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Friday, December 19, 2008

Crisis Investing 101 - Make Your Own Moves

By Doug West

The meltdown on Wall Street has taught us all that:

"You Better Learn To Make Your Own Investment Decisions - And Not Let Brokers Make Choices For You!"

This is a basic fact that we have been teaching for many years now. Most investors either blindly throw money at the market or let a broker do it for them. With just a little time and effort, you can learn to direct your investment accounts and retirement funds on your own.

In this article we want to point you in the right direction, and give you a few crisis tips too.

ETFs (Exchange Traded Funds) are an excellent alternative to mutual funds as an investment vehicle for your retirement or other accounts.

There are ETFs that cover every sector of the market. ETFs offer many advantages over mutual funds. Here are a few:

* Tax Advantages - ETFs seldom sell any equity positions or create taxable profit midstream. Mutual funds do this often. With mutuals, you could owe tax on part of the funds holdings (the winning stocks they sell at a profit) even though you lost money over all. A double whammy!

* Less Management Costs - Mutual funds were a great vehicle at one time. Years ago, they were HOT, and many fund investors did well. Then they started loading on the fees and costs. Then came the so called "No-Load" mutuals. These too became top heavy with many "Professionals" employed and eating up GIANT parts of the profit. You might think of ETFs as Electronically Traded Funds. MUCH less management costs (in some cases no management costs) and the ease of trading them.

* Diversification - Let's face it, this is what was attractive about mutual funds to begin with. Instead of picking out stocks on your own, you had "Professionals" (with the meltdown we can see that most of them are not too professional) putting together a diversified portfolio for you. With ETFs, you can get the same if not better diversification without the hassle of dealing with a mutual fund giant eating up all the profits.

* Easy To Trade - With true mutual funds you can only get out of a position After the market closes. You can trade ETFs just like a stock in your discount brokerage account. If you were locked into a fund when the market was in crash mode, it was not a good feeling. Had that been an ETF you could have bailed at any time (before the DOW closed down 777 points!)

We could go on with the benefits of ETFs, but you should be starting to see the picture. An even better way to call your own shots with your investments is to trade the index (or indices for plural). We are referring to the mini Dow, the S&P eMini, the mini Russell and others. (there are also ETF's the mirror the indices such as "SPY" for the S&P 500 index)

While we focus on mini-Dow trading, any index will do. With Index trading, you just follow the overall market up, or ride it down with a short position.

While we are on the subject of shorts it would be good to mention that while most US mutual funds are not allowed to short a stock, you can actually buy ETFs that do good with the market is dropping. One such fund is ticker "DUG" which does well when the Oil price is dropping (a tip we gave our readers after the big run up in oil to over $140 per barrel - at the time of this writing it has been dropping since).

You can find other ETFs that do well in falling markets. So, you don't have to short the market (statistics show that 80% or more of investors never do short the market - but are always looking for a upward bull run), you just buy the right ETF and let it do the shorting for you.

By now, many investors see the importance of having a strategy for making money when the market is dropping. Most investors have yet to develop this strategy. We prefer to do it with simple index trades. Whatever you do, find a way to make your own moves and don't depend on someone else to invest your money for you. No one will take care of your money like you will!

*********************************************************** NOTE: To learn more about ETFs visit Yahoo Finance and look under the Investing Tab at the top of the page - then select ETFs ***********************************************************

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HUD Allows Reverse Mortgage for Home Purchases

By Tiag Vanrock

Borrowers, aged 62 and older, now have an additional financial tool to help them purchase that home they formerly thought was out of the budget. As of january 1, 2009 the government is allowing the reverse mortgage to be used the fund the purchase of a home, rather than just as a refinancing tool. The program works almost identically to any other home purchase with a mortgage. The borrower brings in adequate downpayment, and the mortgage company funds the loan.

Of course the benefit to the borrower is she can purchase a home and is not obligated to make mortgage payments for the rest of her time in the home.

