Thursday, August 27, 2009

Anaxarchus (c.380—c.320 BCE)

As a follower of Democritus, Anaxarchus developed the skeptical
tendencies within Democritus' thought. Although our information on him
is extremely sketchy, he is a pivotal figure connecting the atomism of
Democritus to the skepticism of Pyrrho, if ancient philosophical
genealogies can be trusted. He allegedly abolished the criterion of
truth by likening our experiences to those of dreamers and madmen.
Renowned for his contentment, he earned the title "the happiness man"
(ho eudaimonikos). Like Pyrrho, this contentment was based on an
indifference to the value of things around him. But unlike Pyrrho,
this indifference did not manifest itself in a detachment from worldly
affairs. Instead, he was an advisor to Alexander the Great and
actively pursued the objects of his desires, often spurning
conventional values.

1. Life and Sources

Anaxarchus was a close companion of Alexander the Great, and he
reportedly accompanied Pyrrho on Alexander's expedition to India.
Apparently, Indian philosophers rebuked Anaxarchus for "fawning on
kings," and it was this rebuke that led Pyrrho to withdraw from
worldly affairs. Also, unlike Pyrrho, Anaxarchus was fond of luxury.
Nevertheless, he was famed for his impassivity and ability to be happy
under any circumstances. This impassivity is the subject of many of
the anecdotes about him, most dramatically in the widely-circulated
story of his death: he was able to pay no attention to his torment as
he was being pounded to death in a mortar at the orders of a tyrant he
had insulted. (Zeno of Elea, however, is also said to have died in
this manner, so the story is somewhat suspect.)

No philosophical works of Anaxarchus survived. We have only two
"fragments" (that is, direct quotations) from his oeuvre, and few
reports concerning his philosophical positions or the arguments for
them. Most of our information on Anaxarchus comes in the form of
colorful anecdotes, contained in much later sources, concerning his
interactions with Alexander and Pyrrho. These stories are often false,
being composed to make some (supposedly) humorous or edifying point.

Relying on dubious anecdotes in order to reconstruct someone's
philosophy is obviously less than ideal, but it is not hopeless,
because these bogus tales were often composed in order to provide
fitting and amusing illustrations of a philosophical point or position
of the figure in question, and so they can be used as evidence for a
person's philosophy. For example, Plutarch reports that Anaxarchus
told Alexander that there are an infinite number of worlds, causing
Alexander to despair that he had not yet conquered even one (Plutarch,
Tranq. 466D). This conversation almost certainly never took place.
Instead, it was invented to make a neat little point about the
insatiability of ambition. That is to say, even Alexander, the most
powerful man in the world, could not attain all that he desired, and
if this is so, wouldn't you be better off in adapting your desires to
the world, rather than engaging in vain striving in order to bend the
world to your boundless desires? Nonetheless, that there is an
infinite number of worlds is a thesis characteristic only of the
atomists in antiquity, and so this anecdote gives us evidence that
Anaxarchus was regarded as an atomist, since putting this remark in
the mouth of e.g., an Aristotelian, who believes that only one world
exists, would make no sense. Still, because of our sources, any
conclusions concerning Anaxarchus' philosophy will of necessity be
sketchy and tentative.
2. Epistemology

Anaxarchus was accused of abolishing the criterion of truth because he
likened things to painted scenery and said they resemble the
experiences of dreamers and madmen (Sextus Empiricus, Against the
Professors 7 87-8). This suggests that the things that we take
ourselves to be acquainted with in ordinary experience, such as trees
and rocks, are merely representations, like painted scenery, not the
objects themselves at all. Furthermore, these experiences cannot be
relied upon to get us at the truth: we are in no better position than
are dreamers and madmen, people whose experiences are paradigmatically
false (or at least untrustworthy).

The above points are only Anaxarchus' epistemological conclusions, not
the grounds for them. At least two different reconstructions of
Anaxarchus' reasoning can be given. In the first (in Hankinson (1995)
54-5), Anaxarchus is offering an argument from skeptical hypothesis.
Such arguments from skeptical hypotheses proceed in the following way:
you start by proposing some skeptical hypothesis—for instance, that
you are a brain in a vat or that the world was created exactly five
minutes ago. You then argue that you do not know whether or not this
skeptical hypothesis holds—typically, because your situation under the
skeptical hypothesis would be indistinguishable, as far as you can
tell, from the situation you ordinarily think obtains. Then various
skeptical inferences are drawn from this—since you do not know that
the skeptical hypothesis does not hold, you are unjustified, for
instance, in trusting the evidence of the senses or of your memory. On
this reconstruction, Anaxarchus' analogies operate as skeptical
hypotheses. The two-dimensional surfaces of painted scenery delusively
convey just the same sort of impression of a three-dimensional world
as do our regular sense-impressions. But because we cannot distinguish
between the delusive impressions produced by stage-paintings and the
(supposedly) veridical impressions our senses normally convey, we
cannot know whether the skeptical hypothesis holds, and so we should
not trust the evidence of the senses. Likewise, the impressions we
receive in sleep, or that madmen receive, are indistinguishable from
ordinary sense-impressions—but if so, we cannot trust the senses. If
this is right, Anaxarchus' argument is an exciting anticipation of the
most famous argument from skeptical hypothesis, Descartes' dreaming
argument in the Meditations against the trustworthiness of the senses.
In the second reconstruction, the analogies are vivid illustrations of
our epistemic predicament, but are not themselves the basis for
Anaxarchus' skeptical conclusions. Instead, he draws from his
Democritean heritage. Democritus says that we know nothing genuine
about objects in the external world, only about the effects that they
have on our bodies (Against the Professors 7 136, DK 68 B 7). For
instance, we are not really acquainted with some portion of honey in
itself, we are familiar only with the way this honey makes us have
certain visual sensations as atoms streaming off of it impinge upon
our eyes, gustatory sensations as the soothing round atoms of the
honey pleasingly and sweetly roll around on our tongues, etc.
Furthermore, the information conveyed by our senses about these
objects is systematically misleading. The same object may appear
yellow to one person, and grey to a person with color blindness: but
both sensory reports are false, since qualities like yellowness,
grayness, and sweetness are not really present in the objects
themselves at all. As Democritus famously puts it: "by convention
sweet, by convention bitter, by convention hot, by convention cold, by
convention color: in reality atoms and the void" (Against the
Professors 7 135, DK 68 B 9, trans. Hankinson).

