Archives for October 2010

Delaying Your Foreclosure

Recently, several banks have stopped foreclosure proceedings in states that require judicial foreclosures A judicial foreclosure means that the final proceedings require court action Ideally, a judicial foreclosure offers additional protection to the homeowner, because the bank has to prove that payments have not been made Connecticut is one of those states that has a judicial foreclosure process.

Now, banks are saying that they have potential paperwork problems and are taking more time to review their internal processes and documentation before presenting them to the court system.

Any foreclosure is, traditionally, a long process with a tremendous amount of paperwork involved With the current mortgage crisis coupled with the economic downturn, banks have been overwhelmed with the foreclosures When you add the multiple bank mergers of the past few years (with files being transferred from one corporation to another), you can see the potential for incorrect and/or missing paperwork According to the latest news, it does seem that a few of the major banks need internal paperwork review before proceeding.

What does this mean to you? If you are somewhere in the foreclosure process, this is going to delay the process for you I don’t believe that banks are going to stop the foreclosure process and give you back your home Wouldn’t that be nice? Only time will tell if the bank has all the proper paperwork in order to proceed.

Start Preparing Your Taxes in October

I know that you’re seeing holiday shopping displays at the stores If you are like me, you’re thinking, “Is it time to think about that already? Halloween hasn’t come yet!” Yes, it’s that time – not to prepare for Christmas, but to prepare for year-end.

For me, October is a time when I set up a meeting with my tax preparer and start year-end planning With three quarters of the year gone by, I have a good idea of where the year stands financially.

You can start now by taking the time to meet with your tax preparer Gather up your information on income and donations, profit and loss statements, and any new financial circumstances or events Did you have more out-of-pocket medical expenses this year? Mortgage changes? Defaulted loans?

After your tax preparer has reviewed your information, you can ask him what you can do before December 31 to improve your tax returns Here are some questions you could ask:

Should you pay your January bills in December
Do you need to make more donations?
Should you hold off on the major purchase?
Should you contribute more to my retirement accounts?
Should you do renovations / improvements to your home to take advantage of the tax credits that might not be there next year?

Don’t wait until mid-December when you are crazed with the holidays, or worse yet, January, when it’s too late to take action for 2010.

Lending to a Friend

A friend of mine recently asked about lending money to a friend. I have always said that if you can afford to lend money to a friend, then give the money as a gift. If the gift is repaid, that’s an unexpected bonus.

But, you should never lend money to friend, especially money that you need to pay your own expenses. I say this because when people lend money to a friend, they often never get the money back, That’s not because your friend isn’t trustworthy, or sincere. It’s a matter of need. Think about it: If your friend can’t afford to pay a bank loan or rent, then how will he be able to pay you? Especially before you need the money yourself? Unfortunately, lending to a friend often means the friendship is lost along with the money.

It’s difficult to watch a friend drowning in debt or suffering without a car or apartment, but two drowning people are not better than one. There may be better ways to help out than putting yourself at risk.

Back to my friend. Unfortunately, she had already lent a substantial amount of money. She had also done everything possible to set up the loan legally with a contract, lien against the borrower’s home, and a formal payment plan. It sounded OK, so, I asked what the problem was. She said that her friend had filed for bankruptcy. That’s a problem.

My friend did everything right and took all the steps to protect herself, and now she will be out a large amount of money that she needs to cover her own expenses. She could never have afforded to give this amount as a gift, but that’s what it became. Will she get her money back? Probably not. In this economy, her friend’s home may not sell and when it does, it probably won’t sell for enough money to cover the loan.

My friend learned a very hard lesson in life. Their friendship will probably never be the same because of the damage that was done. Before you lend money to someone, think about all the possible outcomes and then make your choice.

Having Trouble Selling Your Home? Try a Lease to Purchase Agreement

Are you trying to sell your home? Are you finding the process challenging to say the least? There might be another option for you and your potential buyers.

That option is a lease to purchase agreement This is when a potential buyer rents or leases your home for fair market value AND pays additional money towards the future purchase of the home.

Let’s say someone is interesting in buying your home He isn’t financially prepared to buy a home in your price range today, but he will be ready in a few years Instead of letting the potential buy get away, you can sign a lease to purchase contract That means that he agrees to rent the home from you for a specified time period, and during that time period, you agree not to sell the house to anyone else.

In a lease to purchase contract, the potential buyer pays rent plus an additional amount towards the purchase down payment Let’s say your agreement covers a period of 2 years and your potential buyer pays you monthly rent of $1,000 plus $300 towards the option to purchase your home Over a 2 year period, the buyer would have have paid $7,200 towards his down payment.

If the potential buyer doesn’t go forward with the purchase by the time the contract is up, the down payment money is typically yours (the seller’s) to keep.

Although they’re not widely used today, lease to purchase agreements have been around for years They offer security and income for a seller who needs to move right away, and an opportunity for a buyer to turn his rent into an investment.

If this option is of interest to you (buyer or seller), discuss the specifics with your realtor and attorney, so that you can understand all the details and make informed choices as to what is best for you.