Traditionally, the reverse mortgage acted as a safety net for seniors, allowing them to use the equity in their homes as a source of income to supplement their lifestyles. In return a reverse mortgage lender allows interest on borrowed moneys to accrue rather than being repaid to the lender on a monthly basis.

Eventually, when the home is sold voluntarily by the borrower, or the last surviving borrower passes away, the loan is paid back to the lender. The mortgage company makes money from the accumulation of interest over time. Those moneys are repaid to the lender when the home is sold.

This is how the reverse mortgage purchase program works:

1. Borrower is to get a reverse mortgage approval letter from a HUD approved reverse mortgage lender. In conversation with the lender the senior will be advised as to the amount of funds necessary for down payment, closing costs, maximum purchase price, and reverse mortgage loan options.

2. Go home shopping and write contract based upon guidelines in the approval letter.

3. At closing the borrower will be required to make a down payment between 25% to 55% of the value of the home.

4. At closing, the reverse mortgage company funds the remaining balance and closing costs if desired by the borrower.

5. Borrower takes ownership of the home.

6. Borrower lives in home as a primary residence. The borrower is then only obligated to pay property taxes and homeowners insurance until death or sale of property.

In the near future the typical reverse mortgage candidate will continue to be one in need of funds to relieve financial stress. The reverse mortgage purchase, however, will cater to a certain profile and offer a viable financial tool.

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Avoid Foreclosure By Negotiating With The Lender

By Tomasheus Privetsky

If you find yourself facing foreclosure, there are probably several contributing factors, which have led to your situation. You might have lost your job, suffered an illness (and its accompanying medical bills) or been through a divorce. However you get here, one thing is certain; the bills are piling up and it is getting harder and harder to make ends meet. Even worse is the situation of having an adjustable rate mortgage whose interest rate has skyrocketed, making your payments much larger.

While you're trying to think of how to stop foreclosure on your home, you're getting near constant calls, letters and knocks on your door from foreclosure investors.

These foreclosure investors specialize in chasing homeowners just like you who are close to losing their homes. They're interested in buying your home and profiting from it, because they believe you must sell the home.

Is it a good idea to sell your home to these investors to prevent a foreclosure? This depends, it should not be your first choice though; before selling to one of these investors, you should investigate other options like rearranging your loan first.

You Can Stop Foreclosure Through A Workout Of Your Loan

If you have missed a few payments, your credit score will drop dramatically; once this data is on your credit report, it will be difficult if not impossible to get a new loan to refinance your existing mortgage.

However, mortgage lenders would really rather not end up owning your home; this is why every mortgage lender has a loss mitigation department which tries to work with homeowners who are in default on their mortgages to bring them back onto a timely payment schedule. Unlike refinancing your mortgage with a new loan, this loss mitigation process does not require getting a credit approval, putting this alternative within reach for homeowners who are in default.

If You Do Get a Workout Plan, Beware of the Challenges

The loss mitigation departments at mortgage lenders tend to be understaffed, especially right now with mortgage defaults on the rise. The employees in these departments do their best but have very little time to devote to each homeowner's case file. This means that lenders tend to offer you a standard repayment plan which may not meet your needs, for example, the monthly payments will likely be too high for your budget and the time limit given to get back on track far too short.

Since you are in such a difficult situation, you may be tempted to go with this plan anyway, if only to hold off foreclosure. Generally, this is exactly what happens; in a few months, you'll probably be facing foreclosure again.

Stop Foreclosure By Hiring Foreclosure Workout Companies

You may be much better off by hiring a professional to handle the loss mitigation process for you. These companies know the ins and outs of the loss mitigation process and often have strong relationships with mortgage lenders nationwide. They have successfully helped thousands of homeowners stop foreclosure.

They'll review your finances with you to come up with a realistic repayment plan that'll give you a lot more time and keep your payments at a comfortable level to assure your successful completion of the plan. They have insider's information about variety of programs a given lender may have. In some cases they may be able to negotiate an interest reduction to lower your loan payments.

You may think in you current circumstances hiring a company like this could be prohibitively expensive. Not so. Most charge a reasonable flat fee equal to a single monthly mortgage payment. You'll easily get your money back through a negotiated for you deferral of the next loan payment.

