Debt And Fraud Cause Repossessions To Soar

House repossessions have soared from the beginning of 2008, people who are hit hardest by these repossessions are borrowers who have borrowed more than they can afford against their property. Other causes that have emerged are fraudulent activity by property developers.

Despite the recent 0.25% cut in base rates, which will reduce a typical £100,000 mortgage by £16 per month, people who are struggling will still feel the pressure. Banks are tightening their lending criteria amid the credit crunch, anyone who has existing large debts will see the cost of credit rising for them, instead of reductions in home loan bills they will feel the pinch even more.

Last year more than 27,000 houses were repossessed by banks and building societies last year, this is the highest number seen since 1999 when 30,000 houses were taken back by institutions.

The Council of Mortgage Lenders (CML) wants to highlight that this number is only a small fraction of the 75,500 people who saw their homes repossessed at the height of the UK's last property recession. Despite this the CML is expecting to see this figure rise in 2008 as the economy continues to slow, fraudulent deals increase and the credit crunch tightens.

Despite the fact that the housing market has slowed from the end of 2007 there is still much activity below the surface. Usually house repossessions only rise when the market has been inactive for over a year, and anyone who has serious debts have to sell their way out of their debts.

House sales remained steady throughout most of 2007 and only tailed off towards the very end of the year, house sales in December are expected to be 1.05 million, which is only a very slight decrease from 2006's 1.1 million. Halifax found that house prices in 2007 finished the year up 9.4%, this has been attributed to Scotland's successful market.

Charcol mortgage broker, Ray Boulger said: "Despite recent interest rate rises, most home buyers are not currently at any risk of losing their homes. I suspect that those getting into difficulty now fall into a few groups who have over-committed themselves.

"There is also evidence of fraudulent activity, particularly in the area of new developments. It would take house prices to seriously dive before the bulk of the market has anything to worry about."

Those who are most at risk of repossession are people who have excessive debts, lenders will repossess people's homes if their debts are larger than the value of their property. As a result of swiftly increasing house prices over the last few years many people will not face this problem.

However, those who took a 100% mortgage and have fallen behind with payments remain in trouble, other people who many be in trouble are borrowers who began with modest loans and then took advantage of the equity in their property to fund car purchases, holidays or lifestyle choices.

According to the CML 129,000 borrowers have fallen more than three months behind with payments. Any borrowers with poor credit histories who are coming to the end of their affordable credit deals, may find it impossible to replace these agreements. This will mean they see payments increase and may struggle to meet these demands.

Despite the struggling market, mortgage deal demands from customers are still high, mortgage leads companies are still booming.

Many new properties have been overpriced and this has become apparent as the market has softened and the prices have tumbled, and fraudulent backgrounds to these price hikes have been revealed.

If a developer discounted a property by £50,000, for example, off a property selling for £200,000, the flat was still registered with the Land Registry for £200,000 even though the price paid was £50,000 less. This gave new buyers a false impression of the value of properties.

About the Author:
Jemma Tipping - http://www.onlyleads.com

How To Maximize Your Tax Deductions

It's tax season AGAIN, and you should be looking for those tax deductions that can legally lower you tax bill.

Here are some of the typical deductions that you want to make sure your tax preparer knows about so you get the write-off.

2007 Mileage Deductions

Business Mileage 48.5-cents per mile
Charitable Work Mileage 14-cents per mile
Medical & Moving Mileage 20-cents per mile

Dependent Education Expenses

There are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the Hope Credit and the Lifetime Learning Credit, also referred to as education credits.

To learn about these credits, who can claim them, what expenses qualify, and more, visit the website www.irs.gov and in the search bar type in either "child education expenses" or "Publication 970."

For dependents in daycare through middle school, deductible expenses do not include tuition. However, after-school care expenses and a few other types of expenses are deductible. Ask your tax preparer for advice and be prepared to supply the name, address and federal tax ID number or social security number of the care provider as this information is needed on the tax return.

For each dependent, your tax preparer will need the child's full name, date of birth and social security number.

Schedule A Itemized Deductions

If your itemized deductions exceed your standard deduction, then you are allowed to take the greater of the two. Here are the standard deductions for 2007.

