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I recently read this article by Gary Foreman and thought it was excellent.

The other night I watched a movie called “Flags of Our Fathers.” It was the story of the men who raised the flag on Iwo Jima in World War II. The main theme of the film (heroism) isn’t relevant to us here, but something did strike me while watching it. As soon as someone was wounded and went down they called for a corpsman or medic. If the wounded was injured too badly, a buddy called out for them. The many battle scenes were filled with cries for corpsmen.

With a little research, I found out the corpsman was a Navy enlisted medical specialist and a medic was from the Army. I still know only a little about the subject, but it seemed clear that it was important to get help to the wounded as soon as possible. That’s why the brave medic or corpsman was willing to risk his own life to help save a friend.

It occurred to me that there are similarities in the world of personal finance. At some point or another, we’ll probably all get wounded in the money wars. And we’ll likely fall bleeding to the ground. How quickly we stop the bleeding and dress the wound will make a big difference in our survival rate. Let’s learn the lesson of the corpsman. It’s important for borrowers to call for help as soon as they’re wounded.

Right now many people are having trouble with their home loans. If you think you’re about to fall behind in your mortgage, talk to your bank. Don’t wait until you have missed a payment. Most lenders are glad when a borrower faces trouble squarely and comes to them seeking a solution. It’s much harder for the lender if you run and hide.

The bank doesn’t want to foreclose on you. They’ll probably lose money selling your house. The best situation for them is for you to continue to make payments on your home — even if those payments are less than the original mortgage called for.

Find a way to help the lender “win” if you stay in your home. Contact your mortgage company and tell them that you’re having a problem and want to work with them to find a solution. They’re in business to make money by loaning it out. Reducing your payments and lengthening your mortgage is better for everyone than foreclosure and resale.

The same thing is true if you’re struggling with your auto loan. The lender would rather work with you. That’s easier than repossessing the car, selling it and then chasing you for the difference between what you owed on the car and what it sold for.

Now, that doesn’t mean you should call the lender anytime that your payments are a little uncomfortable. It’s up to you to eliminate the extras in your budget before you approach your
lender. If you haven’t done that, don’t expect help.

And, don’t call your lender and tell them you want reduced payments so you can buy something else. They won’t be receptive. Not because they don’t like you, but because their job is to protect their loan and make money on their investment. Helping you to borrow more money isn’t good business.

Back in the movie, one advantage that the corpsman had was that they could pretty easily tell when someone was wounded.
But, financial wounds aren’t like war wounds. There’s no blood. They’re not that visible to others and we can easily conceal them if we wish.

Often that’s exactly what we do. We try to hide our problems. We won’t address them while the wound is still fresh and can be healed.

Why don’t we ask for help? Sometimes we’re afraid to face the problem. We hope that it will go away on it’s own. Or maybe we
don’t want our friends, neighbors, and co-workers to think we’re not doing as well as we think they are. Usually pride is involved.

The funny thing is that your co-workers or neighbors don’t need to know that you have a problem or that you’re looking for a solution. You don’t need to publicize that you’re asking for help. Only you and your lender need to know.

Can we guarantee that you’ll save your home or car? No, but the sooner you clean and dress the financial wound the better your chances of a recovery.

This advice comes from Gary Foreman, the editor of The Dollar Stretcher.com website and newsletters. You’ll find hundreds of ways to stretch your dollar and your day. I love the site & recommend you visit today for more great time and money-saving ideas!

Attorney and credit repair expert Edward Jamison has warned us about important changes to loan rates for those with medium credit and moderate equity in their properties.

Jamison reports that Fannie Mae and Freddie Mac have announced loan price increases for borrowers with credit scores below 680 on loans with LTVs less than 70%. (In other words, less than 30% equity or down payment.)

In case you aren’t familiar with Fannie Mae and Freddie Mac, they are government-sponsored enterprises (GSE’s) that make loans and loan guarantees. They help keep the money flowing in the mortgage market.

Not every lender relies on their “conforming” loan guidelines, but many do because they want to package and sell their loans on the secondary market. (Yes, that ties into all the “mortgage turmoil” news lately.)

So back to the news: In an investor conference call Mike Quinn, SVP Single-Family Risk Officer for Fannie Mae said, “we announced a meaningful, across-the-board increase on loans having credit scores below 680 and LTVs above 70%. These changes in underwriting and pricing will help control losses and maintain appropriate levels of profitability through this cycle.”

And in a letter posted on their website, Freddie Mac said they will be charging from .75% up to 2.0% depending on the borrower’s credit score for loans submitted with less than a 70% LTV and credit scores below 680.

The following table illustrates the rates and costs for a borrower with a loan amount of $300,000.

Credit Score: Below 620
Delivery Fee Rate: 2.00%
Cost: $6000

Credit Score: 620-639
Delivery Fee Rate: 1.75%
Cost: $5,250

Credit Score: 640-659
Delivery Fee Rate: 1.25%
Cost: $3,750

Credit Score: 660-679
Delivery Fee Rate: 0.75%
Cost: $2,250

This is big news! If your credit score falls below one of those thresholds and you don’t have enough equity in your home (as many don’t these days) you may find it more expensive to refinance — or buy a home — especially if you aren’t taking advantage of the latest technology to search home loan rates and seek out alternatives.

We get lots of questions at FreeRateSearch from homeowners wondering whether they should refinance now or wait until their adjustable rate loan resets. Some of them are concerned because they have a prepay penalty that will make it more expensive to refinance now. Others just aren’t sure if they need to refinance now or can wait.

MSN Money expert Liz Pulliam Weston is warning homeowners not to wait. In her article, Time to Refinance Now, she explains that there are several dangers in waiting, not the least of which is the fact that if home values continue to fall, you may not have enough equity to qualify for the best loan. She says “the risk is in waiting, not acting.”

I would add that with the economy shaky, waiting may also put you at risk of a layoff or pay reduction that could make it more difficult to qualify.

If you are thinking that you need to refinance, don’t wait. Get the ball rolling and find out what’s available now now.

Mortgage shopping is confusing and frustrating. Most people put getting a mortgage right up there with root canals in terms of things they don’t want to do.

We’ve created this blog to answer your questions about home loans and keep you updated on the latest mortgage news. Feel free to submit your questions or share your comments about getting a mortgage.