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Credit Counseling At A Glance

Credit Counselors helps the consumer manage out of control debt thru discipline. The consumer pays a certain amount of money to the Credit Counselors. In return, the Credit Counselors pays the creditors of the consumers for them. The Independent and Non-profit Credit Counselors are two types of Credit Counselors. They offer the same service. The difference is how they get their funding. The banks, credit card companies, and department stores usually give funding to the Non-profit Credit Counselors.

The debt is out of control when the consumer experience one of the following. If the consumer pays the expenses with credit, advances cash to pay bills, loses track of amount owe, gets a call from creditors, or puts off to pay bills, the debt may be out of control. And, the consumer should consider seeking the help of Credit Counselors.

Since the consumer debt now increases to an all time high, the Credit Counselors are even more important than ever. The consumer debt leads to debt crisis. And, many debt crisis leads to relationship breakdown, and health problems. Credit Counselors provides information, recommendation, and support to the different financial options for averting debt crisis.

The different financial options include a debt repayment plan, attainable budget, and money management. The debt repayment plan ensures the satisfaction of debt to creditors. Thereby, the consumer regains good credit rating. The budget must be set realistically to reduce stress. And, the consumer still able to maintains a healthy lifestyle. The money management focuses on how to efficient use the current income to satisfy financial obligations.

Creditors like to see consumer who uses the services of Credit Counselors on times of debt crisis. This shows that the consumer honors the debt. And, the debt will be paid in due time. In debt repayment plan, the consumer pays the Credit Counselors periodically. Then, the Credit Counselors divides the periodic payment amongst the creditors. Beforehand, the Credit Counselors negotiates the payment plan with the creditors on behalf of the consumer. More importantly, the payment plan does not put the consumer into deeper debt crisis.

Debt crisis happens to the best of us. Credit Counselors employs proven method, tools, and skills to combat debt crisis. Thereby, the consumer prevents financial trouble or debt crisis. Statistics shows over eighty percent improve financial situations, and ninety eight percent prevents debt crisis if the consumer seeks credit counseling the first time.

Repair Bad Credit Rating

Bad Credit Rating limits consumers financially. You will find difficulties to secure loan or mortgage for purchasing car, home, or more. Sadly, nobody can remove bad marks on credit report or history unless the bad marks are inaccurate. Only time can heal the past.

The Credit Rating, also known as credit, is way to tell how good the consumer can repay the mortgage or loan. The consumers are often denied of mortgage and loan with bad credit rating. Or, the potential mortgage or loan lender asks for a bigger security deposits, and gives a higher interest rate.

Things to watch out

In these stressful times, you may want to watch out for Credit Repairer that offers repair bad credit rating or improve poor bad credit rating. In reality, the Credit Repairer has no power to remove accurate information on consumer credit history.

Unless there is a material improvement, the consumer should never prepay for any credit repairing services. For example, the Credit Repairer finds bad marks on credit history. He also finds the bad marks leads to a different person. The Credit Repairer asks the Credit Bureau to fix the inaccurate information. Just to let you know. The bad marks stay in consumer file unless the bad marks are inaccurate.

To create a new credit identity and credit report are warning signs. Sometimes, the credit repairer suggests the use of Employee Identification Number instead of Social Security Number to create a new identity. New credit identity leads to prosecution if the new credit identity is use for frauds.

Simple Steps to repair bad credit rating

First, the consumer request a copy of credit report from a credit bureau. Each country has credit bureaus. For any inaccurate information, the consumer asks the credit bureau to fix the inaccurate information. Since credit bureaus shares the same pool of information, the consumer only needs to contact one of the credit bureaus.

Next, any outstanding debts must be repaid as soon as possible. The general rule is to pay off the debt with highest interest rate first. Any outstanding debts can be problematic to handle at times. A professional credit counselor offers helpful recommendations to manage any outstanding debts.

Cut any credit cards and close credit accounts to stop accumulating more debts. In only a matter of time, the consumer pays off any outstanding debts. In the meantime, the consumer sets a budget to pay off monthly obligations and debts. With Patience and discipline, the consumer repays all the debts.

Get low manageable interest rate credit card after achieving good credit rating. To pay off monthly charges promptly greatly increases credit rating and score. Thereby, the consumer gets the good credit rating again. Many credit card company charges annual fee. Any credit card holder can call up the credit card company to remove the annual fee. The credit card company still wants you business. So, the credit card company will gladly remove the annual fee to keep your business. If the debts start to get out of control, you go back to the first step. On continuous problem with this step, you skip this step from now on.

