The issue of health care has taken over the public conscious, creating an issue that overnight seems to have taken many people’s eyes off of the current financial situation. The health care system is indeed in need of reform and is greatly flawed, but with it so suddenly becoming a polarizing talking point, I can not help but question, what are they trying to take our minds off of?
There are many problems with the way health insurance companies operate, especially considering that there is a very good chance that your insurance company will drop you or deny you care when you need it most. Then, once dropped, it can be next to impossible to get insurance again if you have a “preexisting†condition.
When compared to other countries, our health care system is a sham and a disgrace, built upon profit margins and bottom lines, rather than helping those who need it.
The health care lobbyists that have inserted themselves into politics and purchased the votes of our congressmen is also an important issue. As are all the other corporations that pay millions to promote their agendas through our government.
With that said, one can not help but wonder about the timing and that if this current health care ‘crisis’ is not simply another cleverly engineered crisis brought about to help keep our minds off of our financial problems. Perhaps the strongest argument against this, other than the actual need for health care reform, is that it is not an election year.
To reiterate, this is not to say that we do not need health care reform, as this is something that really makes our country look years behind most other developed countries, and even a few undeveloped countries. However, the timing of this newest crisis is questionable, but we most desperately do need an affordable way to take care of our people.
However, with the way the banking crisis helped provide McCain and President Obama a powerful talking point and scare tactic during the previous election, which resulted in fast tracking one of the greatest robberies and transfers of wealth of our time, it is hard to not ask what this current health care crisis is meant to take our minds off of.
In the same way our elected officials stripped us of our constitutional rights with the patriot act, arguing that they were protecting us, I can not help but question, what are they buttering us up for this time? What piece of legislation will be pushed though using the tried and true argument, “If we don’t do anything, the World Will Collapse.”
In today’s housing market, homes prices are at a historic low, as are mortgage rates. For those who have been saving money and waiting to buy a home, there are a number of really great deals available. This includes, of course foreclosures, of which there are literally thousands and thousands across the United States, but even new home builders have been feeling the crunch, so getting a great deal on a home is possible.
In addition to these incentives, the government is also offering an incentive of its own to help make buying a home easier and less expensive for new home buyers. This incentive comes in the form of a tax credit for first time home buyers, which can cover up to 10% of the homes cost, with a limit set at $8,000.
When figuring the amount of the tax credit, the lesser of the two values is used, so for a $60,000 home, only $6,000 would be received as part of the first time home buyers tax credit. For a $150,000 home, only $8,000 would be provided.
This is not the first time the government has offered an incentive to those who have purchased a home, as they have previously offered a no-interest loan. However, the current tax credit for new home owners is different in that it does not need to be paid back. Instead, the tax credit, with its $8,000 limit, comes in the form of a check that can be used by the homeowner to help cover the cost repairs, bills, or anything else that the homeowner needs.
The first time home buyers tax credit, which is often referred to as Obamas Tax Credit or Obamas First Time Home Buyers Tax Credit, is available to those who have purchased a home during 2009, specifically between January 01, 2009 and December 01, 2009.
The home can be a traditional single family home, a modular home, a manufactured home, and even a house boat. Mobile homes and new construction are also covered by the Obama housing tax credit.
There are several other provisions to the First Time Buyers Tax Credit, most notably that the home owners must not have owned another primary residence over the last three years. For those that are married, this stipulation applies to both spouses.
An income cap is also set, with those who make more than $75,000, or $150,000 for married couples, not being able to receive the full $8,000, although a partial tax credit may be available.
The major difference between this and other stimulus plans, such as the 2008 First Time Hombuyer Credit, is that the tax credit will not need to be repaid by the home owner. Instead, it comes in the form of a check and can be applied for when you file your 2009 tax return in April. It is necessary to include a Form 5405, with your standard tax return.
However, it is not necessary to wait until April and it is also possible to file an amended tax return. Simply follow the instructions to amend your 2008 tax return, including the IRS Tax Form 5405, and it is possible to receive the Obama Housing Credit within 8 weeks.
It is also possible to change the number of dependents you claim at work, so that less money is taken from your paycheck every month. However, if you decide to go this route, make sure you are 100% certain you are eligible to receive the Obama Tax Credit, because otherwise you will end up owing the IRS money at the end of the year. It is also a good idea to calculate how much you have received, so you do not exceed the $8,000 first time home owners tax credit.
It is important to note, that the funds of Obamas Housing Credit will be applied to any money you owe the IRS first, with the balance returned to the homeowner. However, those who do not owe any taxes, even those who do not have any actual income, will receive the full $8,000 tax credit.
When applying for a mortgage, the number of different costs and charges can quickly add up. From application fees to home appraisals, it seems like everyone has their hand out. Some of these fees and charges are a normal part of the mortgage process, while others may not be.