$5,350 - Single or Married filing Separately
$10,700 - Married filing jointly or qualified widow(er)
$7,850 - Head of Household

Here is a partial list of Schedule A deductions - for details visit the website www.irs.gov and in the search bar type in "schedule A" and look at the instruction form:

1. Mileage (not claimed as business mileage on another form)
2. Medical expenses
3. Charitable Contributions (there are new record keeping rules that apply for cash donations)
4. Mortgage Insurance premiums for contracts issued after December 31, 2006 (this is NEW for 2007!)
5. Mortgage Interest & Points
6. Real Estate Property Taxes (on residences not used for business or rental)
7. Sales tax you paid on retail purchases
8. Investment interest on money borrowed for a property held for investment
9. Job expenses you paid as an employee (if you were not reimbursed and if you are not filing Form 2106)
10. Tax preparation fees paid to a professional tax preparer

Schedule E Deductions for Rental Properties

If you own rental properties then the income and deductions go on Schedule E. Here are the deductions you can take on rental properties.

Here is a partial list of Schedule E deductions you can take on rental properties - for details visit the website www.irs.gov and in the search bar type in "schedule E."

1. Advertising
2. Auto & Travel
3. Cleaning & Maintenance
4. Commissions
5. Legal & Other Professional Fees
6. Management Fees
7. Mortgage Interest
8. Other Interest
9. Repairs
10. Supplies
11. Property Taxes
12. Utilities

While we must pay some taxes, it's smart to use a professional tax preparer and be sure you are getting the maximum allowable deductions to reduce your tax bill. There are other deductions available if you have them, but these are the most common.

Sandra Simmons, President of Money Management Solutions has years of experience helping business owners and individuals manage their money to achieve financial freedom. To learn more, Watch the FREE 5-minute demo video on her website http://www.moneymgmtsolutions.com

The Benefits Of Renting Versus Owning

Because of current housing conditions that are currently taking place many people believe that no one should buy a home, at least not soon. That is simply not true. There are some issues that home buyers should watch out for, but those issues, such as sub-prime loans, can be avoided by many working people who have good credit histories.

Another truth is that owning a home today can be just as affordable as renting in many areas of the nation. With falling home prices, the time to buy could never be better.

Here are some things to think about when you are considering buying a home.

Buying a home allows you to begin building equity in the home. As you pay off the mortgage you begin to increase your wealth in the home. This is never true with renting.

You will be allowed to take advantage of tax deductions that renters do not have access to. Mortgage interest is tax deductible per the current IRS code.

Monthly mortgage payments under a fixed rate loan are fairly steady, while a landlord can easily increase your rent.

Homeownership allows you to put down roots in a community and become a part of that community. It lets you buy into the American dream.

There are some drawbacks to homeownership as well.

Maintenance costs will be your responsibility. These costs will have to come out of your pocket and the work will have to be done by you or someone you hire.

During the first years of owning the home it may difficult to sell if you find yourself needing to do so. This can tie up your cash significantly. Also, it is not nearly as easy to simply pack up and move on, as some people like to do.

Your property can increase or decrease in value because of conditions that you have no control over. For example, if foreclosures take place near to your home, your home loses value. Not fair, but that is the way it is.

Building equity is usually considered one of the main reasons to own a home. In fact, for many American, homeownership is the only way they can build substantial wealth. Equity is easy to understand. As time passes and you pay your monthly mortgage an increasing amount of that money goes toward paying down the principle. This means that over time you have more of a share in the home in real dollar value. Later on, you can borrow from this equity if you wish to do so. This borrowing power can be a huge benefit for those who pay their bills on time and find they need credit in the future.

Owning a home also allows you to deduct mortgage interest and property taxes from your federal income taxes and some state income taxes. This is not small change for most people. These deductions can mean big tax savings, especially in the early years of the loan when interest makes up most of the payment. In fact, you may find that with the tax deductions it is actually cheaper to buy a home than it is to rent. You can find current tax law on homeownership at various online sources or through a qualified tax advisor.

Lastly, having a home also allows you to feel more secure in knowing that your family will have a place to live. When you rent from someone else, you may not always be able to renew your lease.

Peter Kenny is a writer for The Thrifty Scot, please visit us at http://www.thriftyscot.co.uk/mortgage/ and http://www.thriftymortgages.co.uk/remortgages http://www.thriftyscot.co.uk/Loans/022008/making-the-most-of-your-equity-1.html

Non-Refundable Mortgage Fees

Mortgage lenders in the UK are beginning to introduce non-refundable application fees as a way to bolster their revenue. By applying a non-refundable fee to a mortgage application, the lender will ensure that they receive some form of revenue regardless of the outcome of the mortgage application.

Historically, mortgage applicants in the UK have been refunded the fees they pay to the lender if the application is unsuccessful. This leads to a situation in which the applicant is not left out-of-pocket if they fail to secure the mortgage. Conversely, the mortgage lender will not receive an income from the applicant and will effectively lose money due to the time their staff spent assessing the application.

