If you are among the lucky few to pay off your mortgage in full, you must be thinking -”What now? Will I be getting a letter stating that my loan has been paid in full? Will the lender hand over the title of the property to me? What would I get to prove that I’ve a free and clear property?” Read on to find the answers:

As you pay off the mortgage in full, your lender would give back the original mortgage and note to you. Along with it, you would receive a document called “Satisfaction of Mortgage”. It is a legal document which should be filed at your county recorder’s office.  This will help the title companies to verify that you own your place free-and-clear. Thus, they would issue a clear title when you’re planning to sell off the property. If you do not have a clear title, it would become difficult for you to sell off the property in the future.

There are some lenders who would record the “Satisfaction of Mortgage” on your behalf at the county recorder’s office. However, there are some who would want you to do it yourself. Thus, you’ll have to ensure that the document is recorded at the county recorder’s office. In some states, the homeowner needs to contact the registrar of deeds and get it recorded. This will make sure that you no longer have a mortgage lien against your property.

BTW, Congratulations! You’re a proud owner of a mortgage-free property

In the recent times, it has been noticed that the premiums for homeowners insurance are on the rise. Your premium may even rise if there has been a national disaster in your area. Even increase in crimes in your area can lead to a rise in your insurance premiums even though you haven’t made a claim. However, the best part is that, there are various ways to offset this rise and lower your premiums for homeowners insurance. Just have a look at some of those ways:

• Improve your credit score: Most of the insurance companies are using the information from your credit report to price your insurance policy. If you did not have a good credit score while applying for a homeowners insurance, make sure you take some steps to improve your credit score. You can negotiate your premiums with the insurance company as your credit score improves.

• Raise your deductibles for homeowners insurance: So, what are your homeowners deductibles like? Just note that most of the companies offer deductibles that range from $250 to $30,000. If you can raise your deductibles by $500 to $1,000, you may save up to 25% on your premiums. You can check out with your insurance agent about the different types of deductibles offered and accordingly chose one.

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With the collapse of Lehman Brothers about a year ago, we came face to face with the financial meltdown, which led to severe unemployment and depletion of retirement savings. Though the economy and the stock market have recovered to some extent, there are certain timeless lessons which the financial meltdown has given us. Let’s take a look at it:

• Living within your means: Unfortunately, most of us had forgotten this golden rule. We had started spending more than what we earn while the rule is just the opposite - spend less than you earn. It’s very important to save for the future. It is our savings which can help us in dealing with any financial crisis. So, once you get the next paycheck, make sure you keep aside a certain sum of money as your savings. Keeping an emergency fund is also a good option.

• Financial regulators cannot always help you: It was believed that financial regulators like Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC) would create a safe place for Americans so that they can save and borrow the money in order to buy a home. However, with time, mortgage and appraisal fraud became widespread. Moreover, they were ignored during the financial boom. No rules were enacted until the damage was fully done. Though rules have been enacted and government has offered bail-out to the banks, the foreclosure rates have still not come down. Now, the White House has proposed a number of financial regulations in order to help the common people.

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The extension period for tax filings would end on October 15th, 2009. Though a large number of people have filed their tax returns within April 15th, 2009, some of us would be filing within this extension period. Tax filings can be quite hectic and a small error will lead to the loss of your deductions or credit. So, what are the common mistakes you should avoid while filing tax returns? Just, check it out:

• Filing Status – Lots of people face problems due to the error in their filing status. You should check only one filing status on the tax return. Apart from this, you should check the appropriate exemption boxes.

• Triple direct deposit – Taxpayers can get their refund directly deposited into three accounts. It’s really a good way to save your refunded money. However, the more numbers you enter on a tax form, there are chances that you enter them in a wrong way. If you give a wrong account number, you would lose your refund money.

• Calculations – Take care when you calculate your taxes. Make sure that you double-check all figures on your return so that there are no mistakes when you calculate. Use a calculator and double check the numbers. You can even use a tax software program to file your tax return. This will help reduce your math errors.

• Tax Table – If you’re using the IRS tax tables, use the correct column for your filing status. If you are using the wrong tax table, you will face problems in the long run.

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Last month, Federal Trade Commission (FTC) filed a lawsuit against a Florida-based company, which had victimized more than 3,100 homeowners nationwide with their loan modification programs. The firm has been shut down for now and they have even agreed to pay off $4.1 million judgment. Also, they have agreed to work under the close monitoring by federal officials in future. Such loan modification scams have become popular these days as large number of borrowers are looking forward to modify their loans in order to save their houses. So, what are the signs one should watch out for in order to avoid these scams? Just have a look:

• Guarantee of loan modification: No company can guarantee you a success in preventing foreclosure as it would be totally the discretion of the lender whether or not he would consider your request. So, if a loan modification company guarantees you a success in preventing foreclosure without considering your financial situation or mortgage details, chances are that it might be a scam.

• Upfront fees: Check out for the upfront fees charged by the lender. Though, not all fees are illegal, still it’s better to not pay anyone who’s not a licensed law firm or attorney. There may be some loan modification companies who can charge you upfront fees without even explaining the program details. Avoid dealing with such companies as they could be scam artists.

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Lots of people are of the opinion that the real estate market is coming out of the crisis. But experts have opined that a large number of homeowners may find themselves in worse situation within the next two years.

It’s very important to know if your home is underwater or not. Check out 4 important signs to know whether or not your property has lost value.