It is very important to understand what types of charges are normal when purchasing a home and what types of charges are junk fees. Junk fees are one time fees that are added by the mortgage lender. With the exception of interest and principal fees, most other charges are junk fees. It is important to question these junk fees, as they are often negotiable, but you will not know unless you ask.
Below, you will find a list of some of the common costs associated with a mortgage.
Application Fees: Application fees are also sometimes called processing fees and vary in price, but are usually between $300 and $400. An application fee may be refundable, but it is usually not. It is very important to ask about refunds before paying the application fee. More and more lenders are waiving application fees, but often they tack these fees on somewhere else, after the mortgage is processed, highlighting the importance of questioning all junk fees.
Credit Report Fees: Many lenders will charge the mortgage applicant for the cost of running their credit. The cost of a credit report should not exceed $20 and it is possible to purchase your own and save a few dollars. If a lender tries to tack on a few extra dollars for your credit report, this is a red flag, as most creditors get a bulk discount on credit reports.
Origination Fee: This is a fee charged by the lender to process your mortgage. It is also sometimes called an administration fee or commitment fee. Sometimes the origination fee can be waived, as the lender is making money on the loan and points already. It is important to question this fee and if it is excessive consider using a different lender.
Points: In addition to the origination fee, points are another way that the mortgage lender gets paid. Typically, the points is related to the interest rate, so with a 5% interest rate, they might charge you .05% of the cost of the loan up front. Sometimes the points are negotiable, but the lender could charge you a higher interest rate if you do not want to pay the points.
Prepaid Interest: When you close on your home, you will not be responsible for your first payment right away. Depending on when in the month you close, it could be two months before your first mortgage payment. However, the lender will require that you pay interest between this time, which is the prepaid interest. Make sure to talk with your lender to determine when would be the best time during the month to close, so that you pay the least amount of interest or have the longest time between your first payment.
Lock-In-Fee: Some lenders may charge a fee to guarantee an interest rate while you are looking for a home. This is considered a lock-in-fee and in reality most quality lenders do not charge anything to guarantee an interest rate, however you should get this in writing. If the lender does charge a lock-in-fee, this is a junk fee and if they are unwilling to remove it, this is another red flag that can indicate a less than reputable mortgage lender.
Title Insurance: Like a car, all homes have a title of ownership. When purchasing a new home, a title search is preformed to ensure that no one else has a claim to the property and that there are no liens on the property. Title insurance protects the interest of the bank in case the title search turns up another owner or a lien on the home. The cost can vary, but it usually costs around $200.
Documentation Preparation: This is a junk fee that can often be avoided, because with todays technology, it does not take too much effort to prepare the paperwork for the mortgage.
Underwriting Fee: The underwriters of a loan are the people who take the time to analyze the credit worthiness of the loan applicant. Often, this fee is a junk fee and is not needed. It is a good idea to speak with the lender and have them describe exactly what their underwriters do, as well as questioning the fee.
Property Tax Fee: It is usually necessary to pay the current years property taxes, as well as setting some money aside for next years property taxes, at the time the loan is completed.
Tax Service Fee: Some lenders require that the payments of the property taxes are verified, but this is often a junk fee. It is important to question the lender on this fee, ask them how it is verified, and to see the verification. This tells the lender that you know it is a junk fee and can help you determine if the lender is reputable.
Private Mortgage Insurance(PMI) Fee: Some lenders require private mortgage insurance if less than 20% is put down on the home. PMI partially insures the mortgage and if required, is used until 20% equity is built up in the home. Some lenders require a fee for setting up PMI, but it is a good idea to question this cost. Also, lenders will not usually automatically remove PMI once you have 20% equity, instead waiting for the mortgage owner to question the charge.
Survey Fee: A survey is often done to mark the boundaries of the property. A survey can be a good idea if there are close neighbors or structures on the boundary of the property of questionable ownership. In some cases a survey may be required in order to receive title insurance. Typically a survey is, compared to the other mortgage fees, rather inexpensive and can be a good idea to get an idea of how much land you own. If you decide not to get a survey, you can sometimes see the marking of a previous survey, such as flags on trees or marks on the road, to get an idea of your land’s boundaries.
Appraisal Fee: A home appraisal is used to determine the value of a home, so the mortgage lender can ensure that you are getting a fair deal. The appraiser will evaluate the condition of the home, as well as considering the recent sale price of other similar homes in the area. The cost of an appraisal is usually around $300 and is required when purchasing a new home or refinancing your existing home.
Appraisal Review Fee: This is a junk fee that should raise some warning flags, because it is basically an appraisal of the appraisal. If the lender is so uncertain of the the companies that do their appraisals that they require someone else to review it, you might want to look elsewhere for your loan, as the alternative is that the lender is just trying to fleece you of some extra money.
