Today’s consumer is looking to find ways to reduce their current home loan mortgage or to purchase a new home.  There are a variety of loan products available even in today’s economic climate.  

The key for the consumer is to understand what loan product will best serve their needs for now and in the future.  The problem in the past has been consumers have been placed into programs that were not compactable with their cash flow or their future plans.  

One product for the consumer to consider is FHA Financing.  FHA loans are guaranteed by the government and for the new home buyer offer low down payment options that are in some cases have more flexible guidelines than the normal traditional mortgages.   

Some of the features to this type of product are but not limited to depending upon the consumer’s situation are as follows:  

• Down payment of 3.5%
• Allows for lower credit scores
• Cash out refinance transactions up to 85% loan to value
• Loan amount available up to the maximum Jumbo FHA limit in your area
• No minimum or maximum income limits 

One of the keys to this program is that FHA financing is available to all consumers and not just limited to the first time homebuyers.  

As a consumer if you are considering a refinance or a new purchase, you need to have all of your financial information available.  By having all the information available, the lender will be able to assist you and explain to you all your various options whether under a FHA financing program or another loan program.  

It is important for the consumer to present the following items which visiting with a lender:  

• Complete copy of last 2 years personal tax returns for all borrowers
• Copy of most recent paystub for all borrowers
• Complete copy of last 2 months bank statement on all types of accounts  

Some programs may not require this type of financial information.  However, the more information provided to the lender allows for a smoother the transaction for the consumer.  In addition, it allows the lender to have a frank discuss with the borrower on the types of programs that will meet their financial requirements.

Today’s consumer is still looking to either purchase a new residence or refinance their current mortgage.  However this process is still very scary for the consumer.  They have heard so much negative information about mortgages and various programs they are not sure were to turn to for assistance.  

One way a consumer can assist themselves is to be prepared when meeting with a lender.  A face to face appointment is always better than a telephone interview with a lender.  The actual meeting allows you to present your financial information and discuss the pro’s and con’s for your transaction.  

When meeting with the lender, the consumer must be do the following:  

• Always be truthful to the lender
• Have complete copies of last two (2) federal tax returns including all W-2’s on all borrowers
• Have copy of most recent paystub for all borrowers on the transaction
• Have a copy of last two (2) months bank statements on all accounts and any stock/investment accounts
• If refinancing, have a copy of most recent mortgage statement
• If refinancing, bring copies of original documents in regard to mortgage
• Prepare a list of all assets, including names of banks, average balances along with a list of all liabilities, i.e., auto loans, credit cards, 2^nd home mortgages.  Note the lender can receive this information via a copy of your credit report.  But having the information available at the meeting is important.  

At this meeting, the lender will be able to approximate, what your debt to income ratio. The final ratio is determined by credit underwriting.   

By having this information available, the lender should be able to discuss with the consumer various types of loan programs, which will meet the consumer’s financial position.  If you are a new home buyer, it is important that you have money available for a down payment.  A new home buyer should not be pushed into any program or loan that is at more than 80 percent of the lendable value of the home.  The behind this important fact is that today’s meltdown in the housing market has been caused by lending more than the normal 80 percent loan to value on a residence.  When the financial crisis hit the consumer, they were overwhelmed by two mortgages and higher than expected loan mortgage increases.  

As a consumer, you must have a clear understanding of the program you are selecting.  Do not let any lender give you answers to questions that are not clear or you do not understand.  It is the consumer’s responsibility to understand exactly what their monthly mortgage payment will be and if this payment includes property taxes.  The consumer needs to select a program what meets their financial requirements.

Today’s consumer is being overwhelmed with information of how to get out of debt.  Some consumers are facing financial hardships that they never would have expected in their live time.  These hardships range from lost of job, reduced salary, divorce, death or medical emergency. So the question is “What is the consumer to do?”  

There are several methods available to the consumer to consider when trying to get out of debt.  These methods are: 

• Try and manage their current debt themselves – in other words tighten their belt and spending habits.
• Debt consolidation loan – this would combine all outstanding unsecured debt into a single payment loan. The problem is can the consumer qualify for a new loan with no job or financial hardship issue.
• Refinance or Home Equity loan – This might work, if the consumer has enough equity in their home, however the repayment may be an issue.
• Credit counseling service – This program acts like a debt consolidation loan. The consumer pays a third party company who in turns pays a small or set percent each month to the lenders until all the balances are pay off. In addition, there is credit counseling for the debtor and this will also have an affect on your credit score.
• Bankruptcy – This is the most serious and the final step that a consumer should consider.  The consumer needs to discuss with an attorney all facets of bankruptcy since it will cover all debts, both secured and unsecured.
• Debt settlement – This is a program by which a third party negotiates with the lender in order to reduce the outstanding balances on unsecured credit cards.  

