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What do I do with a 1098-E Form (Student Loan Interest Statement) if I do not plan to file taxes?

Feb 17, 2007 by Andie | Posted in Financial Aid

I am a dependent, I was wondering if I could use this subtraction for my parent.

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The only personally that can claim the interest is the person that is on the form.

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What does the statement "Your student loan interest is deductible" mean?

Feb 09, 2010 by ~*Little Miss*~ | Posted in United States

Does it refer to that when I file I will receive a portion of the amount back, or does that mean that I will need to "pay" a ration of it?

Im just trying to figure out if it is going to make my refund amount increase or decrease.

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It means that the interest that you pay on your student loan can be deducted from you takings when you file your income tax.
So, your net income would be your income - interest you paid on your loan.

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student loan interest statement

Strategic Defaults and the Foreclosure Crisis

CALL US NOW FOR A FREE LOAN MODIFICATON CONSULTATION                         1-866-320-0961

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Nearly a year after the Obama administration unveiled its ambitious housing rescue program, foreclosure tallies continue to break records. Foreclosure filings were reported on more than 2.8 million properties in 2009, up 21 percent from the previous year and 120 percent from 2007, according to RealtyTrac. With nearly 10 percent of mortgages now delinquent–which is also a new record–even more homeowners appear headed for foreclosure this year. “A massive supply of delinquent loans continues to loom over the housing market,” RealtyTrac CEO James J. Saccacio said in a statement. “Many of those delinquencies will end up in the foreclosure process in 2010 and beyond.”

Homeowners have found themselves in foreclosure for a number of reasons. Some purchased properties they could never really afford. Others lost their jobs–the national unemployment rate remains in the double digits–and had no way to make mortgage payments. But as the crisis rumbles forward, an additional driver of home foreclosures has become clear: Many borrowers have the means to keep paying the mortgage but are simply walking away because they believe it’s best for their finances.

The number of so called “strategic defaults” more than doubled, to 588,000, from 2007 to 2008, according to a study by Experian and Oliver Wyman. A separate 2009 survey found that more than a quarter of all existing defaults were strategic. Meanwhile, a growing number of academics are touting the financial benefits of walking away. “Homeowners should be walking away in droves,” Brent T. White, a University of Arizona law school professor, said in a recent paper. “The financial costs of foreclosure, while not insignificant, are minimal compared to the financial benefit of strategic default.”

The case for strategically defaulting is linked to negative equity, or owing more on your home than it is worth. With home prices at the national level having dropped roughly 30 percent from their 2006 peaks–and a great deal more in certain bubble markets–a considerable chunk of property owners are now in this fix. Nearly 1 in 4 borrowers currently have negative equity, according to First American CoreLogic. And rather than continuing to make payments on an investment that’s now worth significantly less than what they paid for it, many borrowers are throwing in the towel.

White uses the following example to demonstrate how many borrowers are better off defaulting: A young professional couple with two children pays $585,000 for a three-bedroom, Salinas, Calif.-home in January 2006. At $4,300, monthly payments on their no-money-down, 30-year fixed mortgage with an interest rate of 6.5 percent represent a tad less than 31 percent of their gross monthly income. Toss in taxes, student loans, health care, food, and other essentials, and finances quickly get tight.

After the historic housing bust, their home is now worth $187,000, but they still owe $560,000. Other homes in their neighborhood, of course, have plummeted in value as well. And if the couple was to purchase a similar, nearby house listed at $179,000, their monthly payments would be less than $1,200. That’s a huge savings over their current $4,300 monthly mortgage bill. But since a foreclosure on their credit report is likely to prevent them from buying a home in the near-term, they may have to rent. And about $1,000 a month gets them a comparable rental property in their neighborhood.

“Assuming they intend to stay in their home ten years, [the homeowners] would save approximately $340,000 by walking away, including a monthly savings of at least $1,700 on rent verses mortgage payments, even after factoring in the mortgage interest tax reduction,” White writes. “If they stay in their home, on the other hand, it will take [the homeowners] over 60 years just to recover their equity–assuming, of course, that they live that long.”

The argument against strategically defaulting is much more straightforward: You promised to repay the loan when you took out the mortgage, and it’s your responsibility to do everything possible to honor that commitment. Avoiding the guilt and shame that can accompany a foreclosure is one of the top reasons struggling homeowners don’t strategically default, White writes. On top of that, a foreclosure significantly damages one’s credit–making it difficult, if not impossible, to obtain a mortgage for years afterward.

But in a recent white paper, Alex Edmans, an assistant professor of finance The Wharton School of the University of Pennsylvania, argues that many homeowners are ignoring these consequences to do what they believe is in their best financial interest. “Defaulting on their loan is a rational decision: While they forfeit their home, they rid themselves of a mortgage liability of even greater value,” Edmans writes. “The source of the problem is the homeowner’s balance sheet: since he has negative equity in his home, it is not worth keeping it by paying the mortgage.”

The issue of negative equity triggering strategic defaults represents a nasty headache for the Obama administration. The $75 billion mortgage housing rescue the administration unveiled last February is designed to keep people in their homes by reducing their monthly mortgage payments down to more manageable levels. The plan does not, however, require lenders or servicers to reduce borrowers’ mortgage principal–meaning underwater borrowers still have this incentive to walk away from their home loan.