The Power Of Real Estate Exchange

The Section 1031 Exchange of Internal Revenue Service (IRS), also known as Starker Exchange or Tax-Deferred Exchange, clearly states that there are no gains and losses incur on exchange of like-kind property. Without gains or losses, the exchange of property defers the tax. Like-kind property means same nature or character. And, the property for exchange must be used for business or investment purpose in order to qualify.

The qualified property includes apartments, rental houses, retail properties, commercial, raw land, office buildings, industrial, and ranches. The non-qualified property includes personal residences, dealer properties, partnerships interests, inventory, stocks, bonds, notes, securities, indebtedness, and other properties.

IRS also permits to mix and match the nature or character property. For example, you can trade an apartment for rental house. And, IRS gives the owner of the property forty days to produce a list of possible trades, and one hundred eighty days to complete the exchange of property.

The owner can also exchange two, three, or more property for one property. The general rule is the replacement property exceeds or matches the value and debt of the property being exchanged. For example, a raw land which is worth $600,000 can be exchange for $300,000 rental houses, and $300,000 retail properties.

There are a number of reasons to exchange a property. The common reasons for exchange are rebuilding equity, moving investment location, upgrading size, reducing maintenance expenses, and maximizing the appreciation.

First, the owner proceeds with the regular sale of property. After the completion of purchase and sale agreement, the owner takes the agreement and notifies of 1031 exchange to closing agent. Then, the Qualified Intermediary (QI) who handles the exchange gets the information to closing agent, and sets up the proper papers for exchange. Within forty days, the owner writes and gives a list of replacement property to the QI. In one hundred eighty days, the owner signs the completion of purchase and sale agreement with 1031 Exchange Clause of the replacement property. Finally, the QI contacts the closing agent on replacement property to complete the 1031 Exchange.

The Real Estate Exchange effectively and efficiently reduces the tax. Failing to meet the requirement, the owner pays a hefty tax on capital gains. The QI makes sure that the owner qualifies for the exchange. Most QI composes a team of CPA and Attorney.

The What, Why, And How Of Real Estate Leverage

Leverage is a way to acquire real estate that is worth more than the asset or equity of the investor to increase wealth. The investor usually leverages his asset or equity thru a mortgage. The return on investment of real estate significantly increases the wealth of the investor.

Real Estate appreciates in value over time. In fact, the real estate doubles every four or five years. With assumption of two percent inflation, the real estate appreciates four to seven percent every year. Thereby, the investor receives four to seven percent return of investment per year. And, the real estate tends to be a stable as an investment on the long run.

For example, the investor has $150,000 as an asset or equity. He looks for way to leverage $150,000. He can purchase a home for $150,000. With a seven percent appreciation, the home appreciates to $160,500 ($150,000 original value + [$150,000 home value * 7 percent]) after a year. The return of investment equals $10,500.

Now, he looks at another scenario. If he purchases a home that is worth $600,000 with $150,000 as down payment, the return of investment drastically rises to the roof. With a seven percent appreciation, the home appreciates to $642,000 ($600,000 original value + [$600,000 * 7 percent]) after a year. The return of investment equals $42,500.

There are risk involve too. Before any investor to proceed with $600,000 home purchase, he needs to evaluate the affordability and gross income. Mortgage Lenders measure up the gross income to Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS). The GDS means a certain percentage of gross income must not exceed the mortgage payment, while the TDS means a certain percentage of gross income must not exceed mortgage payment, home expenses, and total debt. As a general rule, the mortgage payment must not exceed forty percent of gross income. At the end, it all depends on the mortgage lender.

At this time, the investors still take advantage of two monster mortgage tax deduction from Internal Revenue Service (IRS). First, the discount points which are paid upfront to lower the mortgage payment can be deducted on income tax return. Another, the mortgage interests which are paid for every mortgage payment can be deducted on income tax return as well. Mortgage Lender sends a form which tells how much mortgage interest for the year. Consult with your trusted tax advisor and current tax laws for more information.

Leverage works best with real estate property that appreciates. The history of the neighborhood and property type gives the possible future outcome of home values. The home improvements also add values to the property. The installation of carport, renovation of kitchen, construction of rooms, and conversion to hardwood floor provide the best return of investment among home improvements. The economy of the region also delivers clues how the real estate will carry on the next few years. During the strong economy, there are more home buyers. As the demand for home increases, the home values increase as well.


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