If Lender Mediation Is Not An Option

If stopping foreclosure through loss mitigation isn't in your plans, then it's time to sell your home so you don't have a foreclosure record on your credit. If you have a lot of time before the foreclosure sale, then list your home for sale with a real estate agent. This way you will get more for your property. If you're out of time, now you may have to turn to investment companies that can buy quickly. Just make sure you're dealing with a company that has means and track record to perform and close the purchase fast.

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Basics for The First Time Home Mortgage Loan Borrower

By Matthew Sanz

It can be both exciting and perplexing when it comes to buying your first home. Get yourself to know the basics of home mortgage loans and be on your way to finding the perfect place.

What is a mortgage?

In simple terms, a mortgage is simply a loan you make to pay off your home. If you are a first time home mortgage loan borrower, you may be asked to deposit a down payment and pay for the rest (i.e. monthly) through a mortgage loan. Establishments that can offer mortgages are mortgage specialists, building societies and banks.

What are the types of mortgage?

-The repayment mortgage - monthly payments are made within an agreed term until loan and interest are paid off.

- Interest-only mortgage - monthly payments are made for a period of time as agreed in the contract, except payments cover only the loan's interest within the initial term. Afterwards, you are asked to make interest payments in full every month.

- Fixed-rate mortgage - requires you to pay for a fixed interest rate over the whole term. Interest rates do not change and therefore offers a feeling of certainty for most borrowers.

-The adjustable rate mortgage - has rates that adjust after an initial term containing a fixed rate. Rates could adjust depending on the rise and fall of other economic rates. This could sound daunting for first time home mortgage loan borrowers, but those who want a lower initial rate can benefit from this type of mortgage.

What are the requirements?

1. Good credit report:

Your credit report will let lenders determine whether or not they will approve your application and whether or not to increase interests rates for your loan. Lenders especially want to make sure that a first time home mortgage loan borrower has the ability and willingness to make his or her payments.

2. Insurance:

In cases where you get sick, get into an accident, or lose your job, your insurance will be used to pay off your mortgage. You might be required to use life insurance to pay off your mortgage should death occur. What are some tips I can use before purchasing property?

- Improve your credit report - Avoid applying for more credit and pay on time. - Review and correct credit information - Contact the credit bureau to correct inaccuracies - Get the best program - Choose a plan that is most suitable for your situation. - Research - Jot down your price range and find out how much you can borrow. - Do it online - Using the Internet could save you more time and money. Lenders now offer mortgage calculators online that you can use to predict which mortgage program is most suitable for you. - Choose the best mortgage specialist - Determine if the specialist works in a company that is likely to stay in business whenever rates fluctuate. - Ask for advice - Look for recommendations so you are familiar with what kind of mortgage plan you are getting into.

These are only recommendations, though, and should not be used in legal matters.

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How To Dispute Experian

By Justin Hutto

To dispute Experian you must compose a dispute letter and mail it to them. Upon receipt of your letter they will investigate the disputed item.

I suggest you first get a copy of your credit report. This can be done by going to annual credit report. They will issue you a free copy of your credit report with each bureau annually.

Once you have received your credit report you need to identify what marks are incorrect. These are going to be the marks that you will dispute.

These marks are disputed by writing a dispute letter and sending it to Experian. Upon receipt they will say if your dispute is valid or invalid.

If your dispute is considered invalid you will get a letter from them requesting additional information about the dispute. You need to respond and provide them with the information requested.

However if your dispute is found valid they will conduct an investigation. During an investigation they will contact the creator of the listing and ask them to verify the account, the dates, and the amounts.

Frequently an investigation will result in the removal of a bad credit item. This happens because many businesses are not going to spend the time or money verifying a disputed debt.

You can also hire a credit repair service to dispute negative credit on your report too. If you choose this option you will only need to identify each mark you wish to dispute and they will do the rest.

The benefit of a service is they can use advanced dispute techniques such as; debt validation, escalated dispute information requests, and creditor direct intervention.

