second list of sites from Woman’s Day magazine.

Lynda: If you need some extra training in programs such as Photoshop, Dreamweaver, Office and the basics on photography or web design, this is a great place to start. The Online Training Library helps you keep your skills current and starts at $25 per month. Last month, they announced a partnership with Microsoft to be a training partner for Office 2008.

BigHugeLabs: Are you interested in photography? This site helps you do fun stuff with your photos, such as create posters, photo collages, special effects, jigsaw puzzles and magazine covers.

Dafont: Let’s say you’re working on a project and need to download a cool font quickly. There are more than 9,000 fonts to choose from and it’s free!

Fix It Club: Sometimes I get in a jam and wish I knew how to fix something around the house. Well, look no further. The Fix It Club offers free repair help for things from appliances to electronics and apparel to exercise equipment.

Budget Simple: Budgeting your money can be tricky and this website it designed to help for free. Budget Simple offers software to keep track of monthly spending and current income and expenses.

Annual Credit Report: This credit report is free and it’s available once a year. The site works with three nationwide consumer credit reporting companies. Reviewing your credit regularly is important and this helps you do it at no cost.

Dinky Town: Looking for financial calculators? You can calculate just about anything, such as mortgages, loans, automobiles, retirements, personal finances, credit card uses and savings.

Bloomberg: Need more financial calculators? Bloomberg.com helps you figure out how to pay off your car loan, convert currency, check out your investments and mortgage.

Discover America: This is the official travel and tourism website of the U.S. It can help you find great deals to just about anywhere and offers information about each state. It can also put you in touch with a travel specialist to help you book the trip.

Mouse Savers: If you love Disney World, this is the place to go for savings on everything Disney. You can get park and cruise discounts, save on shows, hotels and even books, movies and music.

I recently came across an interesting website that happened to be quite an eye opener. The Center for Economic and Entrepreneurial Literacy’s website Econ4U has some great stuff on it to help teach others about personal finance and economics. In August, the group, a non-profit dedicated to financial education, realized that most college students can’t answer simple questions about their finances when it conducted a survey of 500 American students.

The findings were:

APR Basics 44 percent didn’t know the APR of their credit card and more than 80 percent didn’t grasp how long it would take to pay it off.

Balancing a Checkbook 54 percent have overdrawn their bank account in the past and didn’t understand the consequences of bouncing a check.

Credit Dependency 64 percent of college students have one or more credit cards and 61 percent of them already have credit card debt.

But it wasn’t all bad. About 60 percent said they keep a budget, 92 percent understand supply and demand and they had positive thoughts about paying off their student loans within 10 years. Take a look at the complete results of the survey.

When it comes to the average American, the group found that only 47 percent know what the Dow Jones Industrial Index is. Also, just 57 percent said their credit scores were the most important thing when trying to get a loan and 48 percent understood the advantages of investing in an IRA.

Another eye opener for me was when I clicked on the “Quizzes” tab. The site has several quizzes to help you see if you understand personal finance and investing. I took the 20-question quiz that covers several areas and realized that I don’t know as much as I thought I did. They also have specific quizzes on credit card debt, company costs, credit ratings, entrepreneurship, wages/benefits, home ownership, investing and savings.

The site also helps to educate you on topics such as writing wills, information on mutual funds, car loans, mortgages, student loans and many others. Check it out. Your quiz scores might surprise you.

It took something big before Heather Levin gave personal finance a second thought. It wasn’t until she bought her first home, ripped open the envelope containing her first mortgage payment, and saw just how much of her money was going to pay interest that Heather resolved to buy a home with cash. This full-time commercial copywriter blogs about being green and frugal at TheGreenestDollar.com and tweets about it @GreenestDollar. She and her husband are hoping to sell their Howell, Michigan home and where they’re headed is an inspiring story.

OODC: How did you get started blogging and tweeting?

@GreenestDollar: I started blogging almost one year ago. After I bought my house I realized I really, REALLY hated having a mortgage! So I started researching ways to save up enough money so I could pay my mortgage off. I’d always been a very green-minded person, but I began to realize that making my home energy efficient was just another way to not only save money but help the environment.