Here is a brief overview of the debt settlement process:

The consumer needs to have a full and complete understanding of the process. The debt settlement company needs to explain all the in’s and out’s of the program.

• A “trust/escrow” account is established an a set amount in place in the account. Normally, this is less than the combined minimum monthly payments.
• After at least half of the lowest outstanding credit card balance is in the account then the debt settlement company begins to negotiate with the lender.  The debt may be reduced by up to 40 to 50 percent. In most cases, the lender would rather have at least a partial payment at one time than receive nothing if the consumer files bankruptcy.
• This process is repeated until all debts are negotiated. This process can take between 12 to 48 months.  It’s not a quick or easy fix however it will assist the consumer.

The question of the day is? “How am I going to continue making my monthly minimum payments?” As a consumer I am now faced with some unusual financial situations.  I might have lost my job, had my salary reduced, got divorced, or had a medical emergency. Because of one of these financial hardships, I am barely able to maintain my monthly mortgage and car payments along my other monthly obligations. 

The consumer is about to get hit with another increase on their monthly minimum credit card payments.  In the past, the consumer has been paying the 2 percent minimum monthly payment, it would take years to just payoff their current balances. So at the direction of the federal government, most credit-card companies are increasing the amount of the consumer minimum payment from 2 percent to 4 to 5 percent.  The good news is in a good economic or without financial hardship by paying a higher monthly payment you’ll pay off your debt more quickly. The bad news: Your now have the additional burden of coming up with more money each month. 

Faced with every increasing pressure to get out of debt, the consumer is now more willing to consider a debt settlement program.  The average consumer wants to pay off their credit card obligations, but the lenders are not willing to work with the consumer by either reducing the interest or establishing some type of revised lower repayment plan.  

Therefore, the consumer is let with no choice but to consider either bankruptcy or a debt settlement program.  Yes, there are other options available, a home equity loan or a debt consolidation loan from a lender.  However, because of consumer’s financial situation these options might not be available.  

The debt settlement program is a better option than bankruptcy for most consumers.  If a consumer is considering bankruptcy they should consult an attorney before taking this step. Whereas a debt settlement program will allow a third party to negotiate on behalf of the consumer for a settlement of up to 50 percent off their current outstanding balances.  

This is not a quick fix or easy step for the consumer. This program can take been 12 to 48 months depending on the consumer’s obligations. Basically, the program requires the consumer to place a set dollar amount aside each month into a “trust/escrow” account.  Once there is at least half of your lowest credit card balance, then the debt settlement expert will start to negotiate with your lender. The key to this program is that the lenders are more likely to accept some monies from the consumer than receiving nothing from the consumer if they file bankruptcy.  Under bankruptcy, normally the secured lenders receive their monies first and in most cases the unsecured lenders receive up to little or nothing.  By receiving nothing, the lenders have to write this off as a loss or bad debt on their financial statements.

Today’s consumer is asking themselves, “How am I going to get out of debt?” The answer to that question is to consider a debt settlement program as a method to resolve their current financial situation. Consumers have not faced this type of financial climate since the Great Depression and in that situation; they were not overburden by unsecured credit card debt. Consumers are riding a roller coaster of emotions because of their financial situation. This along with the fact they are facing financial hardships because of a lost of job, reduced salary, divorce, death or medical emergency.   

So what is the debt settlement option? Debt settlement is a method by which a third party negotiations on behalf of the consumer with their lenders to reduce their outstanding balances. Typically, this program works only for unsecured credit cards but may include any other types of unsecured debt like medical bills.  

The consumer needs to select an experienced debt settlement company.  This company should be able to provide answers to all the consumer’s questions in a way that the consumer clearly understands how the program works.  The consumer should ask for the following:  

• A company profile
• List of accreditations or afflictions, i.e., Better Business Bureau and associations
• Upfront copy of all documents along with fee and cost schedules
• Contact name of banker where “trust/escrow” account will be established  

It is the consumers responsible to ask questions and do their research on the debt settlement company they select.  

With any program, there are pros and cons when considering a course of action.  Some of the pro’s are: 

• One single monthly payment
• Avoiding bankruptcy as an option. Always consult with an attorney about this step.
• Stopping collection calls
• Possible elimination of lawsuits and other legal action
• Stop any extra charges to the credit card  

The con’s are:  

• Credit score will drop
• Tax ramifications – consumer will need to report any amount of forgiven debt that exceeds $600. This means an increase to your tax bill.  

So call your debt settlement expert today to fully discuss how they can help you and your family.