As a result, the senses give only "bastard" knowledge (Against the
Professors 7 138, DK 68 B 11). And this makes Democritus conclude that
attaining knowledge of the world is very difficult, perhaps
impossible. Although its exact extent is controversial, there is
doubtless a heavy skeptical strain in Democritus. This strain is
developed further by some of his followers, such as Metrodorus, who
was allegedly Anaxarchus' teacher. Apparently he thinks that Socrates
was being too optimistic when he said that the one thing he knows is
that he knows nothing; Metrodorus asserts that we know nothing, not
even that we know nothing (Against the Professors 7 88). Anaxarchus is
another member of this group: because of the unreliability of the
senses, we are no better off than dreamers and madmen when it comes to
our access to truths about the world, and so, there is no criterion
whereby we can distinguish what is the case from what is not.
3. Ethics

According to Anaxarchus, the key to contentment and happiness is being
indifferent concerning the value of things. This claim is also central
to the ethics of Anaxarchus' traveling companion Pyrrho, and the much
later skeptics who named their movement after Pyrrho. This immediately
raises the question: If one is indifferent concerning the value of
things, on what basis does one act? Anaxarchus gives his own
distinctive answer to this question, one reminiscent of the sophists.

We cannot be sure in exactly what sense Anaxarchus is "indifferent"
concerning things' value, and why, but his Democriteanism allows us a
plausible reconstruction. It is easy to extend Democritus' reasoning
concerning sensible qualities to ethical qualities, although
Democritus himself did not do so. For Democritus, honey is no more
sweet than bitter, because in truth it is neither sweet nor bitter—in
truth, it is just a conglomeration of atoms buzzing about in the void.
And a sign of this is the relativity of perception, that the same
honey can taste sweet to one person, but bitter to somebody with a
disease. Properties like sweetness and bitterness are not really part
of the nature of the objects themselves.

Others give similar arguments concerning value, moving from the
relativity of value to its elimination from nature. Wealth may be
esteemed by one person and disdained by another, or the same sort of
action regarded as honorable in one city and base in another. But when
we think about the objects or actions themselves, none of them are
really good or bad, base or honorable, by nature, but are simply
regarded as such by convention. And so, any statement, such as "this
action is by nature base," which assigns a value to something in
itself, would simply be false. Anaxarchus' ethical eliminativism has
been compared to J. L. Mackie's error theory of morality (in Warren
2002).

The Pyrrhonian skeptic Sextus Empiricus would call this position a
form of dogmatism, since it is a substantial metaphysical thesis about
values not being part of the furniture of the world. The true skeptic,
according to Sextus Empiricus, is indifferent concerning the value of
things insofar as he refrains from making judgments one way or the
other about whether things are good, or bad, or neither, and this
indifference is based upon the equal weight of conflicting appearance
and arguments that leave him in a state of suspending judgment.

Sextus Empiricus claims that suspending judgment about value helps one
attain contentment in the following way: the skeptic will unavoidably
sometimes suffer from cold or thirst, since he is human after all, but
he does not have accompanying this discomfort the further disturbing
thought "I am suffering something that is bad by nature" (Outlines of
Pyrrhonism I 12), and so he is unperturbed. This same basic sort of
reasoning would also be available to both Anaxarchus and Pyrrho.
Pyrrho is unopinionated, and ipso facto he would have no opinions that
he is suffering something bad by nature. Not caring much about things
like pain and danger that most people regard as naturally bad helps
him remain tranquil. (See Bett (2000) chapter 2 for more on this
issue.) Anaxarchus, by contrast, does not suspend judgment about
questions of value, but his eliminativism means he would never believe
that he is suffering something bad by nature. Furthermore, his
indifference allows him to remain content and moderate in his
passions, since he never believes he is lacking in anything good by
nature. If things like luxury, power, and social status, which are
conventionally regarded as good, are really indifferent, and one has
no beliefs about other things being by nature good or bad, on what
basis does one act? Pyrrho's life indicates one possible answer: he
shows his disregard for such conventional values by withdrawing from
the world and living in solitude. He pays no attention to things that
are indifferent, and he is willing to do actions regarded by
convention as demeaning, such as washing a pig (DL 9 66). Anaxarchus
behaves quite differently. As noted above, Anaxarchus was rebuked by
Indian philosophers for "fawning on kings," and many of the anecdotes
about Anaxarchus concern his pursuit of luxury: for instance, his
wrapping himself up in three rugs when a cloak would have done, and
his asking for a huge sum of money from Alexander when Alexander tells
him to ask for as much as he wants.

Pyrrho's disciple Timon condemned Anaxarchus for this behavior, and
apparently thought of it as inconsistent with the indifference
advocated by both Pyrrho and Anaxarchus. But actively engaging with
the world, and pursuing what presently attracts you, is consistent
with believing that the objects of one's pursuit are by nature neither
good nor bad, as long as one pursues them realizing that these objects
have no value in themselves, and are pursued merely because of the
value that one gives them. Realizing that they have no value in
themselves, you will not be terribly distraught if you fail to attain
them, and you will be able to adapt yourself to circumstances
effectively. This adaptability to circumstances might be why
Anaxarchus says that the ability to seize the "opportune moment"
(kairos) is the boundary marker of wisdom. Anaxarchus displays this
virtue in his request of great wealth from Alexander. Pyrrho would
have spurned such an offer. But Anaxarchus, even though he says that
it is hard to collect money, and even harder to keep it safely, seizes
the opportunity and correctly guesses that Alexander would be amused
and flattered by the chutzpah of his request.

And in any case, Anaxarchus does display his own sort of contempt for
convention. He thinks that standards of what is right and wrong are
merely conventional, and as such, one should feel free to disregard
them when they get in the way of pursuing what one wants. This
attitude is strikingly displayed in an anecdote concerning Anaxarchus
and Alexander (Plutarch, Life of Alexander 50-52). Alexander and his
friend Cleitus get into a drunken quarrel. They exchange insults, and
in a rage, Alexander picks up a spear and kills Cleitus. His anger
then immediately departs, and he would have killed himself if his
guards had not prevented him. Over the next several days, Alexander is
in a bad way, staying in his room and loudly lamenting what he has
done. Anaxarchus successfully relieves Alexander's suffering with the
following remark:

Here is Alexander, to whom the whole world is now looking, but he
lies on the floor weeping like a slave, in fear of the law and censure
of men. He should be their law and measure of justice, if indeed he
has conquered the right to rule and mastery, instead of enslaving
himself to the mastery of empty opinion. Don't you know that Zeus has
Justice and Law seated beside him, so that everything that is done by
the master of the world may be lawful and just?

