With the coming of the new rules since January, 2010, everyone of us who has an IRA account will now be able to convert it into a Roth IRA. This has created an opportunity for all of us to have a tax-free growth of our retirement investment dollars. However, you should remember that while you convert a traditional IRA to a Roth IRA, it will be considered as a taxable event. Thus you’ll owe taxes on the money that you convert excepting the nondeductible contributions made to the traditional IRA account.

Let’s take a look at some of the ways in which you would be able to pay for the taxes resulting from the IRA conversion:

Use the proceeds from life insurance - This is an option which would work mainly for those who want to leave their IRA money to their beneficiaries and not use it for their own retirement. After the death of the IRA owner, the heirs can convert the IRA account to a Roth IRA and use the life insurance to pay for the taxes.

Use your liquid assets - In order to pay the taxes for the conversion of your IRA account to a Roth IRA, you can use your liquid assets. You can use your cash savings which you’ve accumulated in your savings account or CD. Apart from this, you can also sell the securities held in a brokerage account, if any, to pay the taxes for the Roth IRA conversion.

Pay taxes with the IRA’s assets - You can also use the assets from the IRA to pay for the conversion taxes. However, this should be your last option. You should note that if you deduct large amount from your IRA, it will in turn affect the growth of that account. Financial experts always suggest to avoid such a transaction as it would take years for you to replace those funds. Also, if you’re below 59 and ½ years of age, then you will have to pay 10% of your money as a penalty for an early withdrawal from the IRA account.

In the year 2010, you will be getting an opportunity to save a tax free retirement income if you convert your individual retirement account into a Roth IRA. Apart from this, the IRS is allowing the taxpayers a time period of 3 years to pay taxes due on a conversion. Apart from this, even the higher-income taxpayers will be able to set up Roth IRAs which was not allowed earlier.

Here are the 7 things that you should keep in mind while you convert your individual retirement account into a Roth IRA:

1. Evaluate your IRA and 401(k)
You’ll have to decide as to which of your assets qualifies for conversion into a Roth IRA. Any asset that you have in your traditional IRA, is eligible for a conversion into Roth IRA. However, you should note that if you’ve a non-deductible IRA contributions, then it won’t be taxed while you make a conversion. If you have a 401(k) or 403(b) from your previous employer, then you can directly convert those assets into a Roth IRA.

2. Take help from the experts
You can take the help of your tax professional or financial adviser while you try to convert your IRA into a Roth IRA . Free online consultations are also available in this regard. You can go for them if you do not want to consult a tax professional.

3. Check out for various tax factors
There are various factors which you should keep in mind while opting for a Roth IRA conversion. These include:

• Age.
• Present tax bracket.
• Time you have before your retirement.
• Your need to use the money.

You should remember that the higher your tax bracket is, the more you’ll have to pay on your Roth IRA conversion.

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With the introduction of the Home Affordable Foreclosure Alternatives Program (HAFA) on April 5th, new rules and guidelines have come up for the lenders. This new program is an extension of the HAMP (Home Affordable Modification Program) and will in turn help the borrowers further in safeguarding their property against foreclosures.

Let’s take a look at some of the specifics of the HAFA program:

1. Hardship information - The financial hardship information provided by the borrower under HAMP will be taken into account while considering him/her for this program.
2. Pre-approved short sale terms - Under this program, the borrowers will receive pre-approved short sale terms. They would receive these terms and conditions prior to their listing of the property with a real estate agent.
3. Future liability - The borrowers will be released from the future liability in regards to the loan. The lender will not be able to come after the borrower for any kind of deficiency judgment or cash contribution.
4. Financial incentives - The HAFA program provides financial incentives for servicers to cover administrative and processing needs. It also offers financial incentives including $3,000 for borrower relocation assistance.
5. Participating servicers - All the servicers participating in HAMP to will have to implement HAFA in accordance with their own written policy. However, the guidelines should be consistent with investor guidelines
6. Tenure of the program - The HAFA program comes to an end on December. 31st, 2010.

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You may seek mortgage refinance to pay off an existing mortgage loan. A refinance means new loan terms and conditions, which if is suitable for you, may prove quite beneficial.

Here are the top 3 benefits for which you may seek mortgage refinance:

1. Financial stability: Refinancing will help you reduce your loan term. You may have to pay higher monthly premiums but in return you can pay off your mortgage sooner. You may also have the advantage of paying a lower interest rate than the original mortgage loan that you had. If you have other bills like huge credit card bills to pay, you may use the refinance to pay off these debts so that you can have only your mortgage payment to make each month.
2. Lower rates: If you get a lower rate than what you currently pay on your mortgage, refinance is a very wise thing to do. This way you can lower your monthly mortgage payment. However, you must remember that the interest rates would vary as per the market fluctuations. The decision that you have to make is whether you would like to go for a fixed rate mortgage or an adjustable rate mortgage.
3. Build equity faster: If you are switching from a 30 year mortgage to a 15 or 20 year mortgage, you may build equity quickly and also save money on the financing fees.

If you have good credit score and would like to pay off your loans faster, you may take advantage of these scores to get yourself a mortgage refinance loan with a lower rate of interest. A refinance can be a good way to get better mortgage in future. However, you should weigh your options carefully and consider the advantages and disadvantages of mortgage refinance before you apply for one. Do your research well and only then take the step.

Hello everyone,

We’re happy to inform you that George M Akerley, one of the mentors of MortgageFit Community has crossed the 10,000 mark! He is the first in our forums to have more than 10,000 posts.

Since 2007, George has been participating in the forums and helping posters who take part in the forums. With his knowledge and experience, he has always tried his best to help people with the needed mortgage and financial advice.

George M Akerley is now the moderator of both Mortgage Know-How Forum and Loan Talk for First Time Home Buyers Forum and has been given the rank of “Community Mentor“. We hope that posters would get further valuable advice which will help them in coming out of their mortgage/financial problems, George. Your level of participation will encourage others to take part in the forum discussions actively. Also, your advice will help members/visitors to take wise decisions regarding their mortgage and financial issues.

Congratulations George on this unique achievement!

Also, check out: http://www.mortgagefit.com/pub/10000posts-gmakerley.html where community members have congratulated him for this unique achievement.

Due to the recession, a large number of people have lost their job whereas some had to go through a pay cut. As a result, they are facing severe problems in paying off our debts - be it the mortgage or the unsecured debts. If the creditors do not receive the payments on time, they can charge off the debts. Credit card debts, medical bills, second mortgage, etc. can be charged off by the creditor/lender.

However, if you are facing such a situation and if your creditor has sold off the account to a collection agency, then will have a severe negative impact on our credit report. Moreover, the collection agencies are quite aggressive and can take any step to recover the dues. Thus, it’s better to deal with the creditor directly and pay off the dues rather than letting it go into collections.

Check out the 4 ways which will help you avoid collections:

1. Negotiate with your original creditor:
It is always better to deal with the original creditors rather than the collection agency. You will have to negotiate with your original creditor and check out if he can reduce your payments for the time being. The creditor may give you an affordable payment plan with low interest rates which will help you in paying off the debt.

2. Go for credit counseling:
You can take advantage of this option if your account is still with your original creditor. If the creditor has not charged off your account, you can contact the credit counseling agencies for help. While you for a credit counseling, you’ll meet with a credit counselor who’ll advice you on managing your finances. The credit counseling company will help you in dealing with your credit card debt. Also, they will explain how to improve your credit score. There are various non-profit organizations as well which provide this option. You may contact such organizations for help.
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