After I started making changes in my home and lifestyle I realized that even the smallest steps, when added up together, could really make a big difference. And, I realized that other people would probably want to know some of the information I was learning on how to go green and save money, so I started The Greenest Dollar as a means to share my information with others.

OODC: Your website says you’re trying to sell your home so that you can build a green home debt-free. How is that going?

@GreenestDollar: It’s going great! We’ve still have our current home up for sale (the MI housing market is “challenged”, to put in mildly…). We’ve been saving money like maniacs so that when we decide to build our shipping container home we can do it without having to get a mortgage. I truly believe that when we finally get our house sold and we’re ready to buy land, we’ll be able to do with cash. I’ve resolved to never having a mortgage again.

At this point we’re trying to figure out the best place for us to live off the grid. We want to use wind and hydro as a means to power our shipping container home, so any land we buy is going to be in a windy area with a running stream. We haven’t decided where we’re going to settle down (we’re thinking western Washington state, western Montana, or the western side of Michigan at this point).

Wherever it is, it’s going to be on lots of land.

OODC: What are the best ways you’ve found that being green has saved you money?

@GreenestDollar: Insulation. Seriously, I’m adding even more to my attic this fall. Michigan winters are brutal, and my house was built in 1900. So adding insulation has been crucial to keeping our winter heating bills low and using less energy. It’s so important to have a well-insulated, tight house! The U.S. Department of Energy estimates that the avg. American home has enough leaks that, when put together, would equal a 9 ft. square hole. That an enormous amount of energy that’s just being wasted.

We also save money and energy by not using any A/C. Our summer energy bill is usually $5-$10. We use CFL bulbs, and just keep the windows open 24 hrs. a day. It’s wonderful. Our home doesn’t have A/C in it, but even if it did I would never use it.

OODC: You said on your blog that you didn’t become interested in personal finance until you bought your first home. Why do you think you weren’t you interested in saving money earlier?

@GreenestDollar: You can chalk it up to sheer stupidity. Honestly, it just wasn’t something that was on my radar. When I think back on it now I’m just astounded that it took me so long to realize how important personal finance is. I never got into debt with credit cards, so I managed to stay out of that hole, but I never proactively put aside money every month for an emergency fund either.

Saving money was not something I was taught by my parents. So I just didn’t “get it” until I bought my first house.

OODC: What do you hope people get out of your Tweets and blog posts?

@GreenestDollar: I try to share information that helps them live a greener life and save money. I often Tweet articles I find when doing research online, especially about up and coming green technology. It’s amazing how many people are working together to creatively solve our environmental problems. It’s so inspiring! I know it’s easy to get depressed at the grim news we’re facing, but we’re slowly making a difference.

OODC: Who are some of your favorite money tweeters?

@GreenestDollar: I love Beth at @SmartFamilyTips. She has some great articles on her blog! I also really love @WiseBread.

Thanks to Heather for being part of our Twitter Tuesday Profile series. Want to be considered for an upcoming profile? Just tweet me!

This summer MSN Money shared an inspiring story about Angela Logan, a single mother of three sons who had fallen in financial trouble. She received a foreclosure notice back in January and at the end of July faced a deadline to pay more than $2500 to her mortgage lender. Angela got to work in the kitchen. Her idea was to sell 100 homemade “mortgage apple cakes” for $40 each. Orders skyrocketed.

The first week Angela took in 500 orders from around the world on her website, . maccakes.com. In order to stay in her home Angela was required to make two more $2500 payments by October 1. The article reported that a health officer had warned Logan that it was against state law to use her home’s kitchen to manufacturer food commercially. But a local Hilton hotel allowed Logan to use their kitchen to produce ten cakes at a time. I think it’s safe to say Angela had made her goal.

Her orders are now being fulfilled by BakeMeaWish.com. Not only that, but according to Bake Me a Wish, 5% of every Mortgage Apple Cake order will be donated to GreenPath Debt Solutions. The nearly 50-year-old non-profit consumer credit counseling service helps people resolve financial problems, achieve financial goals and get relief from debt. Each Mortgage Apple Cake is $44.99 and is topped with rich, butter cream and cream cheese frosting.