Asserting that moral norms are merely conventional, and that one
should as a result feel free to flout them if need be, is reminiscent
of Callicles in Plato's dialogue the Gorgias, and the sophist
Antiphon. And indeed, Anaxarchus was sometimes called a sophist.
However, unlike Callicles and Antiphon, Anaxarchus has no notion of
there being things that are "by nature" just, right, or good, in
contrast to those merely conventional standards.
4. References and Further Reading

* Bett, Richard. Pyrrho, His Antecedents, and his Legacy. Oxford:
Oxford University Press, 2000.
o The best consideration of Pyrrho's "indifference"
regarding things (chapter 1), its practical implications, and its
supposed benefits (chapter 2). Bett also briefly talks about the
relationship between Anaxarchus and Pyrrho (160-163); he is
pessimistic about our ability to reconstruct Anaxarchus' philosophy.
* Brunschwig, J. 1993. "The Anaxarchus Case: An Essay on
Survival," in Proceedings of the British Academy 82: 59-88.
o An interesting discussion of Anaxarchus' supposedly
fawning attitude towards kings. Brunschwig argues that the anecdotes
paint a much more ambivalent and complicated picture than that of a
simple flatterer. Also worth looking at for its extended consideration
of what Anaxarchus says concerning Alexander's deification, which
Anaxarchus supported.
* Hankinson, R. J. The Sceptics. London: Routledge, 1995.
o Contains a brief discussion of Anaxarchus' epistemology
(54-55); also worth looking at for introductions to Democritus'
skepticism and Sextus Empiricus' claims concerning the psychological
benefits of indifference.
* Warren, James. Epicurus and Democritean Ethics: An Archaeology
of Ataraxia. Cambridge: Cambridge University Press, 2002.
o Chapter 3 is the longest treatment of Anaxarchus' ethics
in English, examining our fragmentary evidence in great detail. Warren
also gives a revisionary reading of the "dreamers and madmen" report
in Sextus Empiricus, arguing that it has only ethical, and not
epistemological, significance.

Saturday, August 22, 2009

Down Mortgage Paying

The reader notes that just about every personal finance guy he has read says not to pay off your mortgage with the idea being that market returns typically, I say typically, exceed mortgage interest rates paid..

Down Mortgage Paying

The reader asks why not pay off all debt and invest whatever little bit is left over. I think the question was prompted by my noting that while people with a lot of money may not worry about having enough in the bank, people with no mortgage and no car payments probably don't have a lot of worries either or Down Mortgage Paying.

This issue comes up in talking to clients. I should note I am the portfolio manager not a CFP, my colleagues at the firm are and for planning issues I consult with them but in terms of just talking the issue comes up. My answer is always the same which is that from a long term numbers standpoint there is no question that paying off the mortgage is the wrong thing. It is like investing at a very low rate. Additionally a $2500 mortgage taken out today will be far less of a
burden in ten years from a cash flow basis than it is now. Think about people paying a mortgage they took out 20 years ago that might only be $800 a month.

That being said I paid off my mortgage five years ago when I was 38 making me a tad hypocritical although I always tell clients this in the conversation. We live in a small cabin we bought in 1998 for $87,000 and the financing situation was such that we had to put $30,000 down. Based on troubles my parent had I was motivated to live modestly, this is clearly rooted in psychology versus reason, have a very low overhead and thus avoid financial stress points that many people grapple with.

We are all motivated by different things and the numbers notwithstanding I think most people need to heed these drivers and act accordingly.

In addition to the numbers favoring investing and maintaining a mortgage there is another less objective drawback to paying off the mortgage. If a person has $100,000 in the bank and $100,000 in debt then they have a decent pile of cash and a small payment to make. Each month they make the payment the debt goes down a little and they still have that pile of cash which allows for flexibility to do many things. If they pay off that debt all at once then the cash is gone, the flexibility is gone and they have nothing.

One last consideration is how many people can pay off their mortgage? Is the average mortgage debt $200,000? I can't imagine raiding an IRA account to pay off a mortgage makes any sense so that would mean taking it out of a taxable account. Obviously far more people have mortgages with close to nothing in the bank than with the ability to pay it all off.

Having no mortgage creates an emotional comfort but in my opinion has no numerical support. Down Mortgage Paying

Avoiding Scams When Looking For Mortgage Modification

Before signing any papers for a loan modification, speak to an attorney or a state regulatory agency. You will want to speak with someone who is familiar with the governing process of these companies. Also, make sure the loan modification company has filed a contract with your state and that they hold a valid state license. In addition, make sure they are willing to go through the United States Postal service for pickup and delivery of funds and documents. If not, it could be that they are just trying to skirt issues of mail fraud.

Avoiding Scams When Looking For Mortgage ModificationGet educated on loan modifications. Know what your loan options are. Have several different real estate agents give you a comparative market analysis (CMA) to see what your home would sell for. Seek the advice of an attorney if you want to pursue keeping your home.

Here are some of the common things many "scam" companies will say when you call and ask them if they can help you save your home.

1. "By signing the title of your home over to us, we can salvage your credit. That way when the foreclosure is issued, it's our name that will be recorded."

Busted - In truth, a home foreclosure is always recorded against the borrower. It doesn't matter whose name is on title. The person who borrowed the funds is responsible. If you fall for this, you now owe money on something you no longer own.

2. "We will help you out of this situation by giving you some money AND paying your delinquent payments. Just sign the title to your house over."

Busted - If you don't mind being at the mercy of a lot of uncertainty, this might not be a problem. However, carefully consider this: Are you losing home equity you may have built in your home? Can the buyer really cure the default? Will the buyer really make the mortgage payments? Do you want to be responsible for a home loan on property you no longer own? There are a lot of maybe's and what if's in this scenario, so it's hard to make a call; be careful, and have an attorney on hand to review contracts before you sign them.

3. "Let us buy your home and you can lease it back from us. We'll make sure you can buy it from us later."

Busted — So you sell your house for less than it is worth, rent it for more than you should and then buy it again later at a higher price. Doesn't sound like much of a bargain. Now you've not only lost money, but you will most likely have a higher loan amount than you did before and probably at a higher interest rate. It will probably be harder to qualify for a loan and the payments will be more. A better choice? Sell it on the open market or consider a hard equity loan if you have the equity in the property to do so.