There is a growing trend in the current mortgage market to rectify this situation and ensure that the lenders are indemnified for costs incurred on assessing unsuccessful applications.

Several UK mortgage lenders have now introduced non-refundable fees as a revenue collecting exercise. This comes in the wake of the crackdown on exorbitant mortgage exit fees that are typically charged to borrowers when they remortgage.

The Financial Services Authority has deemed the exit fees excessive and forced the lenders to bring them in line with the estimated expenses they incur during the remortgage. This means that mortgage lenders no longer have this cash bonanza to look forward to when their customers leave them. The solution appears to be to charge more fees at the outset.

For the customers, the new fee regime means that they are practically gambling when applying for a mortgage. If a customer's application is rejected, they may lose hundreds of pounds and have nothing to show for it. If their application is successful, however, they have nothing to be concerned about as they will not be forced to hand over more money for another mortgage application.

For the lenders, the new fee structure means that they have achieved what all astute investors aim for, which is to protect the downside. If the mortgage application is successful the lender will pocket the application fee in addition to making a profit on the interest and charges typically applied the mortgage throughout its term. If the application is unsuccessful, the lender will miss out on many years of interest and fee income, but will keep the application fee to cover costs.

It is obvious that borrowers will need to be on the lookout for non-refundable fees in the future and make sure they do not apply for mortgage products they have little chance of obtaining. Some lenders have products that do not require borrower's to pay fees upon application. Home owners and first-time-buyers should therefore research the market carefully to ensure they are not hit with application fees that they may not need to pay.

Alternatively, applicants should seek advice from an independent mortgage broker who can scan the entire home loan market for a suitable product. Mortgage brokers have software which can evaluate every mortgage product that is available in the UK at any point in time. Furthermore, they can search for products based on criteria such as whether or not they have non-refundable application fees.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

Off-Set Mortgages Overview

Offset mortgages are a type of flexible home loan product that allow borrowers to reduce the interest charged on their loan balance by offsetting the balance of any savings they have accumulated in a specified deposit account.

For example, an offset mortgage that has a balance of £350,000 could be offset against a deposit account that has a positive balance of £80,000. The interest that will be charged to the borrower will be calculated on the net balance of £270,000 instead of the full balance of £350,000.

This type of home loan product first rose to prominence in Australia and are sometimes referred to as Australian mortgages in the UK. The original aim of offset products was to help home owners pay off their mortgage sooner than they could with traditional products and to simplify their banking by rolling several different products into one.

There are several different types of offset mortgages. Although most offset products are basically the same, in that the balance of savings in a deposit account is offset against the balance of the home loan, some lenders structure their offset products in different ways.

One such way in which they are structured is to separate the various financial products included in the package. These products may include any combination of the home loan itself, current accounts, savings accounts, credit cards, and loans.

A different way in which they are structured is to combine the products into a single facility. These offset products are commonly referred to as a current account mortgages.

While the specific features of various offset mortgages differ, some of the common features include: the ability to offset the balance of the home loan and the balance of the deposit account; overpayments and underpayments; additional borrowing to an agreed upper limit; payment holidays; daily interest calculations; the ability to transfer the mortgage to another property; a choice between capital and interest or interest-only repayment types; a flexible term of the home loan – usually between 5 and 25 years.

Interest is not usually earned on the balance of the deposit account. Instead, it is offset against the mortgage balance in order to save interest. This can help reduce the income tax liability of the borrower because tax is normally charges on interest earned from a deposit account.

Despite all the benefits of offset mortgages, there are several disadvantages that must be considered. One such disadvantage is that a higher rate of interest is normally charged on this type of home loan than for standard mortgage products.

Another risk is that the borrower is not disciplined enough to continue reducing their loan balance and instead draw down on it whenever they wish to. Because equity can be drawn upon with little interference from the lender there is a risk that undisciplined borrowers may not pay off their mortgage early as intended. Borrowers should therefore be careful to not use the equity in their home as a bottomless savings account.

Borrowers should therefore carefully assess whether this type of product is right for them before applying. Unbiased advice should be sought from an independent broker if there is any doubt.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

Tips On Avoiding Mortgage Problems

When times are good, times are very good. When times are bad, homes are repossessed. It is safe to say that the good times are over for home owners who have a mortgage to pay off and like clockwork the repossession industry is shifting up a gear.

The ability to sustain repayments on a mortgage can change rapidly. There are many home owners who have secured properties during the past few years who are now facing the prospect of losing their homes because they can't keep up with their monthly mortgage repayments.