A friend of mine in California bought a beautiful home this year and got a great deal because it was a foreclosure. There are definitely real estate deals available for those willing to go this route, but it’s not the easiest way to buy property. According to RealtyTrac, US foreclosures hit another record high in July with 360,149 homes filing for foreclosure within that 30 day period. Nevada ranks the highest in the number of foreclosures, despite a new law that now requires lenders to offer mediation to homeowners that are facing losing their homes. California, Arizona and Florida rank second, third and fourth behind Nevada. Here is a list of all state foreclosure records if you want to see how your state stacks up. July was the third time in five months where a new record was set in property foreclosures, according to RealtyTrac.

If you’re interested in buying one of the millions of homes in foreclosure right now, it’s best to contact your real estate agent and have them walk you through the process. Often the lender wants to recover the amount of the loan which means you could buy a property at a 10 or 20 percent discount. However, the owners of many of the properties being foreclosed on did not have much equity in the property. That means the discount could be relatively low. Wondering where the best discounts are? Check out this article in Business Week that lists the biggest cities with the most discounted homes.

If the home is in pre-foreclosure, you may decide to contact the owner directly and make an offer on the home. This would limit the damage to the owner’s credit report and it would give you an opportunity to get a great price on a home, making it a win-win situation. If the home is already in foreclosure, you will likely have to deal with the bank if it is a bank-owned property. As with any home, you will want to have the home thoroughly inspected before making an offer to make sure it really is the great deal you believe it is.

Many celebrities seem to be having trouble unloading their homes in this troubled housing market, right along with many other Americans. Here’s a list of a few celebrities slashing their asking prices.

Britney Spears: Britney Spears slashed the price of her Beverly Hills mansion from the original listing price of $7.9 million last September to about $7.1 million in February, only to drop it again in June to $6.5 million. She bought the house for $7.1 million in January of 2007. According to real estate site Zillow.com the 7500 square foot home is only worth $4.8 million.

Alex Rodriguez: Baseball star Alex Rodriguez listed his Coral Gables, Florida home last fall for $14,876,000, dropped the price in February to $12.3 million and dropped it again in June to $11 million. And it looks like he has very recently dropped the price by yet another $1 million. He paid $12 million for it back in 2004, so it looks like ARod could be losing money on this home.

Jon and Kate Gosselin: Fans of the show Jon and Kate Plus 8 saw the couple move out of their Pennsylvania home last fall. It was on the market in the winter for $350,00 and is now listed at $315,000. But judging by the headlines lately this is probably not one of their primary worries.

Joan Rivers: Joan’s New York City penthouse hasn’t been on the market long so it’s tough to say how quickly it will sell. It’s listed right now with Sotheby’s for $25 million.

Donald Trump: According to The New York Observer, Donald Trump has knocked $20 million off the price of his Park Avenue penthouse duplex. The price dropped from $51 million to $31 million.

Bill Gates: Bill Gates got a deal, perhaps because of the real estate market. He purchased a home and land once owned by Wild Buffalo Bill Cody for $8.9 million. The home was once listed at $12 million and received a few price cuts before getting picked up by Gates.

It’s hard to find a person not impacted by the economy. And I am no exception. Although my husband and I are blessed to both have small businesses that have been doing very well, we have family members who have experienced the ups and downs of this economy. If you’re wondering how layoffs, the housing slump and drooping retirement accounts could have a positive side, keep reading. Here is a personal look at how some of my loved ones have been impacted by the economy. I’d love to hear how yourfriends and family members have been doing, too.

The Positive

My sister lost her job last summer which could have been a big negative. But it prompted her to start her own business which has turned into a big positive. She’s doing something she loves, living with more freedom, experiencing less stress and enjoying the fruits of a successful small business.

I have several close friends who have been able to buy homes that they wouldn’t have otherwise been able to purchase. One friend bought her first home a few months ago. It was a foreclosure that would have been way out of her price range a few years ago.

The Negative

Some relatives of mine have not been able to afford their mortgage for the last few months. While I don’t know all of the details, it’s likely that the economy had some role in their situation. It looks like they’ll be filing bankruptcy and possibly lose their home.