I suggest do it yourself credit repair if you have only minor damage on your report, however if you have multiple marks I suggest a credit repair service. I also suggest a service if you are having trouble submitting a valid dispute or you have had a mark verified that should be removed.

Be aware that you must send a dispute letter to each credit bureau. If you do not you may remove a negative mark from your Experian credit report however this mark will still be on your Equifax and Transunion credit report.

In sum you can dispute Experian and have them remove negative credit from your credit report. You must either hire a service or dispute the listings yourself.

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Easy & Practical Tips To Significantly Reduce Credit Card Debt

By Jenni Snook

Nowadays, most of us possess at least 1 credit card. On average, an American family owes money to more than 10 different lenders, and almost half of this is on credit cards. Owning a credit card has become much easier than in previous years. There have been both good and bad consequences of this. Credit cards have allowed to get what we desire at a much quicker pace, however we are ending up paying more for it in the long term.

It might be that you are not ready to cut up your credit cards. As a result this article has been written with just that in mind. It's incredible how with some planning, you can end up paying much lower monthly bills.

Charging interest is the main way credit companies make their living. This is the way your payment is used. Firstly, a portion goes to clearing the balance. Secondly, whatever is left over goes to paying the interest.Nowadays, some credit companies have begun charging ridiculously high rates of interest. Store cards are culprits in this practice, often charging between 30 and 40 percent interest. People who find themselves in such a situation has little options. It's recommended that you get yourself a credit card from a large provider such as Mastercard and Visa. Depending on which bank you do it through, their interest rates will vary.

Nevertheless, the rate charged by these companies are much lower compared to those of store cards. In addition, you are generally allowed higher limits with major credit cards. Therefore, it's very possible to replace all your store with 1 major credit card and in the process save a whole heap of money.

If you've already got a heap of major credit cards, then here are some money saving tips for you. There are so many credit card companies that they now have to compete for business. This creates a few opportunities for customers. It's recommendable that you firstly phone your credit card company and ask for a lower rate of interest. Chances are, if you've been good with paying your bill on time, then they will give you a lower rate of interest.

If you're not able to get a lower rate of interest this way, then it is advisable that you shop around for a better deal. It then becomes as simple as obtaining a lower interest rate card and transferring the old balance over. You'll be pleasantly surprised at the amount of money you can save by reducing your interest rate by 2 or 3 percent.

Credit cards can be quite costly over a long period of time. But with the money saving tips in the article, you can make a good start to reducing your credit card debt and keep more money for yourself.

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Should You Go For A Mortgage Refinance?

By Ned Dagostino

There are two common situations which lead people to consider refinancing their mortgage. One is to save money by taking advantage of lower interest rates. The other is to manage an unwieldy debt repayment situation. If you are currently looking out to refinance your existing mortgage here are some important points you should consider very carefully.

Maybe you have a number of small monthly repayments and these are becoming increasingly difficult to manage. You can refinance the mortgage and get a loan large enough to pay off all the small debts at once. You can then concentrate on paying a single monthly repayment. This makes things more manageable.

You may have gone in for a variable rate mortgage plan when the interest rates were low. The interest rate in this plan is linked to the market rate. If there is a rising trend in the market rate which is not likely to abate, you may well change your mortgage to a fixed-rate plan in which the interest rate is equal to or less than the current rate.

Whether refinancing is advisable for you depends on your particular situation. Let's consider some situations where refinancing is not a good option.

Many a time, refinancing companies fail to mention what the actual cost of refinancing is. You may think you have hit upon the perfect plan which will save you at least $10,000 over the next 10 years. Only, you find that you have to pay brokerage fees of $1200, a foreclosure penalty of $8000, and some other fees amounting to $1300 to initiate the refinance! So instead of saving $10,000 you actually end up losing (in a manner of speaking) $500! Even if you don't end up 'losing' money the amount of saving may be so low as to be negligible, in which case the whole refinance exercise is pointless and best avoided.

