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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After years of overbuilding, over-investing, quick-flipping, and credit over-extension, we are now facing the real estate crisis - a crisis which has been created due to our own faults. As a result, the real estate market has been re-priced. Now, it’s high time that we go back to the fundamentals of mortgage and follow them to save ourselves from further crisis.

Here are 5 tips which you may consider before you take a mortgage for your dream home:

Down-payment: If you are planning to buy a property, it would be a smart move if you start saving from today. A large down-payment of around 20% will help you in getting better interest rates and lower payments. You will also be able to build some quick equity in your property and thus can refinance the loan at a lower rate in the future.

Long term loans: This is not a good time for buying a property for quick flipping. No one knows when the real estate market would be revived. Venture into the real estate market only if you want to stay in that property for a longer period of time.

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New set of credit card reforms have been announced by the federal regulators which will come into force from July 1, 2010. The new set of rules will give the credit card users more time to pay their monthly bills, greater advance notice of changes in credit card terms, to avoid retroactive interest rate increases on existing card balances. Apart from this, credit card users will have fewer penalty fees, late charges and interest payments.

Highlights of the new credit card reforms:

Check out the highlights of the new credit card reforms as given below.

• Time limit for monthly bills: Credit card holders will get a reasonable time limit to make their monthly payments. Credit card issuers cannot change the due date without notice. Monthly bills should be delivered to the card holders at least 21 days before the due date.

• Universal default: The concept of “Universal default” should be done away with. Some large credit card issuers have already discontinued this practice.  It is the practice of raising interest rates on customers based on their payment records with other non-related credit issuers.

• Interest rate hikes: There would be limited conditions where the credit card issuer can increase the interest rates.  In case of new transactions, interest rates can increase only after the first year. Also the credit card issuer will have to give 45 days’ advance notice of the change.

• Due dates and times: Credit card issuers cannot set arbitrary deadlines for payments. Early morning due dates should be avoided by the credit card issuers.

• Highest interest balances paid first: Cards with highest interest rates should be paid first or divided on a proportional basis. Right now card issuers apply all amounts over the minimum monthly payments to the lowest-interest balances first.

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The Obama administration has come up with new guidelines for the foreclosure prevention program. It concentrates mainly on how to deal with borrowers who have home-equity loans or other second mortgages.

Most of the borrowers who are delinquent on their mortgage payments also have a second mortgage. However, when the Government announced the $75 billion program to stabilize the housing market, it didn’t concentrate on the question of second mortgages. Thus, the Government has come up with the revised plan which makes it necessary for the lenders to modify the second mortgage when the first mortgage is reworked. The lender’s benefit is that the government will share in the cost of reducing the interest rate on second mortgages for 5 years or it will pay the borrowers to extinguish that debt.

Lenders who will modify 2nd mortgages will receive an upfront payment of $500 and additional payments of $250 a year for up to three years for successful modifications for second mortgages. Apart from this, the borrowers who will be current on the modified loan would receive payments of $250 a year for up to five years. This would be used to pay down the balance of their 1st mortgage.

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