Many good friends and church members have been laid off this year. They’ve faced unemployment unexpectedly. On the positive side, I have seen them respond with optimism and resilience as they trust God during this tough time.

A Little Bit of Both

My mother founded a no-kill animal rescue program in Iowa. While the economy has forced many people to give up their pets, the outpouring of care and willingness to adopt animals in need has increased significantly.

Another friend’s small business lost several huge clients at once, bringing his income down to a fraction of what it once was. He eventually sold his pricey condo so that he wouldn’t end up losing it in the future. He’s now renting and has a new plan to pay cash for a moderately priced home next year. There’s no denying his life was dramatically changed by the economy and as he experiences the freedom of living debt free it will all have been for the best.

Welcome to the first post in a weekly series called Twitter Tuesday Profiles. Each Tuesday we will be highlighting a Twitter user that focuses on an aspect of money including budgeting, investing, or saving. Our first profile features Twitter user SavingForHome. Preferring to stay anonymous, she only wants to be known as Saving Diva. Saving Diva also writes a blog called Saving For Home where she candidly chronicles her struggle to spend wisely and save more money.

OODC: How did you get started blogging?

SD: I found a link to Madame X’s blog, MyOpenWallet.com, in Marie Claire while I was in the doctor’s office. I checked out the blog when I got back to work, and I was hooked. I started reading PF blogs. After about 6 months of reading PF blogs daily, I decided to create my own. I was making about $33k a year, and I had no idea what to do with my money. I was getting a full employer max on my 401k, but I wasn’t saving any other money. I didn’t have a place to discuss money with others, so I created my blog.

OODC: You share a lot of information about your own personal finances on your blog. Why are you so open?

SD: Since my blog is anonymous, I feel very free. I do receive a lot of helpful advice, but also hurtful criticism. I have gained so much from my readers comments. I rely on my sounding board to tell me if I’m being ridiculous.

OODC: When you started Tweeting and blogging you were still saving up to buy a home. How did that go and were you able to buy the home you were hoping to buy?

SD: I had started saving up for a down payment a few years ago. I just started setting aside money that I had made on the Internet and then from my second job. When I enrolled in graduate school, I thought buying a home would be put on hold for at least 5 years. When I found out how inexpensive real estate around my area was, I thought that I might consider purchasing something. I have an FHA loan and a small one bedroom condo. My condo is so much nicer than I had hoped for. I have a small private backyard, washer and dryer in unit, and I live in a quiet residential area.

OODC: Who are some of your favorite Twitter users?

SD: I use Twitter to keep up with my favorite bloggers. Right now, @RevancheGS is my favorite because of her adorable puppy pic! I also love to follow @brokeinthecity, and @StackingPennies

OODC: What do you hope people get out of your Tweets and blog posts?

SD: I don’t have high expectations for my posts and tweets, but I just want people to realize they’re not alone. Money is such a taboo topic that it’s hard to know the social norms. I hope that people can look at my mistakes or my accomplishments and learn something. My blog isn’t supposed to be an example or a tool to teach people how to manage their money. There are a ton of PF blogs that tell you how or what to do. My blog is just about me…and how I save/spend my money.

Thanks to Saving Diva for taking the time to give us a little insight into her life. If you would like to be considered for a Twitter Tuesday Profile, just send me a tweet.

The ongoing credit crisis combined with intense political pressure has made many major banks very amenable to easing the loan terms for most borrowers displaying repayment stress. While federal-backed programs for mortgages have been getting most of the press, banks will modify credit card, home equity and even auto loan terms, too. Many banks may be quick to reduce the cost of your loans, but they certainly don’t advertise this! The trick, is finding the right person to talk to in these behemoth institutions.

