In these tough financial times, it may seem like a daunting task to get approved for a mortgage, but if you are prepared, you will find that it is possible.The credit crisis has brought an end to the days of easy credit, but if you have saved up a down payment and kept up your credit rating, money is out there to be lent.

The first thing you need to do is figure out where your down payment is coming from. With the end of Down Payment Assistance on FHA loans that was enacted when the housing bill was passed, you are now going to be required to have a down payment of at least 3.5% on an FHA loan, 5% on a conventional loan. If you don’t have that kind of cash saved up, all hope is not lost; there are a few different programs that may help you.

First is going to be the NACA program, which is a 100% financing program that is administered by a non-profit organization. There are no closing costs, no minimum credit scores, and no private mortgage insurance, which can save you a lot of money! The negative to this program is that it will take a while to get through; you must first attend a homebuyer workshop, and then there is usually a wait of between one to two months before your appointment with a loan officer. The whole process will take at least 90 days, possibly longer, depending on your credit situation.

For those of you that already have a home picked out, there are some grant programs out there that are legitimate. The Federal Home Loan Bank (FHLB) offers a grant program for “very low- to moderate-income families and individuals.” There are also grant programs that are sponsored by HUD, which are going to be administered by city and county governments. A good place to search for one of these is at Down Payment Solutions, they have a state-by-state listings of all grants available.

The next thing you want to do is check out your credit report. Almost all loan programs are now credit score driven, so you need to know what score you have. A 580 score is going to be the minimum that is going to be accepted on an FHA loan, while a score of 680 will be required for a conventional loan, unless you have saved up a down payment of 20%; in that case, normally a 620 will do. If you have open collection accounts, the lender may require them to be paid, especially if they occurred within the past 12 months. Any judgments or liens will be required to be paid regardless of the loan program.

While it may seem to be frightening to try and get a mortgage in these times, it is definitely possible if you have prepared. With all of the incentives available now, it may be the best time ever to purchase your first home!

Barack Obama says that a bipartisan consensus of economists feel that investing billions into the troubled economy is more important than balancing the budget. Obama, appearing on 60 minutes Sunday night, said “the consensus is this: that we have to do whatever it takes to get this economy moving again, that we’re gonna have to spend money now to stimulate the economy.” He also stated we should not worry about the budget deficit this year or next, “That short term, the most important thing is that we avoid a deepening recession.”

Some of the President-elects other thoughts on the economy:

When asked about the $300 billion spent so far on The Troubled Asset Relief Program (TARP): We should be looking at what didn’t happen such as more banks failing or a bigger drop in the stock market, not just what has happened. He also wants more focus on the impact of foreclosures, and to “set up a negotiation between banks and borrowers so that people can stay in their homes.”

Comparisons of today to 1932: “We’re not going through something comparable to that. But I would say that this is as bad as we’ve seen since then.”

The dire straits of General Motors: “We need to provide assistance to the auto industry. But I think that it can’t be a blank check.” He would like the assistance contingent on all of the major stakeholders, management, labor, suppliers and lenders “coming together with a plan what does a sustainable U.S. auto industry look like?”

Moving the nation towards energy independence. “It’s more important. It may be a little harder politically (because of the drop in oil prices), but it’s more important.”

Re-regulation of the financial market “to restore a sense of trust, transparency, openness in our financial system.. And the answer is not heavy-handed regulations that crush the entrepreneurial spirit and risk taking of American capitalism.”

Did you know that by paying a mortgage bi-weekly you can condense a 30 year mortgage to 24 years? Many consumers spend thousands of dollars extra on interest, which they could spend otherwise, or invest for their retirement. If you would like to investigate this valuable personal finance tool, talk to your lending institution about your options. Here’s what you need to know:

Why Bi-Weekly Payments?

They eliminate your debt faster by paying half of your monthly mortgage payment every two weeks. There are 52 weeks in the year, so at the end of the year you will have paid the equivalent of 13 monthly payments instead of 12. This will take years off your mortgage, and because you are putting more money towards the principal, you pay less interest.

Prepaying on the principal

There are a couple of options. If your mortgage has a prepay provision, you can simply apply more money towards your principal each month. Technically this isn’t a bi-weekly mortgage, but the same rules apply; the more you pay towards your principal, the faster your mortgage will be paid, and you will pay less interest. This is a good option if you are already maximizing your contributions to a tax advantaged retirement account, and you have the income to invest in your home.

Refinancing your mortgage

The 2nd option would be to talk to your bank about refinancing your mortgage. This will require a new mortgage, which will mean closing costs, but you will save in the long run. This is an excellent option if you have equity in your home, and you would like to pay down some higher interest debt, or invest in updating your home.

Summary

Bi-weekly payments are a great way to pay off your debt faster without noticing much difference in your monthly payments. They also work on your other debts, including credit card debt, and car loans. It is important to read the fine print and make sure that your lender will apply the payments towards the principal, instead of the next months interest. Take the time and discuss it with your lender. You could save thousands, perhaps even hundreds of thousands of dollars in interest.