4. "We can help you refinance your property and pay off some of your bills."

Busted — Refinancing costs money - which is usually rolled into the new loan amount. This not only costs you money, but eats into the equity you have in your home.

When looking at mortgage lenders, consider the total amount of the loan, instead of getting stuck on how much the monthly payment is. Traditionally, these loans have higher interest rates and more fees.

5. "Home Foreclosures are my specialty. I know I can get you top dollar and help you out from the strain you've been under."

Busted — There are agents who search the public records looking for people who are in pre-foreclosure. They give these names to investors who make ridiculously low offers, all in the name of "helping." Many times, if the seller had interviewed three agents from the area and gotten comparative market analysis' done on their homes, they would have gotten a better deal. Always do your homework and work with an attorney if possible.

6. "Declare Bankruptcy - Stop the Foreclosure."

Busted - Foreclosures are NOT stopped by declaring bankruptcy. It just stalls the foreclosure process, and gives you a little extra time to organize your finances better. Contact a local attorney who specializes in bankruptcy and see if this is truly your best option. Wrong choices can make the situation even worse so make sure you choose someone who knows what they are doing. Are you looking for a bargain or do you want the job done properly?

7. "In exchange for paying us to modify your loan, we can arrange to have your mortgage payments frozen for 3 to 5 months.

Busted - Many mortgage modification companies get paid in advance for their assistance in stopping foreclosure by making false representations to homeowners. Some companies are not operating legally even though they offer money back guarantees. A number of these loan modification companies simply take the money and run, while others arrange only for you to receive the same unaffordable forbearance agreement you were already offered by your lender. Make sure you are working with a reputable company. Beware if they start offering rebates or making offers that sound too good to be true.

In closing, remember to do your homework. Just because you find yourself in a difficult situation, don't lose your head. Speak to several experts and get several opinions. A knight in shining armor may end up being a nightmare.

Enjoy The Mortgage Rate Slide Through 2008

It ALMOST cant get any better than this. Mortgage rates are smoking going into 2008. The current interest rate environment is Storm Chaser Roller Coastergreat for adjustable rate mortgage holders. My ARM loan rate is down nearly a 1/2 % just in the last few months and looks as though it will continue to go down throughout this year. This morning I found myself calculating how low my mortgage payment would go if………..Kind of funny. Like when you buy a stock and you start calculating all this money your going to make if this winner you picked goes to the moon.

With the Jobs Report for December showing only 18,000 new jobs when estimates were looking for 70,000 thats quite a surprise. Unemployment is creeping up as well to 5% this is a pretty large increase from Novembers level of 4.7%. Bad news for stocks but great news for mortgage bonds!

The bad news with the slide in interest rates as is with all the so called help from the government for those facing foreclosure or arm resets is that the majority of those wanting to take advantage of the lower rates and refinance can not. Its nearly impossible for even the best of credit scores to refinance their loan right now at anything over 80%. I have had four loans in December alone, all rate and term refinances (no cash out), all mid 700 credit scores not get approved. Its ridiculous right now, mortgage bonds are at the best they have been since summer of 2005 but its increasingly harder for approvals on refinances to take advantage of them.

Fannie Mae and Freddie Mac have all but closed up funding higher loan to values. I do not see this getting better anytime soon and even see it getting worse before it gets better. Most lenders have already added Risk Based Pricing to loans that Fannie and Freddie are officially starting in March 2008. Some lenders are starting to take away Investor loan programs for cash out. That is correct No Cash Out for Real Estate Investors, not even $10. Also some lenders are pulling Expanded Approvals as well. Then you have the automatic 5% value reduction for declining markets.

The storm is not over yet. There are going to be many more limiting changes that are coming down the pipe I am sure and It will not matter how low rates go if mortgage holders can not take advantage of them.

Avoiding Scams When Looking For Mortgage Modification

Before signing any papers for a loan modification, speak to an attorney or a state regulatory agency. You will want to speak with someone who is familiar with the governing process of these companies. Also, make sure the loan modification company has filed a contract with your state and that they hold a valid state license. In addition, make sure they are willing to go through the United States Postal service for pickup and delivery of funds and documents. If not, it could be that they are just trying to skirt issues of mail fraud.

Avoiding Scams When Looking For Mortgage ModificationGet educated on loan modifications. Know what your loan options are. Have several different real estate agents give you a comparative market analysis (CMA) to see what your home would sell for. Seek the advice of an attorney if you want to pursue keeping your home.

Here are some of the common things many "scam" companies will say when you call and ask them if they can help you save your home.

1. "By signing the title of your home over to us, we can salvage your credit. That way when the foreclosure is issued, it's our name that will be recorded."

Busted - In truth, a home foreclosure is always recorded against the borrower. It doesn't matter whose name is on title. The person who borrowed the funds is responsible. If you fall for this, you now owe money on something you no longer own.

2. "We will help you out of this situation by giving you some money AND paying your delinquent payments. Just sign the title to your house over."

Busted - If you don't mind being at the mercy of a lot of uncertainty, this might not be a problem. However, carefully consider this: Are you losing home equity you may have built in your home? Can the buyer really cure the default? Will the buyer really make the mortgage payments? Do you want to be responsible for a home loan on property you no longer own? There are a lot of maybe's and what if's in this scenario, so it's hard to make a call; be careful, and have an attorney on hand to review contracts before you sign them.

3. "Let us buy your home and you can lease it back from us. We'll make sure you can buy it from us later."

Busted — So you sell your house for less than it is worth, rent it for more than you should and then buy it again later at a higher price. Doesn't sound like much of a bargain. Now you've not only lost money, but you will most likely have a higher loan amount than you did before and probably at a higher interest rate. It will probably be harder to qualify for a loan and the payments will be more. A better choice? Sell it on the open market or consider a hard equity loan if you have the equity in the property to do so.

4. "We can help you refinance your property and pay off some of your bills."

Busted — Refinancing costs money - which is usually rolled into the new loan amount. This not only costs you money, but eats into the equity you have in your home.

When looking at mortgage lenders, consider the total amount of the loan, instead of getting stuck on how much the monthly payment is. Traditionally, these loans have higher interest rates and more fees.

5. "Home Foreclosures are my specialty. I know I can get you top dollar and help you out from the strain you've been under."