To help you make your loans more affordable, we tracked down the direct contact information for the loan modification departments at major U.S. banks:

Bank	Program Name	Phone Number
	Bank of America Financial Difficulty Relief	800-846-2222
	Chase Home Ownership Center	866-550-5705
	Citibank’s Office of Homeownership Preservation	866-915-9417
	Citifinancial Hardship Assistance	877-915-9417
	National Homeownership Retention Program for Countrywide Customers	800-669-6607
	Fifth Third Bank Financial Hardship Assistance	866-601-6391
	HSBC Payment Assistance Program	800-338-6441
	Regions Bank Loan Payment Assistance	866-298-1113
	SunTrust Home Retention Team	888-886-0696
	U.S. Bank Lending Assistance Program	800-872-2657
	Wachovia Loan Modification Programs	800-707-4607
	Wells Fargo Home Mortgage Alternative Payment Options	800-678-7986

Mortgage payment help is here but only for a special few. There has been a lot of news coverage about all of the money that the Federal Government is throwing at the trouble economy. The real estate market and the mortgage industry has received some of that money in the form of new loan programs for homeowners that are struggling to pay their mortgage payments each month. There is just one little hitch that it NOT being talked about very much.

Homeowners that are cutting back, giving up and doing everything in their power to pay the mortgage and other bills are not eligible. The government is not in the business of helping homeowners with their mortgage payments if those homeowners are current on the bills and have a good credit history – even if that good standing is maintained by the use of savings.

The only way that you can utilize the wonderful programs (sarcasm intended) that the government is providing is if you are behind. The Federal Government seems to be encouraging homeowners to get behind on their mortgage in order to be able to receive any of the benefits of their own tax dollars at work.

The good news is that some of the banks that are administering the programs for the Federal Government may be willing to “go to bat” for you in your particular mortgage situation. If you find that you are in trouble with your mortgage payments (or see trouble looming in the distance) then contact your bank now and request a hardship package for your mortgage or other loans. The sooner you begin the process the less stress you will have while jumping through all the hoops.

The interest rates are down and now have many homeowners considering the path of refinancing. Experts in the industry are encouraging those homeowners that do qualify for refinancing to take the leap (partly in hopes of stimulating the economy and the lending industry). It is important to look at the cost verses the benefits before taking the refinancing leap.

3 Reasons to Refinance

- Do consider refinancing if your existing mortgage is on a variable rate interest. Locking in a low interest rate could end up saving you thousands of dollars over the term of your loan.

- Do consider refinancing if you have 20% or more in your home. Lower loan to value percentages will help you qualify for the best programs and interest rates that are currently on the market.

- Do consider refinancing if your current rate is over 6%. The savings that you will have will far outweigh any costs for refinancing.

Every loan is not a good candidate for refinancing. It is important to sit down with a lending professional when considering the move. Take time to discuss your current circumstance, review available programs and weight the potential savings before making the move to refinance your current mortgage.

There is no feeling quite as bad as realizing that you can not make the monthly payments to keep food and shelter. It can be even more upsetting when you have a family that you are supporting as well. There are several things that you can do when you run into financial trouble to help keep your mortgage from going to foreclosure.

Tips for Avoiding Foreclosure

1. Contact your lender as soon as you see trouble in the future. The sooner that you begin working with the lender then the more likely there will be a solution available for your situation.

2. Ask about Real Estate Assistance Packages. The trouble in the lending and real estate markets has causes many companies to create packages to help customers deal with financial difficulties.

3. Ask about a temporary waiver. If you know that your trouble is temporary then you may want to get your lender to put off payments for a couple of months.

4. Cut other expenses. Start getting rid of all those payments (extra cars, entertainment or special classes) that are cutting into your budget. Remember that you can always come back to those when your finances return to a healthy place.

The key to avoiding foreclosure is to deal with trouble as soon as you become aware of its potential. Waiting until you are already behind on your payments will make it more difficult for you to find a solution that will work.

Times are tough and many people are choosing to walk away from debt voluntarily especially when it comes to mortgages. Voluntary Foreclosure or the act of choosing not to pay a debt that is owed is a dangerous line to cross for Christians. Scripture is very clear about those that do not pay what they owe and about the rules regarding payment of debts.

Ultimately the goal is to owe no one anything but today’s society has made borrowing a “normal” aspect of life which is the easiest way to avoid voluntary foreclosure or other debt problems. Christians must be the example during these down economic times and work hard to pay all that they owe.