When you consider refinancing, the first thing to do is to survey the market. Find out all the plans and schemes being offered by different companies. Make a comparison chart showing all the salient features and savings of each plan. Don't restrict your survey to just your local companies. Go online and get information on various plans offered in your area.

Find out all the penalties and fees that refinancing companies may extract from you upfront. For example, there is an origination fee or points, which is taken before the refinance plan becomes operational. There might be a plan where the interest rate is slightly higher but you don't have to pay origination fee. This may turn out to be better for you.

Refinancing is advisable if your net savings is significant. If not, you may as well keep the current mortgage going. Don't go in for refinancing if you think you may have to move before the fresh mortgage period has time to play itself out. Such a move will require you to foreclose the fresh mortgage which entails a huge penalty!

Refinancing your mortgage can be very helpful indeed. It can save you quite a bit. You should survey the refinance market very carefully and minutely. Find out all the options available to you. Find out all the fees and charges that will be taken upfront. Compute the savings you expect to make and then deduct the upfront fees to determine whether taking the refinance is a good idea. A wrong decision here, a single point overlooked, can mean ending up losing money with the refinance. Remember, refinancing is a very serious financial decision. The benefits differ from situation to situation, and sometimes even within the same situation.

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Timeline for Negative Credit History

By William Blake

If you have seen (or heard) the recent commercials about getting a free credit report, then you know it's important to have good credit and to monitor your credit line. This is the only permanent record that you need ever be worried about. Having a negative credit report can affect your borrowing ability, your interest rates, and even your employment.

Fortunately, a negative credit report is not permanent and thus can be made better. After seven years, the majority of the undesirable contents of a negative credit report will automatically be removed.

Even though financial mistakes that damage your credit report can be fixed, it will require seven years. In order to avoid waiting seven years to have better credit, you need to take good care of your credit history now.

Late payments on any loans or rotating credit will be a negative mark on your credit history. Make a point to pay your debts on time. If that is a problem for you because of organization then pay your bills early. Before you go to talk to a lender you want to have at least a year's worth of on time payments so they can see the new trend in your finances.

There are times when you get behind on the payments and work out a payoff arrangement with credit card companies or store cards. This is a smart thing for you to do in the long run (but only if you cut up the cards and don't get any more credit lines), but it could be a negative strain on your credit history in the short run. Settlements of any kind will put a mark on your credit history.

Bankruptcy is definitely a negative on your credit history. It is one of the few negative financial situations that could remain in your credit history for more than seven years.

When lenders are trying to decide whether or not you can be trusted to pay back the money you wish to borrow, they will judge you by your credit history. Bankruptcies filed under chapter 13 stay on your credit history for seven years, much like other negative information. If you file for chapter 7 bankruptcy and thus do not have to pay back debts you have racked up, that information will remain a part of your credit history for ten years.

Loans are often offered to people with a negative credit history at interest rates three or four percent higher than normal. The financial decisions you make now can potentially affect you for the next seven or even ten years, so make sure that you take care when it comes to your finances.

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How to Get High Rankings For Free

By Brian Armstrong

You may have heard about social networking or social media marketing. These are basically websites that you can use to give people information about your site and do so in a way that you can targeted traffic back to your site. The best way to learn this social marketing is to actually do this yourself on your site.

The first thing to do is to compose your article, your blog post, or your web page. You can use any number of free websites to create your content. This is the first thing that needs to happen before you'll get the benefits of social networking for your site specifically. You can always start with other people's websites or web pages, but typically you'll get the most benefit by doing some of both.

Once you're ready to go with your blog post or article, you'll need to setup new accounts with the social bookmarking sites you can find on The advantage of using a service like this is that you'll be able to bookmark your articles or blog posts with one main website instead of having to repeat the process and visit multiple websites with each bookmarking process.

The first thing you'll add is a title. This title should not only include the blog post title or article title, but should also include the main primary keyword phrase that you're trying to use to get rankings. If you can start with this as your title, you'll have a better chance of getting ranked for those keywords.