Busted — There are agents who search the public records looking for people who are in pre-foreclosure. They give these names to investors who make ridiculously low offers, all in the name of "helping." Many times, if the seller had interviewed three agents from the area and gotten comparative market analysis' done on their homes, they would have gotten a better deal. Always do your homework and work with an attorney if possible.

6. "Declare Bankruptcy - Stop the Foreclosure."

Busted - Foreclosures are NOT stopped by declaring bankruptcy. It just stalls the foreclosure process, and gives you a little extra time to organize your finances better. Contact a local attorney who specializes in bankruptcy and see if this is truly your best option. Wrong choices can make the situation even worse so make sure you choose someone who knows what they are doing. Are you looking for a bargain or do you want the job done properly?

7. "In exchange for paying us to modify your loan, we can arrange to have your mortgage payments frozen for 3 to 5 months.

Busted - Many mortgage modification companies get paid in advance for their assistance in stopping foreclosure by making false representations to homeowners. Some companies are not operating legally even though they offer money back guarantees. A number of these loan modification companies simply take the money and run, while others arrange only for you to receive the same unaffordable forbearance agreement you were already offered by your lender. Make sure you are working with a reputable company. Beware if they start offering rebates or making offers that sound too good to be true.

In closing, remember to do your homework. Just because you find yourself in a difficult situation, don't lose your head. Speak to several experts and get several opinions. A knight in shining armor may end up being a nightmare.

Mortgage Contingency Conditions In the Real Estate Contract

It is really important to make sure that your real estate attorney explains to you the mortgage contingency provision in the real estate contract. Many contracts tend to have generic provisions but there is no reason why your attorney cannot amend the provision and tailor it to suit your particular situation. When negotiating the mortgage contingency provision of the contract, a mortgage contingency amount of eighty percent (80%) of the purchase price may be requested, even if the client may subsequently apply for or accept a smaller loan. A forty five (45) to sixty (60) day contingency period in which to get a firm mortgage commitment should be sought, remembering that loan application processing in some banks can be very slow. However, a shorter thirty (30) to forty five (45) day mortgage contingency period would be acceptable in the contract if the sellers' attorney agrees to insert the provision assuring the granting of a reasonable extension of time if the loan commitment has not been secured by the agreed contingency date. You don't want to be left in a situation where the seller finds another buyer or decides to take the house off the market and leave you high and dry. Even though he may not give you an argument in returning your deposit you have already expended money and time in securing a mortgage and in making plans to move forward with the purchase of the particular residential property, commercial property, co-op or condominium that you have set your dreams on.

There are a lot of different standard real estate contracts floating around out there and different attorneys use different versions of a contract. I have seen many contracts where there are no mortgage contingencies in the printed form but there is a specific tailored rider annexed to the original contract. It is important that that tailored rider is studied in detail and that your attorney explains it to you in detail. In many contracts the mortgage contingency clause is actually in the standard contract and if you read the paragraph in detail you see that you are committing to purchase the house as soon as you have received a "written commitment" without the word "firm," "unconditional" or "fundable". Now we all know that many lenders issue written commitments BUT the written commitment isn't worth the paper its written on if it is followed by a long detailed page of conditions that you have to meet before you close on the loan. I personally am very careful to make sure that my client is not placed in a position where he has to go forward and purchase the property as an all cash transaction because the mortgage contingency clause isn't worth anything.

Of course the purchaser can always file an action in court claiming that he is entitled to his deposit back if the mortgage is not funded by the financial institution however, I would much prefer that my client is not put into this expensive nerve-racking situation.

Options to Keep or Sell Your Home

The following are several options to help you keep your home: If you current financial situation is only temporary and you know you will be able to make your mortgage payments in the near future, you can get approved for a forbearance, which would delay or reduce your payment. If you make your regular monthly payments plus an additional amount, you can have a repayment plan available. If your loan has mortgage insurance, you may be eligible for a claim advance to bring the account current. You may also be eligible for a modification by modifying the terms of your mortgage.

There are also several options to help you sell your home: If you're unable to afford your home anymore, you may be able to receive a short sale, where the lender accepts less than the full payoff amount. You can also get a loan assumption if you have a buyer willing to assume your mortgage loan. If your property is fairly listed for 90 days without any activity, you can receive a deed-in-lieu from your lender who will accept the property by warranty deed as a settlement.

Loan Modification

Many people often find themselves in loan trouble with their mortgages. The first thing someone in need of help must do is to make sure that their current loan is a lawful one. You should have an experienced mortgage lawyer look through your documents to make sure all is well with them. You should also keep a complete written life of loan history so that you know everything you were ever charged for.

If no laws were violated, you may approach your lender for a loan workout or loan modification. Your lender will look at what is causing your hardship to pay, as well as your ability to pay and the amount you owe. They will also check the equity in the property, the future financial situation, and what is best for them. This means that everything will be used against you when you try to obtain a loan modification. You need to be savvy and get in touch with the higher-ups in the department, even if it means going through the lower level employees and filling out many forms. The most important things are your budget (can't be too low or too high) and not spending your house payments. If you are able to achieve these factors, your chances for a loan modification are greatly increased.

First Time Buyers Mortgage Application Checklist

If you have a dream about owning your own home and applying for a mortgage then you may be a bit nervous at the present moment. While having your own home is the American dream the high prices involved can be overwhelming. In addition to this, many lenders will be more concerned with earning a profit than with helping you find a home that matches your income. Below are some steps you can take to properly apply for your first mortgage.

Applying for a mortgage used to be simple. People would compare the prices and rates on houses they wanted, and once the found a lender they were comfortable with, they would make a large down payment and then move in. Today things have changed, and going through the number of options available can be very stressful. One thing you should do before shopping for a house is to educate yourself.

First Mortgage Application Steps

The first thing you will want to do is look at your current income.
How much do you make per year? How secure is your job? Remember, if you go about getting a mortgage the traditional way, it could take 15 to 30 years to pay it off, and if you get behind on your payments, you could lose your home and have your credit ruined. If you can't afford a home, it is best not to move into one until you can. This will keep you from taking on debt you can't afford.

How Much Can You Afford?

If you feel that you can afford a mortgage the next thing you should decide is how much you can afford. Lenders have a tendency to offer you mortgages which are more than you can afford, and this is important to remember. In addition to the cost of the mortgage itself, you will have to pay taxes, insurance and other expenses as well. These costs should be included in your monthly expenses.