Credits cards were originally designed to give the consumer short term borrowing ability.  The cards were first used by major department stores for purchases only at their locations. In some cases, this was the consumer’s first credit card or credit in their name.  Then the first major credit card issued by a non-retail company was the Diner’s Club card.  This card was considered to be a business card to cover entertainment and meals and repaid in full each month.  Then the major banks become players in issuing credit cards and the borrowers were on their way to creating new financial problems for themselves.  

In the beginning, the consumer used the card judiciously and paid off the balance in full monthly. However over time, the consumer started paying only the monthly minimum payment along with a little bit toward the principal balance.  The consumer was alright with this practice because they had enough monthly cash flow along with a good job and the economic was doing fine.  From time to time because the economic climate was on the up swing, the consumer had equity in their homes. Because of the equity, the consumer would refinance their homes at a lower rate and take monies out to pay off their unsecured debt.  This way of handling finances was alright as long as the economic was in a positive position. 

This all changed over the past several years.  Consumer’s started facing financial hardships, lost of job, reduced salaries, and divorce or faced a medical emergency along with the adjusted interest rate on their mortgages and increased unsecured credit card debt.   

The consumer was faced with the reality of how to get out of debt. In most cases, this is the first time many consumers were faced with these uncertain financial times.  So the consumer started looking for ways to payoff their financial obligations.  

One of the options the consumer is selecting is a debt settlement program.  Debt settlement is a method by which a third party negotiates with the lenders to reduce your obligation by up to 50% of the outstanding debt.  The consumer puts aside a set amount of monies each month into a “trust/escrow” account over a period of 12 to 48 months depending upon the amount of their credit card debt.  The debt settlement company starts to negotiate when at least half of the lowest balance is in the account.  This proceed is repeated until all debts are settled.  

This is not an easy or quick fix program for the consumer.  However the amount of monies placed into the trust/escrow” account is normally less than the combined monthly minimum payments. By entering into this program, it will show the lender you want to repay your obligations but need help because of the consumer’s most recent financial hardship. The majority of lenders are willing to accept a settlement of half because if the consumer files bankruptcy the odds are the lenders will receive nothing.  By receiving nothing this affects the lenders bottom line and is reflects as loan losses on their financial statements.

The definition of debt settlement is a third party who negotiates with lenders on behalf of the consumer. Debt settlement is a method of getting out of debt for the consumer’s who have fallen on hard times. The financial hardships may have been caused by the loss of a job or reduced hours, a divorce, a death or a medical emergency. Debt settlement is one of the methods used by consumers when they fall behind on their unsecured debt obligations. A debt settlement company may be able to reduce the consumer’s outstanding balances by up to 50%. The consumer may be asking why use a debt settlement company instead of trying to negotiate with the lenders themselves. As a consumer you can take this approach, however one of the drawbacks is you will be working with multiple lenders. These lenders would want the agreed amount money upfront in order to settle your account. In addition you may not be working with the same individual each time you contact the lender. By using a debt settlement program, they will negotiate on your behalf and notice the lenders of your indications of using a settlement program. The debt settlement program will set up a “trust/escrow account” for the consumer. Each month the consumer is deposit an agreed to amount in order to start saving. Once the account has reach at least half of the lowest outstanding balance of one your credit cards, the company will begin negotiations with the lender. The consumer will now be making only one monthly payment instead of multiple payments over a set period of time. It may take between 12 to 48 months to complete the cycle of reducing the consumer’s unsecured debt. The consumer needs to know that if there financial situation improves they can opt out of the program and start paying their own bills. Yes, there are drawbacks to any program when dealing with lenders. However these drawbacks far out weight the consequence of doing nothing or filing for bankruptcy. The drawbacks may be: • Reduced credit score – But this is already hurt by late payments. • Taxable Income – Any settlement over $600 may be considered taxable income by the IRS – The consumer needs to discuss this with their tax preparer. • Collection Calls – You may still get collection calls until the debt settlement company notifies the lender. • Fraud – The consumer needs to be sure you select an experienced debt settlement company and ask questions and get references. Call the bank where your account will be open and talk to the companies bank officer.

Debt settlement has become a way for the consumer to unburden themselves from their unsecured credit card debt. The consumer in the prior years used their credit card as a method to purchase everything from retail, groceries, airline tickets and everyday living expenses. However, when the economic climate changed the consumer was not longer able to keep up with their minimum monthly credit card payment. The consumer started to face undo financial hardship caused by loss of job, divorce, death or a medical emergency.

 The consumer needed a way out of their current financial situation. The average consumer does not want to totally walk away from their obligations but just needs a method by which to handle their situation. In some cases, the loss of a job will be corrected and the consumer will be able to get back on track. It is during this time, that the consumer is seeking some type of financial relief from their lenders.

