Underwater on Your mortgage? Thoughts to Consider

In the fourth quarter of 2009 another 600,000 homeowners found themselves "underwater" or owing more on their mortgages than their homes were worth. In fact, the total number of households in this situation is now over 11 million people or 24 percent of all properties that carry a mortgage. This information, reported by First American Core Logic, a real estate research firm, tells us that many people are still really struggling.

The first choice for many homeowners in this situation is to try to restructure their existing mortgages. However, this can be a very long and painstaking process and many people find that they do not qualify. As a result, more and more people are thinking about walking away from their existing homes and mortgages.

Aside from the moral considerations, which are great, what are the points you need to consider before you think about walking away from a mortgage?

First, you need to understand that this is a huge decision. It might seem like this option would solve a lot of your problems, but in reality, it generally just adds more. Probably the biggest impact is that you will not be able to get a new mortgage for quite some time — five years is typical. This means you need to prepare to be a renter for at least that amount of time.

Your credit score and record will be adversely impacted for about seven years. During that time, your ability to get any other kind of loan will be negatively impacted. Car loans, assuming you can get them, will be at a very high interest rate. Same for any other type of consumer loan. Finally, there may be adverse tax implications as well.

Walking away from a mortgage is certainly not without its costs. If your financial life is going to be impacted for five to seven years anyway, it just might make more sense to hang in there and keep making the mortgage payments. No one can accurately predict what the real estate market might look like in 2015 — perhaps by then your situation could be dramatically different.

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Taxes: Most Common Mistakes

With tax time here again, here are some of the most common mistakes people make while doing their taxes. Avoid these to save yourself money, and a possible audit.

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Why Rent When Home Prices Are So Low?

Mortgage rates are at record lows. Home prices are at record lows, and the federal government is offering tax credits for purchasing a home.

Why then should anyone rent?

Home prices and mortgage rates have dropped so much that the cost to own and maintain a house is only a bit more, and sometimes even less, than the cost of renting.

Recently, mortgage rates and home prices are at, or better, than historic averages in 49 of the top 50 home building markets.

Currently, a buyer who qualifies for a mortgage loan can get a monthly mortgage loan payment on a median-priced home at about 15.3 percent of the median family income. The number is far below the 20 percent average from 1991-2008.

However, the key is finding the right market because in some places, home prices remain unaffordable. Some areas however, may be cheaper to buy than to rent.

The federal government’s home buyer tax credit program also makes it advantageous to buy. The tax credit program was passed as part of the government’s stimulus plan. It offers an $8,000 dollar tax credit for first-time home buyers and $6,500 dollar tax credit for existing homeowners looking to upgrade. However, the program is scheduled to expire on April 30. Home buyers are urged to act soon.

At the same time, analysts warn home buyers that if they are planning to buy, stay put for a minimum of five to eight years or risk taking a loss.

Were Your Loan Documents Forged?

It is estimated that there are more than 9 million people who are in foreclosure today with the numbers of foreclosures increasing by the day. There is a silver lining for some of them. Documents pertaining to some home loans were not correct and in some instances were even forged. In such circumstances these homeowners have a chance of getting their foreclosures waived.

Only those who have an in-depth knowledge about property laws and loan regulations will be able to figure out who might qualify. The loan papers are thoroughly examined by these professionals and checked for any discrepancy. There are certain laws pertaining to mortgages that must be adhered to. It is a violation of law if an omission or error is made by the agents of the lender or the lender themselves. It is here where the experts take over.

After checking the loan audits, they note any violations in the loan documents. They use the same to initiate litigation with the lender in question. In such situations the lender will be held accountable for laws and/or loan documents that may have been fudged. On completion of the audit and identification of the loan violations, the organization will help you through US legal advisors to find an attorney who can assist you to follow up the case with any requisite legal action required against the lender.

If you think your loan may have been forged in any way, it might be time to take action and save yourself from the impending threat of foreclosure. Before your lender terminates you of your rights through foreclosure and takes over your property, you should file a case against them if you suspect fraud in any way, and it can be verified.

Ways To Get More Money From Your Home

The freefall in home prices may be over, but the buyers' market persists–there's stiff competition to get a house sold for a good price. In a competitive market sellers need to make every effort for their properties to appear more attractive so they sell for more.

Believe it or not, it's the simple touches–not the big renovations–that often matter the most. HomeGain surveyed 1,000 real estate agents last year to determine which home repairs offer the biggest rewards. After ranking for return on investment, the survey found that cleaning and de-cluttering–including removing personal possessions, polishing woodwork and glass and removing excess furniture–is the most important. Spending $100 to $200 tidying up can increase a home price by $1,500 to $2,000.

Certain renovations can also add value, but they don't have to be major overhauls. One simple suggestion would be to install a new front door. It's an inexpensive exterior improvement. Also consider replacing worn-out siding. New fiber-cement siding will generate the best return on investment, but vinyl siding will work for those with smaller budgets.

Pre-sale home inspections have gained traction in the down real estate market because sellers are trying anything and everything to outdo one another. With a heavy supply of houses on the resale market, a pre-sale inspection can provide extra assurance that there won't be any surprises after signing the sale contract.

Sellers needing to move quickly should remain focused on the basics, neutral paint jobs and replacing or cleaning carpets. That could be the difference between a signed contract and the for-sale sign remaining on the lawn.