AARP.. Law Didn't go Far Enough to Reduce Reverse Mortgage Costs

By Jerry Smith

In the Fall lenders offering reverse mortgages or HECMs started funding reverse mortgages with two big differences legislated in the Bush housing bill.

First: the national loan limits were increased from as little $200,000 all the way of up to $417,000. Second: Closing costs were reduced in the form of lower lender origination fees.

Here is how it works; the origination fee is two percent of the value of the home up to $200,000. For values above 200k and up to 417k the fee increases by 1%.

Let's use a $300,000 valued house. The orgination fee for th first $200,000 will be as much as $4,000. For the additional $100,000 in value it can be as much as $1,000. The maximum origination is $5,000.

Before the law was changed the lender could charge 2% regardless of value, up to the FHA limit.

What does AARP really expect of the lender? Should the lender price itself to point where the owner should take a second job? It sounds like it.

This "high cost" origination fee is the only way reverse mortgage companies create revenue. To reduce it is asking them to find a new business.

Additionally, these fees are not more than typical forward mortgages. They appear to be more to the layman.

Forward mortgages use a standard 1% origination fee. The difference in forward mortgages is known as a service release premium. This is a fee the bank pays the mortgage company for selling a loan at a higher rate.

Reverse mortgage companies make a small percentage of their revenue from the SRP... Many times it's less than $100. That's why the origination is higher.

Is it possible that AARP is just putting on a good face to keep up appearances for their senior contituency?

I also have to wonder if AARP is asking all the insurance companys, who use AARPs name to sell insurance (of which AARP gets a commission), to take a 50% pay cut on all insurance sold.

Of course not. AARP is far too busy making a killing on all those policies sold through their marketing efforts.

AARP is not so pure and they should to sit this one out.

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Credit Repair Home Based Business: Easy To Start, Lots Of Rewards

By William Blake

It is certainly a good idea to open up a credit repair home based business because of the abundance of good opportunities open to anyone that has the skill and wherewithal to do credit repair. This is a line of business that has great potential and it is indeed possible to earn sizeable amounts of moneys right out of your home.

A credit repair business operated out of your home is a great way to start small and slowly build a successful business. Now is a good time to get started because of the increased demand for this type of service.

No Special Skills Required

The best part about starting a credit repair home based business is that anyone can do it and there is also no need to be a financial whiz kid in order to succeed. It's an easy business and there are many do-it-yourself kits available that will help you get started with a credit repair home based business. These kits will show you the best strategies to succeed in a credit repair home based business and will also ensure that the costs involved are minimal.

One of the best things about your own home based business is that you can be your own boss. There is no need for special schooling or licensing to begin your credit repair business. You can start the business right away with the help of these business kits. They even give suggestions on how you can market your business.

Marketing is an important step in getting your business off the ground. Once you advertise your business and get people to respond you can set up a time to meet with them and explain what services can provide for them. If you are able to convince them that you can really help them successfully repair their credit you have just contracted a client.

In your contract with your client be sure you state clearly what fees you will be charging for your services. Collect your fees before you begin working for the client. Once a contract is signed and fees paid you will be ready to gather credit information from your client and prepare dispute verification correspondence for each of the major credit bureaus.

Do your homework before you get started to be sure that you can successfully operate a credit repair business out of your home. With finances the way they are right now and with stricter bankruptcy laws in place the opportunities for success in a credit repair business are greater. It is a good time to try to see for yourself whether this type of business is a good fit for you.

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Important Information About Student Loans

By Kim Archer

For students who do not have the cash to directly pay for their college, student loans are commonly used to obtain the money they are needing. Student loans are one of the most common ways young adults use to pay for their schooling after high school.

Most parents do not have the cash to directly pay for their children's post-secondary education. So a blend of scholarships, grants and student loans is used to pay for the costs of college or university. This includes tuition, books, housing fees and other expenses associated with higher education.

New students can have access to several kinds of student loans. The most common type found is the federal loan. This financing option has smaller limits, and is typically limited to funding tuition fees only. The federal student loans are highly watched by the government, and can be gained through the school's financial aid packages. They frequently have an extremely small interest rate. The student does not need to start paying back the money owed until they have either finished school or are no longer going to school full time.

When a student goes to register for federal student loans, there are several things that should be remembered. First, there is typically a six month no payment period associated with these types of loans. This means that, from after the point in time when the student graduates or has cut back to part time classes, they won't have to begin returning money to the lender for the set amount of time. Interest, however, starts growing as soon as you graduate from school or have fallen to half-time attendance. The payments and amounts owed affect the student's credit history.

There are also student loans that are given to guardians rather than to the student. Higher maximums are available with these loans. The interest rate may also be higher than the federal student loans that are more commonly issued. Interest also begins to accrue immediately. This is due to the fact that the adult is the one responsible for the loan, not the student. Choosing this route does not help build the student's credit score.

Finally, there are private alternative student loans. These go outside of the government regulated process, and are typically saved for people who require more than the amounts issued to typical students. Private loans have the highest available, and may also come with the highest interest rates in addition to this. Personal student loans are issued either to the adults or the students, and can be done through a variety of banks as well as private lenders. This option is usually utilized by people going to very high cost schools where federal cash is not enough. Students can use both private and federal student loans at the same time if necessary.

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Why First Time Buyers are Hardest Hit by the Credit Crunch

By Kelly McMahon

In the past, banks loved first time buyers, who would take out their first house mortgage and then come back again and again for services and new mortgages, which meant a lot in profits for the bank. Now, first time buyers are being seen as less important because their finances are less stable and they pose a bigger risk to banks. You may ask yourself how first time buyers are getting hit by the credit crunch exactly.

The answer to this question is complex. The first thing you have to look at is what first time buyers got before. Usually, they were able to get a mortgage with a really good interest rate or a mortgage without needing to put a lot down for a down payment. The problem is that a lot of first time buyers who only put down five or ten percent of the price of the home ended up not being able to afford their homes when the economy turned bad. This ended up causing a huge headache for banks, and a lot of banks are reconsidering their first time buyer strategies.

You may want to know what is going to happen with your current first time buyer mortgage. You don't have anything to lose sleep about if you already have your first time buyer mortgage with a good rate or other deal. It is only those who are currently looking for a mortgage that won't get the same first time buyers deals that you did. First time buyers can expect to have to purchase special insurance to cover any low-down payment deals that they get, if they are able to get them. This insurance will add to the cost of the mortgage, and take away a lot of the benefits of being a first time buyer.

Also, you can probably expect to see fewer first time buyer deals offered by banks. Add to that the fact that mortgages are going to get more and more expensive because banks are going to be more careful with their money because of the bad economy. In the past almost anyone could get a mortgage, but in the future, you are going to need to be financially secure and do a lot more in order to secure a mortgage. This can be an advantage if you are someone who has good credit, because you are going to have to pay less for those who ruin the system by foreclosing on their homes. When someone defaults on their mortgage, a little bit of that mortgage is passed onto everyone else in the form of higher interest and fees. If your credit score is not so hot, you might not be so happy to hear about these changes.

Those looking for their first mortgage are absolutely going to be affected in a negative manner by the credit crunch. There is no changing the situation, so hopefully you already have your mortgage in place and don't have to worry about what the future holds for you.

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