 One of the ways to get relief is to use a debt settlement program. This program is not an easy fix or an overnight miracle for the consumer, this program can take between 12 to 48 months depending on the size of your debt. Basically the debt settlement program works with the consumer to establish a payment plan by which monies are placed monthly into a “trust/escrow account.” When a less half of the monies owed to a lender on your lowest balance credit card, then the debt settlement expert will begin to negotiate on the consumer’s behalf. The monthly payments into the account are normally much less than the current minimum monthly credit card payments. The debt settlement company is usually able to negotiate a 40 to 50 percent reduction of the consumer’s debt.

As a consumer you are asking why, would a lender expect this type of negotiation? The underlying answer is the lenders are more willing to take something against the outstanding debt than to have the consumer file bankruptcy. Normally, when a consumer files bankruptcy, the secured creditors are pay first from the consumer’s assets and the unsecured creditors receive little to nothing from the consumer. It is a win-win for everyone, the consumer and the lender.

There are some drawbacks to the consumer when using a debt settlement program. Those issue maybe 1) taxable income on the forgiven debt and 2) lower credit score. But the consumer needs to remember that your credit score may already be hurt because you are late on payments, over limit and have high balances. You can work on improving your score as the debts are settled.

As a consumer, you have reviewed all the various options for getting yourself out of your recent financial situation.  In some cases, this financial situation maybe only temporary since it has been caused by the current economic conditions in which you may have lose your job or had an medical emergency. However, since you are unable to maintain your normal level of payments on your credit cards and have made the decision to get up with your mortgage payments.  You are seeking some type of financial relief. The solution to this situation is a debt settlement program.

Before entering into any program, the consumer needs to understand how the program works and its affect on them.  Debt settlement may not work for everyone.  It is not a quick fix or overnight miracle for the consumer.  So if anyone tells you they can wipe way your debt instantly or in less than one month. You need to seek out another company, since the process can take between 12 months to 48 months. 

When you sign up with a debt settlement company, the consumer should ask the following questions: 

• How long has they been in business
• Is the staff trained and certified
• What are the exact fees for this service
• What is the name of the bank and officer responsible for the trust account
• Are they listed with the Better Business Bureau
• Who will exactly be handling my account
• Ask for a contact list for the company 

A legitimate business should able and willing to answer any questions you might have about their services. Also how your account will be handled on either a day to day bases or monthly bases once you have established the parameters. 

As a consumer, you need to also know the drawbacks of a debt settlement program.  However, these drawbacks are less serious than filing bankruptcy or doing nothing about your situation: 

• Credit Score may be hurt – but your score has already dropped because of late payments or non-payments. You score will improve as your payoff the debt.
• Tax ramifications – The IRS requires you to report as taxable income any amount of debt settlement in exceed of $600. This means an increase to your income.
• Collections – The consumer may continue to receive calls from the lenders until they are informed you are using a debt settlement program. However the call may continue since it up to the individual lenders.
• Fraud – As a consumer you might select the wrong debt settlement company. 

The key to a successful resolution to your financial situation is to understand the progress and know the debt settlement company you are working with. 

Again, this is no easy progress, but with determination and a willingness to solve the problem. A debt settlement program can and will work for you and your family.

Today’s consumer’s largest problem is their unsecured credit card debt.  This debt can be reduced by considering a debt settlement program.  The consumer might consider this program because they want to paid off their credit cards but have been struggling because of possible job loss or reduced salary or a medical emergency.

The consumer is asking themselves how can get out from this burden.  If we take a quick review of what it is costing the consumer on their unsecured credit cards.  For example: 

• Credit Card debt of $30,000
• 3 years of interest at 19% is $17,100
• 5 years of interest at 19% is $28,500 

The above interest figures do not calculate any principal reduction on the $30,000 outstanding. So you can see that you are not making any headway on reducing your debt only adding to your financial situation. 

If you have faced a financial hardship, then consider using the debt settlement method.  Under a debt settlement program, a third party will negotiate with the lenders to reduce you debt possible up 50%.  This would mean you would cut your outstanding balances in half and would save up to $17,100 or $28,500 over the next three to five years. 

Here is an example of a possible monthly program: 

• Credit card debt reduced from $30,000 to $15,000
• Minimum monthly payments of $700.00 for 24 months*
• Minimum monthly payments of $500.00 for 36 months*
  • *This figures are an estimate only 

So isn’t time do something about your financial situation.  Debt settlement may not be the right program for everyone.  However as a consumer, you need to call an expert today to discuss a program that is right for you and your family.