Recently a number of banks have been filing for bankruptcy or have been taken over by other banks. Many people are concerned about what that might mean for the mortgage that bank holds, and are confused what happens next. There are a few common points involved in understanding how this works.

• How Bankruptcy Works
• Debt As An Asset
• Can A Bank Buy A Mortgage And Change the Terms?
• The Truth in Lending Act

How bankruptcy works.

Bankruptcy essentially means that a company or individual can no longer afford to pay their debts. That doesn’t necessarily mean that all their debts are forgiven or disappear. (In the case of banks, their assets are either auctioned off, or in some cases, outright assigned to other banks by the government.)

Debt As an Asset

When you have a mortgage with a bank, it is a debt for you. (For the bank, though, it’s an asset; it’s something that brings in money.) Even when mortgage holders can’t pay their bills, and the bank in turn is unable to pay their own bills, every mortgage the bank holds still has some kind of value. If nothing else, there is the possibility of the bank foreclosing on the collateral property in order to sell it. When a bank declares bankruptcy, its assets – including the mortgages it hold – are either auctioned off or assigned to other banks to help pay for its debts.

Can a Bank Buy A Mortgage And Change the Terms?

The answer to this is often in the mortgage contract, which is a really good reason to make sure you read your mortgage contract and consult your attorney before signing one. In most cases, as long as you are paid up and following the terms laid out in your mortgage, a company cannot change it. However, if you become delinquent, there are often provisions that allow the new owner to change the terms, as could the original bank if you were to default. Some people assume that if their lender is overloaded with debt and declares bankruptcy, their mortgage disappears. This is rarely true, and assuming so without proof in writing could make for a very big financial pitfall.

The Truth in Lending Act

Recently, some of the troubled lenders have been investigated for telling borrowers incorrect terms about their mortgage. (Many mortgage holders who thought they had a traditional 30-year mortgage in fact had an adjustable rate mortgage, or one with a balloon payment. ) Every mortgage contract must conform to the Truth in Lending Act, which among other things requires lenders must plainly state the actual interest rate in the contract.

Summary

The old adage holds true: you should always read your contract, especially in an environment where mortgage companies are being investigated for lying to consumers about the mortgage terms. Even if your lender is not one of the many currently facing bankruptcy, you should know what terms might change if your mortgage were to be sold or if you were to default. For most people with mortgage debt, as long as you are still in good standing with your current lender, it would be unlikely for the terms of your mortgage to change. For owners not in good standing, it would be very good to contact the new company that holds your mortgage very quickly. Often times, mortgages in default can be sold very cheaply to companies that are interested in taking ownership of the collateral property, not a repayment of the loan, which they may have purchased for pennies on the dollar.

Many people today are worried about excessive debt, especially with news of higher unemployment (http://www.bls.gov/CPS/) and fewer raises. A lot of folks are trying to accelerate their debt, but feel it is futile, as additional payments don’t significantly reduce their debt. There’s a right way to accelerate your debt that many are unfamiliar with; it’s called debt stacking. It accelerates your debt payments with no additional charges, and without necessarily even paying more than the minimum monthly payment.

Most people who try to accelerate the process of paying of their debt use the “shotgun” approach. For instance, one month they will pay 100 dollars on one account, then a different account the following month. The problem with this is twofold. Firstly, it doesn’t actively target the accounts with the highest rates and fees that are keeping you in debt longer by taking more of your income for the interest and fees that could be more effectively applied to principal. Furthermore, it doesn’t consider that accelerating large debts make keep you paying added fees on small ones for a long period of time, which could be avoided by simply picking off the small debts quickly. It all comes down to getting out of debt faster and paying as little as possible in interest.

The first step to debt stacking is to make a list of all your debts, the minimum monthly payments, and the interest rates. It’s important to note which debts are fixed debts, for instance a 5-year car loan, and which are revolving, like credit cards, or in store credit accounts. Whether you work out the debt stacking yourself or use a debt-stacking program, you still need this information.

If you really want to kiss your debt goodbye, then it makes sense to set aside at least a little extra every month to help accelerate your debt. If that isn’t possible or doesn’t interest you, then you can just keep paying the minimum monthly payment. The key is that once you’ve made your list, you put it into order according to which debts to pay first and which ones to pay last. Once you’ve paid one off, you take the money you had been applying to the monthly payment of the first debt and apply it to the next one on the list along with the minimum payment for that debt.

The question now is how to put your debts in order. There are a few ways to do this, and it’s somewhat subjective. Some people simply sort the list so that the highest interest debts are first and lowest interest debts are last. Others use debt calculators to determine how long each debt will take to pay off, and put the shortest ones at the top so that they know the fastest way to get out of debt. Also, there are computer programs that can look at this in more detail by making projections based on all the combinations of payments the fastest possible way.

Summary

Debt stacking isn’t the same as debt consolidation, and it’s often not as fast or as dramatic in terms of freeing up money. That said, debt stacking could be used in conjunction with debt consolidation. Consolidating the highest interest debt into a fixed loan is a great way to combine these two programs. Either way, debt stacking is an effective way to accelerate the repayment of debt that doesn’t require a high priced credit counselor or an excellent credit score to accomplish.