When you are a homeowner struggling with your mortgage payments you should understand the difference between a short sale and a loan modification. Both of these methods may help you get out of a foreclosure situation. They are dealt with in the same department of your bank by a loss mitigation professional. Homeowners should be aware that the approach you choose may have a very different results on your finances.

Initially, many homeowners choose a loan modification. The modifications can come in the form forgiveness of late fees, a reduction in monthly payments pr lower interest rates. You can get one pr more conditions of your mortgage modified, depending on what your bank will agree to do and what you can afford.

If you are looking into a short sale, you will actually sell your house. You will get your bank to agree to a sales price lower then what is owed on the mortgage. Once the the sale is completed, the bank will forgive the rest of the money owed.

How are you going to benefit from a loan modification on your home mortgage?

1. You will not have to worry about finding somewhere else to live, because you will stop foreclosure proceeding right in their tracks. 2. If you are able to get payments or fees reduced, you will have extra time to get your finances in order. 3. There will be less damage done to your credit score.

Here are three disadvantages of loan modifications:

1. Even if the bank approves a reduction of your mortgage payments you may still not be able to recover financially. 2. Should you miss any of the agreed upon payments you could be running the risk of the bank reinstating foreclosure proceedings again. 3. Your bank might only offer reduced payments for a limited period of time. Your payments would likely go back up before long which could cause more financial problems.

Three benefits of short sales:

1. Once your home is sold your debt is gone, which means no more monthly payments are required. 2. If you see no possible way to increase the value of your property any time soon, then a short sale could solve your ‘underwater’ mortgage problem quickly. 3. Your lender may agree to forgive any short fall of funds that exists between your outstanding loan balance and the lower sale price of your home.

There are three disadvantages of short sales:

1. There is a possibility that you bank will report their loss to the IRS. This could create phantom income for your and mean that you may have to pay income taxes on their write-off. 2. As you sell your home with a short sale, you will need to find someplace new to live. This could prove to be difficult, as many landlords will not look kindly on a record of past due payments. 3. Chances for you getting a new mortgage anytime soon are very slim. Many lenders do not have much faith in consumers that had outstanding debt forgiven.

There are pros and cons to both methods of stopping possible foreclosure. If you choose to go with a loan modification you will be able to stay in your home and repay your debt over time. Most homeowners prefer this solution rather than wiping out your debt with a short sale and starting from scratch.

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Right now the country is seeing record high foreclosure rates. People across the nation are literally walking away from their homes and letting them go back to the bank. The important thing to realize here is that the banks do not want the homes back. Banks are not in the real estate business, they are in the banking business. Why is this important? If you are in a situation where your mortgage payments are too high due to a financial difficulty, an adjustable rate mortgage, or other reason, there are programs available to re-negotiate the terms of your existing loan to allow for you to stay in your home and get back on top of your home loan.

Loan Modification, Loss Mitigation and Home Loan workout programs are some options to consider. If you enroll in any of the aforementioned programs, you should be cautious about the company you work with. Make sure they’re reputable! A good company can make the programs incredibly successful in offering you financial relief.

Here is a practical example of this type of program in action: Borrower owes $400,000 at 8% and the home is worth $340,000. After foreclosing, bank must re-list the property or sell at auction. Either method can end up costing an additional $60,000 or more in losses.

In this example, bank will lose at least $120,000 if a client decides to “walk away”. Through modification and lowering interest rate to 5.25% on a 30yr fixed term, bank will make close to $400,000 in future interest payments. The result is a win-win for all parties involved.

Sometimes, homeowners can work out their own loan modification, but the default rate is often over 50%. Working with an attorney to formulate a modified loan reduces the default percentage to 5% or less. As you can imagine, banks prefer working with attorneys.

More often than not, if an attorney structures a loan modification for you and it doesn’t work out, their fee is refundable. You’re likely to see incredible results from restructured loans! Loan principal reductions, interest rate reductions, extended payment terms and lower monthly payments are all feasible when you modify you loan.

We can give you a free consultation to see what can be done to best fix the financial fiasco you’re dealing with. If you’re having problems making your current mortgage payment or you’re dealing with an adjustable rate mortgage that doesn’t work for you anymore, give us a call at 1-888-282-1011 and get some more information about our loan modification program!

