My House Payment Is Rising Again...

I just got a letter from my lender today and I forgot it was that time of year again where they do an escrow account analysis.

Why is my house payment increasing again? I have a fixed, interest rate loan.

Most people pay their property taxes and homeowner's insurance premiums into an escrow account each month as part of their monthly mortgage payment. Then when the property taxes are due each July and January and the homeowner's insurance is due once a year, your lender pays those bills for you out of your escrow account.

So why is my monthly payment and possibly yours increasing?

Well, two reasons: 1) homeowner's insurance premiums have been rising in recent years and 2) when your school levies are passed or the county you live in raises the assessed value of your property, they have to increase your escrow account amount to cover the increases.

When your escrow account is adjusted for your January bill, you often find that when your property taxes and/or insurance went up at some time during the previous 12 months, then you're behind and you have to catch up.

So when you receive your escrow analysis statement, if you have a shortage of funds in it, you either can pay up in full or spread it out over the next 12 months. It's a matter of pay me now or pay me later.

If you receive a letter like this and don't understand it, please call your lender right away or call me and I'd be glad to explain it to you.

One way to decrease the 'shock' of receiving this letter every year is to apply an extra amount to your escrow account each month, so that in a year from now, if you still have a shortage, it won't be as large.

We still live in the greatest country in the world!

Know Someone Worried About Foreclosure?

Southwest Ohio Borrower Outreach Day is Monday, November 19, 2007 from 2 – 8 p.m. at Xavier University’s Schiff Conference and Banquet Center at the Cintas Center (1624 Herald Avenue, 45207).

If you, or someone you know, is worried about making your next monthly loan payment, you will have the opportunity to receive loan counseling, meet with servicers privately and learn about refinancing.

Attendees will also learn about foreclosure prevention, legal rights, loss mitigation and credit counseling.

Borrower Outreach Days are co-sponsored by the State of Ohio and the U.S. Department of Housing and Urban Development. For more information, call 1-800-CALL FHA (225-5342) or visit http://www.com.state.oh.us/bod.

I Couldn't Believe My Eyes!

I saw a headline in a local paper that said, "Credit Card Bills Paid First".

Credit cards being paid before mortgage payments? You've got to be kidding me.

People are so concerned about getting behind in their payments, but they don't think the lender will foreclose on them. Wake up! They will, if they have to. With Congress and others looking for ways to slow down the number of foreclosures around the country, some consumers may get a break from having to move out of their home by re-financing their mortgages or possibly adjusting their terms, but for many others there will be no relief.

What you need to understand is by taking out home equity loans and lines of credit can only get you into deeper debt if you don't change your spending habit. Many consumers use home equity loans to pay off high interest rate credit cards and other debt. The problem is if you keep using the same credit cards and you start building balances on them again, you won't be able to increase your home equity loan again. You're really just switching your short-term debt into long-term debt. You haven't paid anything off.

I'm not here to criticize you, but the banks and credit card companies of the world are bamboozling consumers. They just want you to borrow more and more money. When you are late with a payment, they just increase your interest rate to extremely high levels. I recently heard that up to 30% of a credit card company's revenue is generated from late fees and imposing higher interest rates.

Always consider what you need to pay first: your necessities like your mortgage, utilities, food, car payment... Look at how you can cut back on your daily and weekly expenses. I'm not to go into it here, but there are a lot of ways to find and save extra cash. It just takes making changes.

Keep your credit score as high as possible, because if you start becoming delinquent on payments, your credit score will drop. The more it drops, the more you'll pay for things like insurance, car loans, mortgage, credit cards. It's a vicious cycle!

If you need to have a garage sale or sell a new car that's more than you can afford, do so. Try selling some items on e-Bay.

In the end, VISA and Mastercard, etc, have conditioned us to consume...buy, buy, buy! Just stop, take a breath and decide if you really need something. Do you need it brand new or would you get significant savings by buying slightly used?

For years, we leased new cars, because it initially kept our payments low. But over time, they kept going up, so we finally bought them out. Now, the next time we go looking for a vehicle, it'll be a late model. You've heard the old saying, "They depreciate the minute you drive them off the lot".

When you have a big financial decision to make, please don't be too embarassed to ask someone you trust for their insight into your situation. Whether it's your accountant, financial planner, pastor, trusted friend or me, get another opinion that you value to see if you really need or can afford what you want.

Powerful Documentary You Shouldn't Miss!

Please watch this 30 minute documentary on CourtTV on Saturday, Oct. 27th at 11:00am EST.

Afterwards, call me at 615-1890 for more information and tell me what you liked best about what you heard.

Shift Happens!

This video was shown in our sales meeting today.

The real estate market is not the only thing changing around us.

The world is changing; constantly!

Click to check this out: www.newportharbor.us/video/as_the_world_shifts.wmv

Watch it a few times and really think about it...watch it with your pre-teen and older kids. I'll bet their thoughts about it may be different than yours.