• Rising unemployment:

Homes have lost value is those cities where the unemployment rates have been higher. It has been found that in California, properties have lost around 40% home values (according to Zillow). According to the labor department, California also has the worst unemployment rate – 27.5%. People who live in areas which have high unemployment rates can find their home values to drop further.

• Homes lingering on the market:

If a house in your area is not selling for a long time and the “For Sale” sign lingers for three or more months, then there are chances that buyer and seller are not agreeing on the same price of the property. Thus, the seller will have to lower the price of the property in order to sell it off. If this trend continues, the other properties in your area would also lose value.

• Foreclosures in your neighborhood:

Your property can end up losing value if you live in a neighborhood where foreclosures have become quite common. It is said that when one property in your neighborhood goes into foreclosure, your property’s value will drop by 1%. But again, if 2 properties in your neighborhood goes into foreclosure, then your home’s value may drop by more than 2%.

• Poor condition of homes in your neighborhood:

Take care of your home or else it may lose value. If your neighbors are not taking care of their property, it may affect the value of your property. Broken porches or dented siding can inevitably lead to a lower value of your home. If your neighbors are not investing in their property to keep it in a good shape, be ready to lose your property’s value.

Real estate agents are very busy these days as they are trying to finalize deals with clients who want to take advantage of the federal tax credit for first time homebuyers. The tax credit for first time homebuyers will expire on November 30th, 2009. Will this tax credit get extended? – that’s the question everyone in the real estate industry is asking.

The National Association of Realtors and the National Association of Home Builders are engaged in campaigns so that the tax credit can get extended. Also, it has been noted that the delegations of home builders as well as realty brokers have begun descending on district offices in order to inform the higher authorities how beneficial it was to introduce the tax credit. Due to this tax credit, a large number of people have been interested in buying property even during recession. Apart from this, there have been positive economic effects on the local businesses. The tax credit had also helped in generating new jobs and providing the local government with additional tax revenue.

Thus, we can hope that some sort of extension would take place regarding the federal tax credit for first time homebuyers. But I don’t think the government would announce the extension of tax credit before November 30th. Also, we should not expect that the government would provide us with a bigger credit, or broaden the concept of tax credit to cover all buyers next year.

If you’re facing foreclosure, you can get help from your mortgage insurer. Surprised? Even I was surprised when I heard of it. Most of the mortgage insurance companies have loss-mitigation departments. The loss mitigation experts try to negotiate with the lenders and borrowers for various repayment plans.

Lenders also have their team of loss mitigation experts but most of the borrowers do not feel comfortable in negotiating with them. On the other hand, it has been noted that borrowers sometimes are more receptive to mortgage insurers. The insurer’s loss mitigation team will not call the borrower for payments but they would rather try to workout an option for the benefit of the borrowers. This attracts the borrowers to work with the mortgage insurer’s loss mitigation team.

Why will mortgage insurer help a borrower who’s facing foreclosure?

If a lender forecloses a property, it is the mortgage insurer who will have to reimburse the servicer and investor for their losses. This motivates the mortgage insurer and his loss mitigation team to negotiate workouts with borrowers and stop foreclosure.

How does the mortgage insurer’s loss mitigation department work?

The mortgage insurance companies get a list of insured loans that are in default. From this list, the insurance companies choose a group of people and contact them for a period of 60 days. The insurance companies send a letter to inform the borrowers as to who they are and why they are interested in their loan. The loss mitigation department also informs them about ways in which they can help them. If the borrowers do not respond to the letter or call the insurer, the loss mitigation department of insurance company calls them and tries to negotiate with them.

The borrower has to fill out a hardship letter informing them about his financial crisis. The mortgage insurer analyzes the borrower’s financial situation and recommends payment plans. The workout option will be finalized if the investor, servicer and mortgage insurance company approves it collectively.

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Loan modifications may or may not affect your credit score. Generally it is believed that a loan modification will have a positive impact on a borrower’s credit score. In case, if the lender has reduced the principle amount of your loan, it will also help you in reducing your debts. Also, if you pay off your debts on time after the loan modification for the next 6 to 12 months, your credit rating will start improving.

However, after the loan modification, if you’re late on your payments or start making partial payments, your credit score will get negatively affected. In addition, the lender would report the principle reduction as “debt satisfied for less than the full amount”. This will also have a negative impact on your credit score.

In certain cases, the lenders would not accept your loan modification request if you’re not delinquent on your mortgage payments. You may have to show that you are 30 days late on your payments. If the lender reports this 30 day late payment to the credit bureaus, your credit score can go down by few points.

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President Barack Obama had announced Home Affordable Refinance and Loan Modification program in order to help homeowners avoid foreclosure. These programs compensated lenders who lowered the loan payments of borrowers and most of the big lenders agreed to participate.

However, the initiative taken by the government did not work as expected. Most of the borrowers complained that they cannot reach a lender who would help them with this plan. Moreover, with a large number of people losing their jobs, most of them have become ineligible for this program. Some people who were fortunate enough to get a modification later found out those modifications were offered on a 3-month trial basis. This has left some of the homeowners with mortgage dues which they can’t afford now.

So why isn’t the federal initiative working?
Most homeowners blame lenders for the failure of Obama loan modification. There are borrowers who’ve complained that lenders have not responded to their loan modification request. The lenders who agreed to participate in this program did not develop their own plans for loan modification. Most of the lenders are taking more than a month to respond to the borrowers regarding this plan. A recent study has revealed that most of the lenders do not want to modify the loan as they would lose money in such a deal.

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