Apply Directly Or Via A Broker?

When you begin looking for a mortgage you will encounter two types of lenders; mortgage brokers and direct lenders. The direct lenders are the people who have the money to lend you. They are ultimately the individuals who decide if you will be approved for a home. The mortgage broker acts as a middleman, going out and finding direct lenders who can give you the best deal.

While the lenders may have a limited number of loans available, a mortgage broker will often have access to multiple lenders simultaneously. If you are looking for a specific type of mortgage, a mortgage broker may be better to use than a direct lender. However, a mortgage broker will charge you for their services, and this could be a certain percentage of the mortgage loan you end up with. With the rise of the internet, online mortgage brokers can help you save money.

Get The Paper Work In Order

Once you have found a loan through a direct lender or mortgage broker the next step is to fill out an application. There are a number of things you will need to fill out on the application and it will help if you have some supporting documents. You will need to provide information about your income, length of employment, and your assets.
They will also want to know what other loans or credit cards you have.

Once this information has been provided, the lender will look at your credit report. In addition to this, they will want to see your bank statements and check stubs from your job. You may also need to show them tax information and data about your insurance. If your credit is good, an appraiser will be hired to make sure the house is valued at the loan amount that will be given to you.

Five Tips to Slash Your Home Finance Costs

It's no wonder that the majority of homeowners dream of one day being able to pay off their home loan and live a life free from the shackles of interest rates, home finance and worries about meeting the monthly mortgage payments because the largest expense the majority of us take on in a lifetime is our mortgage and each month our home finance payments take a substantial chunk out of our take home pay.

Just think what you could do with all the extra money you would have spare if you didn't have to meet your mortgage each month! Interested? Well, here are five steps that you could take today to substantially slash your mortgage repayments and the overall cost of your home loan and even speed up your rate of repayment so that the day when you've paid off your home finance and are free to live the life you want comes that much sooner.

Step One – Demand Better Service!

As a loyal customer of your mortgage lender isn't it about time you were rewarded for your financial commitment, for making your regular payments and for being a good, long term customer?

Well, you can rest assured your mortgage lender will not reward you unless you ask for a better deal on your mortgage!

So get on the phone, call up your lender, ask to speak to someone in customer services or the customer retention department and explain that you're looking around for a better mortgage deal. Ask them for an evaluation of how much you have left to pay so that you can give it to any one of the hundreds of other mortgage lenders out there all willing to give you a better deal.

If you are indeed a valued customer you should receive favourable feedback to your demands and receive details of better offers currently available to you from your current lender.

Remember, if you don't ask you don't get and be adamant about what you want!

Step Two – Shop Around

If step one doesn't get you the deal you deserve, shop around. There really are well in excess of a hundred lenders out there all seeking new customers who will offer you incentives to take up their mortgage product.

Use the internet to get an idea of rates being offered and special deals available to you. Do remember that lenders will do everything they can to make their deal seem like the most attractive one available and do everything within their power to attract new customers so you need to be shrewd.

Look for any hidden charges or tie in clauses and make sure you evaluate products offered on a like for like basis taking into account all the features of the mortgage offers available.

Step Three – Call in the Cavalry

Well, not the cavalry exactly but expert assistance in the form of a licensed and regulated fee free independent mortgage broker. In the UK these guys are now regulated by the Financial Services Authority and in the US they should come under the scope of The Responsible Lending Act.

As independent brokers they have access to and understanding of every single mortgage product available and they should be best placed to assist you find a better deal than the one you have now where your repayments will be less, your interest rate will be lower and the amount you repay over the entire duration of your loan is reduced.

Make sure your broker is fee free and remunerated by any company you decide to take a mortgage out with. More importantly than this, make sure they are regulated and licensed correctly and if possible ask for professional references or testimonials.

Step Four – Cut Out All Extras

Mortgage lenders are notorious for selling overpriced add-ons such as life insurance, home insurance, contents insurance, income protection cover…all these insurances have their value of course – but you can bet your bottom dollar that you can every last one of them for a fraction of the price by going directly to an independent insurance house or even seeking the services of an independent financial adviser to find you the best deal available.

You could literally save yourself thousands each year in insurance premiums!

Step Five – Throw Some Money at It

So, you've cut your interest rate down to size, reduced your monthly repayments, maybe received a cash lump sum from a new lender and saved yourself thousands on insurance products – now turn all those savings back into your mortgage and repay early.

Make sure you have it negotiated into your new mortgage contract that you can make early repayment or lump sum annual top ups and get rid of the millstone round your neck, free yourself from your largest financial commitment as soon as possible and save thousands in interest payments and enjoy freedom of life once again!

Home Improvement Equity Loans

Homeowners often need extra cash for home improvements. And often a homeowner will opt to take out a secondary loan, otherwise known as a home equity loan, to remodel the home. Some borrowers stay up-to-date on loan choices and elect to choose the home improvement equity loans. The equity loans for improving home value offer cash to homeowners to make repairs or remodel the home, including external and internal repairs, carpeting, tiling, floors, borewell, painting outside and inside structure, roof repairs and renewals, pipe repair, structural modification, structural repair, and structural remodeling.

The maximum loan amount given to customers depends on the customer's status with the lender. If the customer had prior loans and showed good faith, then the lender may offer 100% equity lending, while new comers may receive 85% more or less on equity lending. The loans are often extended 15-years; however, few lenders will offer longer terms or shorter terms, depending on the lender and the outcome of the application. The lenders present joint and single packages, however, are responsible if more than one party applies for the loan.

Home improvement equity loans come in fixed rate or adjustable rate options. Thus, the fixed rate is often the first choice, since the loans interest will remain constant–and the borrower will not be subject to the vacilliations of the market.

However, the few that take out the adjustable rate loans are subject to pay higher or lower interest rates per quarter on the loan. Many home improvement loans require that an "independent contractor" oversees the improvements of the home; and thus home improvement loans are intended to improve the home, forcing the borrower to utilize the cash only for repairs and improvement. Few lenders will place penalties on home improvement equity loans to guarantee the loan is used for its intentions.

Home Buying Advice For First Timers

Purchasing your first home is an exciting and scary time. For the most part, new homebuyers are unfamiliar with the home buying process. Before accepting a mortgage loan, it is important to educate yourself on various loan programs. Furthermore, first time home buyers should be aware of factors that improve and decrease their chances of getting a good loan package.