Laurie Goodman, a senior managing director at Amherst Securities Group, considers negative equity to be the housing market’s greatest challenge and believes current housing rescue efforts are insufficient. “The current modification program does not address negative equity, and is therefore destined to fail,” Goodman said in written testimony before a Congressional committee in December. “It must be amended to explicitly address this problem.”

Although Uncle Sam has reduced mortgage payments for more than 850,000 borrowers so far–for a median savings of more than $500–the government will remain under pressure to take more aggressive action as long as the foreclosure epidemic keeps churning. Mark Zandi, the chief economist at Moody’s Economy.com, believes the government may take steps to tackle the issue of negative equity head-on this year by incorporating principal write downs–which reduce a borrower’s negative equity position–into the housing rescue program.

Let us know if we can help you out! feel free to call us at 866-320-0961. We are her to assist you with any and all of your loan modifiation questions. Our team of professionals are licensed in all 50 states. License number 163090

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Source: 1stAmericanlawcenters's Blog

FHA mortgage, FHA Loan down to 530 FICO

FHA Mortgage Checklist

Prepare for a Smooth Application Process with an FHA Mortgage

Before you start the FHA home loan process, be prepared to provide some information to your FHA loan officer. Have it ready now to save time later.

Address to your place of residence (past two years) Social Security numbers Names and location of your employers (past two years) Gross monthly salary at your current job(s) Pertinent information for all checking and savings accounts Pertinent information for all open loans Complete information for other real estate you own Approximate value of all personal property Current check stubs and your W-2 forms (past two years) Personal tax returns (past two years), current income statement and business balance sheet for self-employed individuals

In addition, you will need to pay for a credit report and FHA appraisal of the property

Down payment of most FHA approved loans is 3.5% down.

FHA Closing Costs

APPLY FOR AN FHA HOME LOAN AT  http://www.fhamortgagefhaloan.com/

Allowable Charges that Borrowers Need to Understand

While FHA defines which closing costs are allowable as charges to the FHA mortgage applicant, the specific costs and amounts that are deemed reasonable and customary are determined by each local FHA office. All other costs are generally not allowed and are usually paid by the seller when buying a new Florida home, or paid by the lender when refinancing your existing FHA loan.

Lender’s origination fee Deposit verification fees Attorney’s fees The appraisal fee and any inspection fees Lender’s origination fee Cost of title insurance and title examination Document preparation (by a third party) Property survey Credit reports (actual costs) Transfer stamps, recording fees, and taxes Test and certification fees Home inspection fees up to $200

Allowed in an FHA refinance loan are wire transfer fees, courier fees, reconveyance fees, and fees to pay off bills.

FHA Debt to Income Ratios

Comparing Your Debt to Your Income

In order to prevent Florida homebuyers from getting into a home they cannot afford, FHA guidelines have been set in place requiring mortgage applicants and/or their spouse to qualify according to set debt to income ratios. These FHA ratios are used to calculate whether or not the potential mortgage applicant is in a financial position that would allow them to meet the demands that are often included in owning a Florida home. The two ratios are as follows:

1) MORTGAGE PAYMENT EXPENSE TO EFFECTIVE INCOME Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 31%. See the following example:

 

Total amount of new house payment:

$750

Borrower’s gross monthly income (including spouse, if married):

$2,850

Divide total house payment by gross monthly income:

$750/$2,850

Debt to income ratio:

26.32%

 

2) TOTAL FIXED PAYMENT TO EFFECTIVE INCOME. Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 41%. See the following example:

 

Total amount of new house payment:

$750

 

Total amount of monthly recurring debt:

$400

 

Total amount of monthly debt:

$1,150

Borrower’s gross monthly income (including spouse, if married):

$2,850

Divide total monthly debt by gross monthly income:

$1,150/$2,850

Debt to income ratio:

40.35%

 

Please note that the above indicators do not exclusively determine whether or not a candidate will qualify for an FHA loan. Other factors will be considered, including credit history and job stability.

 APPLY FOR AN FHA HOME LOAN AT  http://www.fhamortgagefhaloan.com/

FHA Credit Guidelines

What FHA Lenders Want to See When They Review Your Credit

NO CREDIT HISTORY

Two lines of credit are necessary to apply for an FHA loan. However, in the event a borrower does not have sufficient credit on their credit report the FHA will allow substitute forms.

CHAPTER 13 BANKRUPTCY

FHA mortgage lenders will consider approving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee’s written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.

CHAPTER 7 BANKRUPTCY

At least two years must have elapsed since the discharge date of the borrower and / or spouse’s Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.

LATE PAYMENTS

During an underwriter analysis of borrower credit, the overall pattern of credit behavior is being reviewed rather than isolated cases of slow payments. If a good payment pattern has been maintained, regardless of a specific period of financial difficulty preceded it, the borrower may escape disqualification.

FORECLOSURE

FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower’s main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit. This does not include the inability to sell a home when transferring from one area to another.

COLLECTIONS, JUDGEMENTS AND FEDERAL DEBTS

A collection is minor in nature usually does not need to be paid off as a condition for loan approval. It is stated as such in FHA guidelines. Any judgments will have to be paid in full prior to closing. Borrowers who are delinquent on any federal debt, such as tax liens, student loans, etc., are not eligible.

 

Tags: down , FICO , Loan , Mortgage

Source: Your Finance Consultant