Courier Fees: Sometimes a lender may charge a fee to transport the mortgage package between the lawyer and mortgage office. However, this fee is often not needed unless it is an out of state transaction or there is a short window of time that the loan must be completed in. It is a good idea to question this fee, as it is often unnecessary.
One of the most significant pieces of legislation to address unfair lending practices and consumer rights is the Fair and Accurate Credit Transactions Act of 2003. The Fair and Accurate Credit Transactions Act address identity theft, as well as allowing the consumer to receive a free copy of their credit report from each of the credit reporting agencies every year.
When you apply for a mortgage, one of the first things the mortgage lender will do is look at your credit report. Credit reports contain information about how you have used and are using your credit lines. They contain information like your payment history, delinquent payments, and outstanding debt. Mortgage lenders use this information to help decide how much of a risk you would be to offer a loan to.
Credit reports are nothing new and have been used by businesses for thousands of years. In concept, using a credit reporting system makes sense, as it allows businesses to more easily analyze risk. However, in the past a great deal of personal information, such as race and religion, was included in credit reports and this information was often used to discriminate against a prospective borrower. There have been many pieces of legislation to address this issue and keep the lending industry more honest, although its success is debatable.
The information contained in a credit report is maintained by one of three credit reporting agencies. Businesses report information to these agencies, who then compile a report that can be used by mortgage lenders and others who offer credit lines.
Up until very recently, there were a number of hurdles that made it difficult and costly for a consumer to view their credit report. It is very easy for an error to end up on your credit report and without being able to easily and inexpensively check, many consumers were penalized for these mistakes when they applied for a mortgage or loan.
The Fair and Accurate Credit Transactions Act addressed this issue and requires that each of the three credit reporting agencies provide consumers with one free copy of their credit report every year. However, in some states, the credit reporting agencies have fought this law by making it more difficult and complicated to receive these reports.
Another big part of the Fair and Accurate Credit Transactions Act is aimed at preventing identity theft. Under the Fair and Accurate Credit Transactions Act, consumers who think they might be about to be the victim of identity theft can place a fraud alert on their credit report, ensuring that potential creditors are more diligent in checking ones identity and providing some recourse if identity theft occurs. It also set up some red flag rules, which were to be developed by the credit industry to help detect fraud, although these have not been fully implemented.
The Fair and Accurate Credit Transactions Act also sets up some rights for those who have been the victim of identity theft. The credit reporting agencies are now required to block cases of identity theft from being visible on credit reports, providing the consumer has provided sufficient evidence of the identity theft. The credit industry is also required to be more corporative when investigating identity theft.
The law also requires that credit card merchants print no more than the last five digits of a credit card on a receipt.
The effectiveness of this law and others that address the credit and mortgage industry are highly debatable and many institutions deliberately try to find ways to get around these law.
Businesses and creditors have for years kept information about the people who use their business, using this information to determine whether to continue offering an individual services. Until the advent of modern technology making it easier to reliably send information across long distances, these records were usually only used internally or in specific locations.
However, beginning in the eighteenth and nineteenth centuries, businesses began sharing these records with each other on a much larger scale, which is the basis for the modern credit report.
As is often the case, with no oversight banks, mortgage lenders, and other creditors were quick to abuse this system. They began storing all sorts of personal information in credit reports, including race, gender, religion, and sexual preference. Worse, the lenders would then use this information to deny or approve a loan.
To help address this problem, the Fair Credit Reporting Act was passed in 1970. Since then, the law has been changed many times, but its premise, to regulate the credit reporting industry, remains the same.
The Fair Credit Reporting Act helps to regulate both credit reporting agencies, as well as who can provide information to these agencies.
There are three main credit reporting agencies, Equifax, TransUnion, and Experian. These agencies compile information about how a person uses their credit lines, including tracking payment history.
As part of the Fair Credit Reporting Act, these agencies are required to ensure that there is a way for consumers to address errors on their credit report and that these errors are removed in a timely manner. They are also not allowed to keep information indefinitely and in most cases can only cover the last 7 years, although bankruptcies can be kept on a credit report for up to 10 years.
Only recently, consumers were given the right to see a copy of their credit report for free and purchase a copy for a fair price.
While a big part of the Fair Credit Reporting Act is aimed at regulating credit reporting agencies, it also deals with who can report information to these agencies and what type of information can be added to a credit report.
As part of the Fair Credit Reporting Act, agencies that report information to credit reporting agencies must:
The Fair Credit Reporting Act also puts limits on who can report information to credit reporting agencies, which is usually limited to banks, credit unions, and other creditors. It also put regulations on how credit reports can be used for background checks by employers.
While the Fair Credit Reporting Act took steps to help make the credit reporting industry more transparent and less discriminatory, it still has a long way to go and it would require a number of other laws to bring the credit industry under better control.