How Much Can You Afford to Spend?

The biggest mistake that some homebuyers make is purchasing a home they cannot afford. Many assume that since their mortgage application was approved, they can meet the expenses of homeownership. On the contrary, some lenders regularly approve questionable loans.

Obtaining a pricier home may sound appealing; however, the risk of foreclosure is higher. Aside from affording your monthly mortgage payment, you must have the funds for utilities and unexpected expenses that arise.

Get Pre-Qualified for a Home Loan

Getting pre-qualified for a mortgage before beginning your search will speed up the home buying process. A pre-qualification provides an idea of an affordable mortgage amount. Thus, you avoid touring homes and neighborhoods outside your budget. A pre-qualification letter from a lender does not guarantee a loan. The loan amount is contingent on income, employment, and credit verification.

Fix Your Credit before Applying

Although it is very possible to get approved for a first time home loan with poor credit, a good credit rating will open the doors for low rates and better financing options. Improving your credit is a slow process. To begin, strive to pay all creditors on time and avoid skipping payments. A key to increasing credit scores is maintaining a good credit standing. Secondly, reduce your debts. Maintain credit cards at half the maximum limit. If possible, payoff balances monthly.

Select a Good First Time Homebuyer Loan Package

Working with a mortgage broker is the best way to locate excellent first time home buying loans. Many first time homebuyers do not have extra cash for closing or down payments. A mortgage broker has access to several lenders that are willing to offer assistance for down payments and closing fees. Furthermore, if you have bad credit, a broker can match you with a bad credit or sub prime mortgage lender.
The advantage of working with brokers is that you receive multiple offers. After receiving the loan application, your broker will send you up to four offers from prospective lenders.

5 Ground Rules for Home Buying Success

There are few purchases in life that carry the financial and psychological weight of buying a home. Whether you are buying your first home, moving up to your dream home, or downsizing your home and your life after the kids have gone, it is important to understand the ground rules for success in the world of buying a home.

Making the wrong decision in buying a home can have devastating and long lasting effects, while making a wise decision in home buying can greatly enhance the overall value of the investment. It is necessary to learn all you can about the world of home buying and mortgages before setting out to purchase the home of your dreams.

While there are plenty of web sites designed to help first time homeowners learn all they can, most financial experts say that there is no substitute for the good old one-on-one learning. Fortunately, most mortgage lenders, home inspectors and real estate agents will be able to provide this kind of one-on-one learning.

When buying a home it is often best to use a systematic approach as this is often the best way to be sure that all decisions are based on information and reason, not on impulse or emotion. Buying a home can be an emotional process, nevertheless it is imperative to keep your emotions under control and not let them cloud your judgment.

There are five basic ground rules when it comes to buying a home and shopping smart, and they are:

#1 – Get your financing before you get your home

There are few things in life as disappointing as losing out on the home of your dreams due to not being able to secure funding. While the desire to get out there are search for that great home is
understandable, it is vital to line up the financing you will need before you start shopping for a home.

Getting the financing ahead of time has a number of important advantages, including knowing how much you can buy and gaining more respect from the listing agents. By knowing how much home you can afford before you shop you will avoid wasting your time looking at unaffordable properties, and the listing agent will be more than willing to show you the homes in your price range.

It is also important to take a good look at the various types of mortgage on the market before getting started in the home buying process. These days, mortgages come in far more choices than the typical 15 or 30 year. For that reason, potential home buyers need to understand how each type of mortgage works, and to gauge which mortgage is the best choice for their needs.

#2 – Look at the community, not just the home

It is a good idea to look at the entire community, instead of focusing on a single home. This can be a particularly important thing to consider for those moving to a new metropolitan area, as these buyers will be unfamiliar with the local climate and lifestyle. It is crucial to determine the areas of town that are most desirable, and to consider things like distance from work and local shopping opportunities.

We have all heard that location is the key consideration when it comes to real estate, and that is certainly the case. Buying a house in the wrong area can be a big mistake, and it is important to choose the location as well as the home. Potential buyers can learn a great deal about the nature of the various neighborhoods simply by driving around town, as well as by talking to other residents.

#3 – Be fair with your first offer

Trying to lowball a seller on the first offer can backfire, as can paying too much. It is important to carefully evaluate the local market, and to compare the asking price of the home with what similar houses in the neighborhood have sold for.

Comparing the sales of comparable homes, what are known as "comps" in the industry, is one of the best ways to determine what is fair, and to make sure that you neither overpay or underbid on the property.

#4 – Always get a home inspection

Always investigate the home for any possible defects before making an offer. Compared to the cost of the average home, the price of a quality home inspection is virtually negligible. Hence, get a good home inspection done before you buy.

To find the best home inspector, it is a good idea to seek out word of mouth referrals as many of the best home inspectors rely on word of mouth advertising.

#5 – Do not alienate the sellers of the home

Many real estate deals have fallen apart due to the personal animosity of the buyer and the seller. It is important to avoid alienating the seller of the home during the process, and to avoid nitpicking every little detail during the sale.

Keeping the good will of the seller will help the transaction go smoothly, and it will provide the best environment for seller and buyer alike.

Mortgage Programs Designed Just For You

The biggest resource for first time home buyers is the Federal Housing Administration (FHA). They work by providing private mortgage lenders with guarantees (insurance) against the loan that you take out with them. They help home ownership become a reality for many who don't have perfect credit or have the finances available to otherwise afford the hefty up-front payment sometimes required to buy a home. It is important to realize that they are not there to help you buy a home you cannot afford; they are there to help you to buy a home you can afford by providing guarantees and assistance up front. It is up to you to make sure that you are not buying a home that you cannot afford over the life of the mortgage note. Never get yourself into more debt than you can handle!

The process of applying for an FHA loan is pretty much the same as applying for a conventional mortgage. You will need to provide verified proof of your income over the past three years - yet what qualifies as income is relaxed a bit. Social security, alimony, rent paid by other family members and such qualify as income under the FHA program. In addition, short-term debt doesn't count against you (short-term is defined as being able to be paid off in less than 10 months).

You are allowed to use up to 29% of your total income towards housing costs and up to 41% towards housing expenses and other long-term debt obligations. Again, it is up to the homeowner to make sure they can afford the home they want to buy. Just because the FHA relaxes the restrictions doesn't mean you should buy a home that you have to struggle to afford each month.