Scriptural Reasons to Avoid Voluntary Foreclosure

Voluntary foreclosure is choosing to NOT pay what you have agreed to pay – Psalm 37:21 “The Wicked borrows but does not pay back, but the righteous is generous and gives”

Voluntary foreclosure is choosing not to pay what is owed in the hopes that the bank or lender can get what is owed by selling the collateral – Romans 13:7 “Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed”

The goal of Christians is to always pay what is owed when something is owed. Circumstances may make that impossible and lenders may refuse to work out new or different terms to make payments possible. Lenders may push the situation to foreclosure or bankruptcy and that is their right as the lender. Christians are called to be the example and must work harder to pay those debts instead of choosing the path of voluntary foreclosure.

There are a large number of home owners that are struggling to make payments because of the change in the economy, a lost job or a rise in their interest rates. The craziness of it all is that the company that brings about the foreclosure may not (and usually isn’t) the company where the loan originated. Home loans are often sold, then re-sold, then re-sold sometimes more times than any one can keep count.

This could be good news for the home owner. There is a little known requirement that forces companies to produce the lien before getting any money. In the old days, the note was actually cut in half in a zig zag fashion and the homeowner would keep one half while the lender kept the other half. Any person coming to the homeowner to demand payment had to produce the other half of the note and the two halves had to match up exactly.

Talk to your court house before the foreclosure hearing and see if you need to fill out a form or can just be informal about your request. But using the “produce the note” could be the time saving tactic that a homeowner needs to get things back on track.

The answer to that question could change several times throughout a given day. It all depends on the current available interest rate, how much refinancing will cost you and how long you will be staying at your current residence. I just left an attorney’s office after refinancing my mortgage. Even though I bought my home only 7 months ago and had a pretty good mortgage rate, my husband and I couldn’t pass up the 4.75% rate we locked into last month. It will save us $118 a month on our mortgage payment, which to some people may not seem like much, but to us that’s like getting free electricity and water every month!

It’s important to consider how long you’ll be in your current residence and how much refinancing will cost. Refinancing cost us roughly $3000 which means we’ll need to stay in our current residence just over two years in order to break even. But there are other benefits. By lowering our monthly bills we feel like we’re being more responsible with our money and we are better prepared for any bumps in the road that we may encounter. And in a recession, bumps in the road are pretty much inevitable. So how do you know if it’s the right time for you to refinance? Here are some pros and cons to consider:

Pros
1. Do you have an ARM or adjustable rate mortgage? If your current rate is higher than available fixed mortgage rates, you may want to research the possibility of refinancing.
2. When will you break even on your refinancing costs? Figure out how many months it will take for you to make back the expenses of refinancing. Will you be living in your home that long?
3. Do you have two loans? Now may be the time to combine them into one by refinancing.

Cons
1. Do you have bad credit? You may want to wait to repair some of your credit mistakes in order to get a better rate when refinancing.
2. Thinking about moving? Refinancing may not make sense if you’re not planning on staying in your home long or if there’s a chance you’ll be asked to relocate for your job.

The Federal Reserve lowered interest rates this week, which is good news for home buyers and owners. The National Association of Realtors released a statement saying that the lower rates make the dream of homeownership attainable again. “That is the lowest rate in nearly 50 years and will bring buyers back to the market,” NAR President Charles McMillan said. “We are pleased that the government heard our message and responded to our call for action.” Rates had averaged 6.3% in the third quarter, but have now fallen into the 4% range in some parts of the country, making it the lowest rate in nearly 50 years. That has enticed many homeowners to consider refinancing.

According to the Mortgage Bankers Association, mortgage applications rose 2.9% last week. Refinancing made up 76.9% of mortgage activity last week, bringing it to a five-year high. The average rate on a 30-year fixed rate dropped to 5.18% last week. What does that mean as far as potential savings? On a $165,000 loan, the payment would be $906 with current rates, down from over $1000 a month just a month ago.

So how do you know if refinancing is right for you? Try this Mortgage Refinancing Calculator. It will tell you what your new monthly payment will be as well as how much in interest you can save over the course of the loan. That way you will know if refinancing is right for you.