Property affordability has dropped considerably in the last few months as interest rates rise and lending criteria tightens. While it is easy to use hindsight to see that many home owners who are facing the prospect of losing their home should not have leapt onto the property ladder in the first place, it is more sensible to focus on the issues that they should have considered before applying for a large mortgage.

When assessing whether or not to buy a property, a prospective borrower should first look at whether or not the mortgage they wish to apply for is simply too big. It sounds so simple - and that's because it is. Mortgage lenders offer products with income multipliers of more than five times an applicant's salary these days which is more than twice as much as it used to be.

This raises the question - why the increase? Twenty years ago lenders assessed that borrowers could only afford a mortgage of about two to three times their annual wage. Why are they now suggesting that borrowers can sustain a mortgage of five times their salary?

Even if a borrower secures a mortgage that they can afford at present, potential future changes in the terms and conditions attached to the mortgage and potential changes to the household budget should be accounted for.

The most obvious factor that can, and probably will, change is the mortgage's interest rate. When interest rates increase, monthly repayments on variable rate mortgages also increase. When fixed interest rate periods expire, the interest rate payable on a fixed rate mortgage may also increase. Both of these scenarios will result in an increase in the monthly repayment amount due on the mortgage and will therefore lower its affordability.

Finally, borrowers should factor in the possibility that their income may reduce. Any reduction in a household's income will naturally lead to the mortgage, as well as other bills, becoming less affordable. There are various insurances available to mitigate reductions in income and borrowers should research this carefully when applying for a mortgage.

Borrowers who plan ahead and factor in potential changes in the variables detailed above will have a much better chance of funding their mortgage through the bad times and therefore holding on to their home.

Before buying a home or remortgaging to a new home loan it is wise to speak to an independent financial adviser or mortgage broker to ensure that the most appropriate financial products are obtained. Financial information should be sought from an independent adviser to ensure the best advice possible is received.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

Should You Get A Mortgage Now?

It's never a good sign when your home loan company files for bankruptcy. Sadly, that's just what's happening to many sub-prime mortgage lenders these days. Mortgage rates are low right now (about 5.5% - 6% for a 15-year fixed interest loan at the time of this writing), but the lenders who managed to stay afloat are tightening their lending guidelines. Should you get a mortgage while the housing market is so volatile?

Simply put, yes, you should get a mortgage if you're in a position to afford a house. But it's not that simple. Before you sign that dotted line, you need to consider some things.

First, do your research. Learn about mortgages and mortgage professionals. If you get a good offer, don't assume that it's the best you'll get. Shop around and compare offers. You might find that that initial offer wasn't as great as it seemed. Compare the terms you're offered to the current national mortgage rates. You can find these online at My FICO. By familiarizing yourself with what's out there and with what can be expected, you're protecting yourself from scams.

Mortgage scams are a problem, but they can be avoided. Just remember that mortgages that seem too good to be true probably are. The Mortgage Asset Research Institute reported that 26 states have "serious problems with mortgage fraud". Some tactics include pressuring home buyers to file quitclaim deeds; buying homes at low prices and re-selling them for profit through dishonest appraisals; and manipulating fees and penalties to re-classify performing loans as defaults.

When choosing who you'll do business with, be sure to select an established business with a good reputation. This doesn't necessarily mean that the largest lenders will give you the best terms; don't forget to look for local firms, too. Check them out online through the Better Business Bureau and Rip-off Report. Ask to speak with previous clients, or solicit opinions through online forums or classified ads. If you're very concerned, you can always hire a lawyer to represent your best interests.

Also, don't accept a variable-interest loan, or a mortgage with a low-interest introductory period. That period won't last forever, and your interest rates – and monthly payments – will likely soar when it's over. Look at how many homes have been foreclosed because buyers couldn't afford the payments after their interest reset at a higher rate. Carefully read everything you sign, and demand clarification for any vague or unspecified points. It wouldn't hurt to have an attorney look it over, too.

Finally, you should consider using a professional mortgage broker. As pros, they have the knowledge and resources to find great loans quickly and easily. Using a broker will cost you some up front money, but will save you time and stress.

We've all heard the myriad horror stories about families losing their homes, houses that were foreclosed and auctioned off for insultingly low prices. This should not scare you away from buying a home, but it should serve as a cautionary tale for anyone looking to secure a mortgage: take your time, and do your homework. If you get caught up in the dream of owning your own home, you're more prone to take the first good deal that comes along. Don't make yourself vulnerable to unscrupulous lenders. Instead, arm yourself with knowledge and keep your head about you. Taking your time to think things through could make all the difference.

About the Author:
This article has been provided courtesy of Destroy Debt, http://www.destroydebt.com/