Through the FHA they will help you get started on owning the home of your dreams - but remember, it is a cooperative process. You should still shop around at various mortgage lenders and try and negotiate the best rates possible no matter if you are a first time home buyer or a seasoned pro.

There is a wealth of information available about the FHA programs.
Your mortgage lender should be able to provide you with extensive information and guide you through the process. You can also read up on it yourself at www.fha.gov.

In addition to the FHA, there may be state and local programs available to you to help offset some of the costs of purchasing your first home. Check with your lender to find out if such programs exist.

3 Ways To Get The Lowest Interest Rate On Your Home Refinance Loan

Maybe you need a little extra cash for a home remodel or college tuition, or perhaps you simply want to save some money. Whatever your reason, refinancing your home loan can be a smart move as long as you get a low rate. Here are some simple tips that can ensure you get the lowest rate possible on your Home Refinance Loan:

Clean up your credit

Lenders use your credit score as one tool for determining your interest rate. In general, the better your score, the lower your rate. Before applying to refinance your mortgage, check your credit report and look for any errors. If you find a mistake that's negatively affecting your score--such as a payment marked as "late" when you sent it on time, or a line of credit that doesn't belong to you--be sure to correct those errors.

Shop around

You might not necessarily get the best deal from the same finance company that holds your mortgage loan. Make sure you check out offers from other lenders. You can do this by submitting your application to multiple lending companies, or by hiring a mortgage broker that will check out numerous lenders for you. To get the largest variety of offers, try different types of companies, such as banks, credit unions, online mortgage lenders and local mortgage brokers.

Negotiate

Once you've received a few offers, take the time to negotiate with lenders. Let them know that you have other options and that you're looking for a great deal. Mention their competitors so they know you're serious about your loan, and be prepared to walk away if the loan company won't give you the best rate. However, once you find a deal you like, ask the lender to "lock it in." Interest rates change daily, and locking it in guarantees that you still get a low rate even if rates soar the next week.

Remember: the interest rate is only part of the expense of refinancing. In many cases you'll have to pay fees, points and other extra charges. You can lower the cost of your loan by asking to have
these fees waived or lowered.

Home Mortgage Refinancing Tips

If you are considering refinancing your mortgage, make sure you get all the mortgage refinancing advice you can get. Better interest rates, terms, conditions, and a good mortgage lender will make your home loan refinance the most profitable it can be.

Choosing the best time to refinance a home loan can be hard. Some people can greatly benefit from it, while others will be hard pressed to find any good reasons to do it. Your decision to refinance your mortgage should be based on:

-How long you plan to live in your home.
-How low of interest rate you can get on your new home loan.
-If you pay PMI or private mortgage insurance or not.
-All closing costs and associated fees with refinancing a mortgage.
-How much equity you have built up in your home.
-If you want to or can do a cash out refinance.

If you are still trying to figure out whether or not refinancing a mortgage can be a good thing for you and your personal financial situation, here are some more tips which will help you:

-If you do not have plans of living in the home for a good length of time, refinancing a home mortgage may not be a good idea for you due to all the fees and costs.

-Refinancing a home loan into anything but a new mortgage with lower interest rates, may, not always, result in actually paying more, or paying more in the monthly installments, in the long run.

-Homeowners who have an ARM (Adjustable rate mortgage) should refinance into a stable fixed rate mortgage. With rates as low as they currently are, a lot of homeowners would benefit from the financial stability of a fixed rate mortgage.

-Refinancing a home loan can allow you to do away with having to pay the costly PMI many homeowners pay every month.

-Always take into account all closing and associated fees when refinancing a mortgage. These can easily equal thousands of dollars and negate any potential savings.

-Homeowners who wish to use the equity in their home to get cash have two different choices, a home equity loan, or a cash out mortgage refinancing. Each is different and has its own distinct advantages. Make sure you choose the right one for your financial situation.

With these mortgage refinancing tips a homeowner can more easily save money and get a better home loan. Mortgage refinancing can be very beneficial for the right homeowners if it is done correctly.

At my site I will teach you how to properly refinance or modify a home mortgage saving you thousands of dollars, or even your home. A lot of Greedy Mortgage Lenders will try to suck you dry if you let them. Learn the right way to refinance or modify your home loan at my site:
http://www.refinancingcondo.com

Fixed Rate Mortgage Advice

One of the most important decisions you will make in your financial life is which mortgage you should get. For many people, the option of a fixed rate mortgage seems appealing. But what exactly is a fixed rate mortgage, and why do so many people choose this option? If you are new to mortgages then this article will let you know a little more about fixed rate mortgages and their benefits.

What does fixed rate mean?

A fixed rate mortgage is fairly straightforward, and does exactly as the name suggests. A fixed rate mortgage has an interest rate that remains the same throughout the mortgage term, meaning that your monthly repayments will remain the same, allowing for inflation of course.

Why a fixed rate mortgage?

Many people choose fixed rate mortgages because of the security and peace of mind that they provide. If you have a fixed rate mortgage, then you know your monthly repayments will not change, meaning you can budget effectively for both the short and long term. If you have a mortgage with a variable rate of interest then your payments can change depending on market fluctuations. This can leave you paying less, but often leaves you paying more each month. The best times to get fixed rate mortgages are when competition is high, and the fixed interest rate is lower than that of the tracker or variable rate mortgages.

Are there any drawbacks?

There are drawbacks to getting a fixed rate mortgage. The biggest drawback is that the interest rate is usually higher than that of variable rate mortgages. The added security comes at a price, in that you have to pay more in interest over the length of the mortgage. Also, the 'fixed' rate is usually only fixed for a certain number of years, usually 2 or 3, after which the rate can be put up and then fixed for another period. This can mean that your mortgage will be cheap now, but in the future the rate could rise.

Who should get fixed rate?

Despite its drawbacks, there are many people that should definitely opt for fixed rate mortgages. If you are on a tight budget and have a fixed income each month, then you cannot afford for your payments to rise. Having a fixed repayment each month means that you know you can make the payment even if national interest rates rise. Also, if you can get a deal whereby the starting interest rate is lower than that of a variable rate mortgage or even the same, then opt for the fixed rate mortgage.

How to decide?

If you are still unsure about whether or not a fixed rate mortgage is right for you, then consult an independent financial advisor. They will be able to help you find the best deal, as well as tell you whether or not the base interest rate is going to fall or rise. This will determine whether a fixed or variable rate mortgage is best for you.