The times may be tight, but that doesn’t mean they have to be tight for you. Finding ways to save just a little money here and there will give you the opportunity to pay off your mortgage or other debts in record time. Just making two extra payments on your mortgage each year will allow you to cut your term by 1/3.

1. Tax Refunds – instead of spending your refund on something frivolous, put that money to work. Use it to make that extra payment (or two) on your mortgage.

2. Groceries – Keep a close record of what you are spending on groceries and work out a plan (using coupons and other techniques) to allow you to cut out $50 a month from your budget. Use your savings to make an extra payment on your mortgage.

3. Luxuries – pass on the manicures, expensive hair cuts or other special treats for just one full year. Use these savings to make a dent in your mortgage term.

4. Entertainment – utilize free and discount opportunities for family fun. Put aside the money that WOULD have been spent eating out, going to the movies and other things and use it to make an extra couple of payments on your mortgage or debt.

The money adds up quickly and the more you pay on your debt the faster it vanishes. The best part is that once the debt is gone then the savings will be available to spend in other (usually more enjoyable) directions.

There was a recent news story about Christians that were allowing homes to go into foreclosure rather than cut out the tithe to make the budget balance. The idea is that it is more important to give to God than it is to pay others what is owed them.

The tithe was set up in the Old Testament as a means of supporting the Levites (who did not work outside of the temple). When Christ came he fulfilled all of the laws. That meant that all the Christians were not obligates to follow the hundreds of rules, regulations and laws set up to guide the Jewish people – the Law was not to live inside each Christian.

Practicing the tithe is a way of training a person to freely give from what God has provided. Ideally the entire Christian world should be living off the 10% and giving the 90%, but I digress. It is important to support the Church and its missions, but a Christian that defaults on his finances will do more harm to the cause than the tithe could ever make up for.

Romans 13:7 is a reminder to ‘Give everyone what you owe him’

Now it is more important than ever for the Christian community to follow through on promises – whether it is a promise to pay a debt or just a promise to help with a school event. Why should the world trust someone who has proven to be untrustworthy?

It was just a few days past that the government declared the answer to the financial crisis was to let the government intervene. After a struggle between the House of Representatives and the Senate, a bill was passed and signed into law.

Apparently, the market did not get the memo. It is still moving along just like it was before the law was passed allowing government to take over some private enterprises. Maybe the market has less faith in the government than the government has in itself.

Since the market hasn’t responded the way the government thinks it should, the government is going to step in it even deeper. The announcement was made that the government is going to use its new found power to buy up eligible notes that (the worth of which is estimated over a trillion dollars). The goal is to start the lending market moving once again.

The concern that tax payers should have is that if private industry doesn’t want to invest in these loans – even at discounted prices – then why should these be considered such a great investment for the taxpayer?

The other day I stopped by my mortgage broker while I was making a deposit at the bank. I was curious to see if we could roll our mortgage over without reviewing our income status. We have recently become self employed and most lenders require two years of records before self employed individuals can secure loans.

It was nice to find out that the bank is still financially secure and still lending money. She said that lending practices had tightened up a bit and that income would have to be proven, so refinancing my loan is out. But what she said was encouraging for others that might be looking at a loan in the near future.

1. Income – you will have to be able to verify your income. Lenders usually prefer tax records from the last few years to establish income, but if you have recently received a raise then a letter from your employer or the last couple of pay stubs may also be acceptable.

2. Credit ratings – pay your bills on time, limit your credit applications and reduce your debts. Lenders are looking for consumers with high credit ratings because this usually will mean a lower risk for the lender.

3. Down payment - expect to put some money down on a home. There were several years when borrowers were getting by with a minimal down payment or NO down payment. Those days are likely gone for good (or at least until lenders forget about the economic woes of these last few months). Start saving today. Put aside the money that you would be paying on your mortgage payment each month. By the time you get ready to purchase your home you should be able to put down 10% or more to secure the purchase.

Lending is tight today but it is still going on. You can help smooth the way for your mortgage process by getting your paperwork together, clearing up your credit and saving for a down payment.