The Financial Crisis Could Prolong The Pain

WASHINGTON - Federal Reserve Chairman Ben Bernanke warned Tuesday that the financial crisis has not only darkened the country's current economic performance but also could prolong the pain. - read more-

$700B Bailout and A Tremendous Impact On American

WASHINGTON - The Bush administration asked Congress on Saturday for the power to buy $700 billion in toxic assets clogging the financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.

The rescue plan would give Washington broad authority to purchase bad mortgage-related assets from U.S. financial institutions for the next two years. It does not specify which institutions qualify or what, if anything, the government would get in return for the unprecedented infusion.

Democrats are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation.

Congressional aides and administration officials are working through the weekend to fill in the details of the proposal. The White House hoped for a deal with Congress by the time markets opened Monday; top lawmakers say they would push to enact the plan as early as the coming week.

"We're going to work with Congress to get a bill done quickly," President Bush said at the White House. Without discussing specifics, he said, "This is a big package because it was a big problem." -- read more

Should you Refinance?

When rates are low, refinancing can be a no-brainer. But, what if they're not? Is refinancing still an option? You bet. Here are five reasons why you should consider refinancing:

1. You want lower monthly payments.
A lower rate may mean lower monthly payments. Consider taking out a new loan for the same length of time that remains on your current mortgage.Choose this option if you plan to stay in your home for the life of the mortgage or need more cash for current financial obligations such as college or a new car.

2. You want to pay off your mortgage more quickly.
You may be able to shorten the length of your mortgage (say, from 30 years to 15 years) while keeping your monthly payment at or near its current level. You could save thousands ofdollars in interest and assume full ownership of your house more quickly. Choose this option if you don't plan to stay in your house for very long and you have ample current cash for your current financial obligations.

3. You want to lock in a low rate.
Refinancing may be an easy way to convert your Adjustable Rate Mortgage into a Fixed RateMortgage, ensuring a stable mortgage payment. Check first to see if your current loan has any charge lock-in feature. Choose this option if you expect the rate on your ARM to go up. Which is better - fixed or adjustable?

4. You want a better Adjustable Rate Mortgage (ARM).
Mortgage options are constantly changing. A new adjustable rate program may be available that has more favorable rates and terms than your current loan. Choose this option if you are unhappy with the terms of your current ARM.

5. You want to consolidate debt.
If you have enough equity in your home, you might want to combine a home equity loan with your original mortgage and have one manageable payment. Or you might want to wipe out some other high-interest debt, such as credit and charge card balances or installment loans.

Refinance to Save Money

Refinancing with a new interest rate or loan term can be a great way to save money on your mortgage.
A lower rate means lower payments
If rates have fallen since you took out your current mortgage, refinancing now may get you a lower rate. That means your monthly payments will go down, assuming the interest rate is all that changes.Lower payments are great, but will they actually save you money? That depends on the cost of taking out a new loan, how long you plan to stay in your home, and how much less you will be paying each month. Use our Refinance Break-Even Calculator to run the numbers and find out if refinancing will pay off.
Get lower payments with a longer term
Another way to reduce your monthly payments is to lengthen your loan term, which is the length of time you spend repaying it. With your payments spread out over a longer time period, each one will be smaller.The drawback to this approach is that because you will repay the mortgage principal more slowly, you may end up paying more interest overall.
Shorten your loan term to pay less interest
You can reduce the total amount of interest you pay by shortening your loan term. With fewer monthly payments required to repay the loan, each payment will reduce the balance by a larger amount. As your balance decreases more rapidly, so will interest charges. Besides reducing your interest costs, a shorter loan term helps you build equity faster. That means you'll have a growing source of wealth to draw from when you need it.

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What is Mortgage?

A mortgage is the pledging of a property to a lender as a security for a mortgage loan. While a mortgage in itself is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.
The term comes from the Old French "dead pledge," apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure.
In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.
In many countries it is normal for home purchases to be funded by a mortgage. In countries where the demand for home ownership is highest, strong domestic markets have developed, notably in Spain, the United Kingdom, the Commonwealth of Australia and the United States.

Types of mortgage instruments (US)
Two types of mortgage instruments are commonly used in the United States: the mortgage (sometimes called a mortgage deed) and the deed of trust.

The mortgage
In all but a few states, a mortgage creates a lien on the title to the mortgaged property. Foreclosure of that lien almost always requires a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.

The deed of trust
The deed of trust is a deed by the borrower to a trustee for the purposes of securing a debt. In most states, it also merely creates a lien on the title and not a title transfer, regardless of its terms. It differs from a mortgage in that, in many states, it can be foreclosed by a non-judicial sale held by the trustee. It is also possible to foreclose them through a judicial proceeding.

Most "mortgages" in California are actually deeds of trust. The effective difference is that the foreclosure process can be much faster for a deed of trust than for a mortgage, on the order of 3 months rather than a year. Because the foreclosure does not require actions by the court the transaction costs can be quite a bit less.

Deeds of trust to secure repayments of debts should not be confused with trust instruments that are sometimes called deeds of trust but that are used to create trusts for other purposes, such as estate planning. Though there are superficial similarities in the form, many states hold deeds of trust to secure repayment of debts do not create true trust arrangements.

Mortgage lien priority
Except in those few states in the United States that adhere to the title theory of mortgages, either a mortgage or a deed of trust will create a mortgage lien upon the title to the real property being mortgaged. The lien is said to "attach" to the title when the mortgage is signed by the mortgagor and delivered to the mortgagee and the mortgagor receives the funds whose repayment the mortgage secures. Subject to the requirements of the recording laws of the state in which the land is located, this attachment establishes the priority of the mortgage lien with respect to most other liens on the property's title. Liens that have attached to the title before the mortgage lien are said to be senior to, or prior to, the mortgage lien. Those attaching afterward are said to be junior or subordinate. The purpose of this priority is to establish the order in which lien holders are entitled to foreclose their liens in an attempt to recover their debts. If there are multiple mortgage liens on the title to a property and the loan secured by a first mortgage is paid off, the second mortgage lien will move up in priority and become the new first mortgage lien on the title. Documenting this new priority arrangement will require the release of the mortgage securing the paid off loan.

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Debt Consolidation Calculators
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