Your description is one of the more important things you'll include in these bookmarks. The main reason is because the description is usually what is going to get those clicks back to your website. This means your description should have a strong call to action that gets you clicks.

The URL is your web address of the page you're bookmarking. Do NOT use only the domain name. Make sure you are using the actual web address of the specific page you're trying to get bookmarked. If you don't do this, you'll get errors on several of the sites complaining that you've already or someone has already bookmarked that domain or that main page.

Tags are also important because they are what you'll use to get the individual "tag" pages ranked. These tag pages, especially using the long tail keywords or keyword phrases with little competition. This means that you can leverage the search engines to the point where you get not only your blog post ranked, but possibly several of your individual bookmark pages ranked including the tag pages.

These techniques are good ways to get rankings in the search engines. Obviously there are some things that make getting ranked in the search engines very valuable and if you can not only get your main website ranked, but get several of these secondary pages ranked that will ultimately allow you to dominate the search engines.

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Today's best mortgages: How to Qualify

By Mortgage Wizard

Equity The amount of equity you currently have your is a large factor when determining if you qualify for the best mortgage rates available. The recent sales in your area determine the current market value of your home. Within the past 3 months what have the houses surrounding your home sold for? Home prices are being driven down in most areas by all the recent foreclosures. Lenders judge home value based on what they could sell your home for if they ended up having to foreclose. (Measures to properly value your home are used to protect the banks in case they end up with your home. But in reality, they do not want that to happen.)

Existing home equity in a refinance or the amount down payment in a purchase is one of the factors that help determine if you qualify for today's best mortgage rates.

Income If you were lending your money to some one there is a good chance the first question you would ask yourself is, "Will you be able to pay me back." The same holds true for the lenders. For loans above $417,000 they want to see that your debt is no higher than 45% of your income monthly. This includes property taxes and insurance even if you pay them semi annually. The calculation does not include bills not included on your credit report such as cell phone, gas, and groceries.

Assets When determining if a borrower has the capacity to be able to repay a mortgage loan on time liquid assets are taken into account. Most banks like to see that anyone they lend to has a between 2 and 6 months of mortgage payments saved up somewhere in accounts they have access to. This provides a buffer for stability in case someone is between jobs or an unforeseen bill comes up one month. Lenders like to know that someone has enough money saved to be able to overcome unforeseeable events such as paying for car repairs in the event of an accident. Without any assets saved up a person could be forced to reallocate money that typically is used for their mortgage payment for something else.

Credit Score Good credit score and great rate go hand and hand. The better your score the less risky an investment your loan is to the bank because you have proven across the three major credit reporting agencies (Transunion, Experian, and Equifax) that pay your debts back. If your middle credit score from all three bureaus is 720 or above you qualify for the best rates. You have shown them that not only can you afford your loans but you honor them. This helps you qualify for a lower rate because the bank sees you as a stable investment and can count on making less interest on your loan for a longer period of time rather than charging you more interest so they can capture as much of their money back as possible in the event that you do not pay them back.

Your home financing is the largest financial decision you may make in your entire life. If you are qualified for the best rates on the market find a company that is upfront and will the value in your ability to show credit worthiness and start a working relationship with them so they can help you achieve your goals.

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Credit Card Usage Rises For Hispanics

By Eliud Perez

Credit card consumption among Hispanics keeps getting higher every year. The more culturized they are in the American culture the higher the credit card debt.

Hispanics prefer to use cash to buy what they need. For a long time Hispanics would not carry credit cards.

What happens is that they end up going to car dealerships and they are not able to finance a car because they do not have a credit background.

Hispanics end up falling into the American system of having debt so they can go further into debt. All because some company told them to build up their credit.

Most Hispanics still prefer to use money to make purchases. That is why used car dealerships do well among Hispanics, they can go and pay cash with every paycheck.

Our society is getting better at explaining how credit works. A lot of banks now have their information translated in spanish so more people can read it.

As long as Hispanics are being educated about credit card usage by the big banks this is a good thing.

Still Hispanics are having to work harder to maintain their American lifestyle. For years Hispanics have been debt free.

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