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In the past, I’ve written articles about consistently generating a good quantity of new leads each month. For my business, this quantity was 400 leads every month. This article will shift the focus from the quantity to the quality of these leads.

In this day and age, agents seem to be putting all their eggs in the basket of inexpensive leads. I have found, however, that inexpensive leads tend to be of lower quality.

Here’s a telling finding from my own business:

Lower quality leads are attractive because you don’t have to spend a lot on the “front side” to generate the leads. However, you end up having to spend more on the “back side” trying to convert these lower quality leads into clients. The “back side” is the marketing you deliver to the leads once generated. This would include special reports, sales letters, and more.

In my own business, the quality of leads is ranked as follows: (Ranked from high to low)

1. A referral

2. Joint Venture Endorsement

3. Leads registering to attend a special class

4. Leads responding to an advertorial-style ad

5. Leads who respond to a “pay-per-click” ad or “solo” e-mail

6. Leads responding to a home buyer magazine advertisement or classified ad

7. Leads who respond to a Craigslist ad or a similar free ad

So many agents seem to be focusing on these free or cheap ads that attract lower-quality leads. What ends up happnening, then, is major effort required to convert these leads into appointments, showings and sales.

To be successful, an agent’s marketing campaign must include leads from each of the sources listed above. I would evn suggest that more resources be invested in the top four or five categories, in order to capture higher-quality leads. The amount invested will be higher, but the higher-quality leads will mean less invested per lead to convert them into clients/buyers.

If you want to see less competition in your area, heed this advice. The majority of your competitors will continue to put the emphasis on the inexpensive ads that bring in the lower-quality leads. Let them work with those leads. How many agents in your market are putting together joint venture marketing campaigns? How many are running advertorial advertisements? I would guess there probably aren’t too many.

Why is this the case?

Because focusing on the lower-quality leads will ultimately mean fewer sales. Fewer sales means money will get tight and agents won’t be able to afford ads to attract higher-quality leads. You will have a long-term economic advantage by putting your focus on higher-quality leads.

Bottom line: A lead is not a lead. Different quality levels exist in the leads you generate. A comprehensive marketing campainng that stresses generating higher-quality leads will mean more sales for you, while your competition fights over the lower-quality leads.

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Investors who are new to the gold market often wonder which is a better investment, 1 Oz Pamp Suisse Gold Bars or 1 Oz Gold Bullion Coins? So the battle between the gold bars and the bullion coins begins. Who will emerge as the winner?

Gold Bars

Advantages: Larger-sized, heavier weighted gold bullion has a lower premium than their coin counterparts. They are highly liquid as they are easily recognized and are frequently traded across all world markets.

Disadvantages: From a practical standpoint, because of their weight and size, these gold bars are better left hidden or stored in a storage facility. When the time comes for you to liquidate them, you will have to deal with the shipping and handling fees plus the transportation costs necessary to transport them from one place to another.

Bullion Coins

Advantages: Gold coins are easy to acquire, store and handle thus making them a lot easier to trade.. When you sell buy or sell gold coins, you need not risk its safety since it does not require an Assay to determine its value.

Disadvantages: They are sold with a much higher premium than their counterpart bars.

All in all, you really can’t go wrong with either of the two — 1 Oz Gold Bar Pamp Suiss or 1 Oz Gold Bullion Coins. Investing in gold is more stable and less risky than stocks as you are guaranteed a liquid investment since you’ll always have willing buyers. You won’t be forced to trade just to let it go.

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The markets did great again in the month of May, as the Dow is almost back up to positive for the year.  The lows of early March seems like such a long time ago, but we need to remember how painful it was.  We need to remember:

• Complacency is exactly why we lost so much money
• Greed almost always costs us money

We are definitely in a bull market, but remember those points, and we shall all live to fight another day.  Below are some of the articles of the past month.  Enjoy.

Be a Better Investor

• 41 Investment Lessons We Already Know
• Volatility and Market Fluctuations are Great for Retail Investors
• Trading Easy is Not So Easy

Investment Terms

• What is Preferred Stock
• Contributing to a SEP IRA
• Case Shiller Home Index

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Related Articles at Investing School:

• Stock Market Holiday Schedule in 2009
• Happy New Years
• Weekend Investment Reading – Is the Market Done?
• Weekend Investment Reading – Banks are Money Machines
• Weekend Investment Reading – Trading Range

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