2013년 11월 30일 토요일

About 'debt to net worth ratio formula'|How to Reach $1 Million







About 'debt to net worth ratio formula'|How to Reach $1 Million








The               internet               is               filled               with               desperate               homeowners,               who               are               hearing,               that               even               after               the               golden               ticket               of               a               "trial               modification"               they               are               being               denied               due               to               the               NPV               formula.

Banks               like               Chase               and               OneWest,               formerly               IndyMac               Bank,               are               using               this               formula               to               deliver               devastating               news               to               those               holding               on               to               hope.

Since               many               of               those               borrowers               going               for               a               modification               do               not               know               what               that               means,               here               is               an               explanation               of               the               make               it               or               break               it               formula.

The               guidelines               for               most               looking               at               the               qualifications               for               HAMP               or               Obama's               Home               Affordable               Modification               Program               look               simple.

However,               many               homeowners               are               finding               a               twist               that               the               US               Treasury               Department               and               the               FDIC               failed               to               make               clear               to               borrowers               who               may               be               trying               to               obtain               a               loan               modification.

If               you               were               fortunate               enough               to               get               a               "               trial               modification,"               prepare               yourself               for               a               possibility               of               being               denied               due               to               the               NPV.

Participating               lenders               are               supposedly               required               to               use               the               NPV               test               on               each               loan               that               is               at               risk               of               default               or               at               least               60               days               delinquent.

This               test               decides               if               the               lender,               when               making               the               consideration               of               the               DTI(debt               to               income               ratio               of               31%,               )               will               make               more               money               by               foreclosing               and               selling               the               home               or               by               modifying               it.

If               the               NPV               shows               a               positive               return,               regardless               of               the               amount               for               the               investor,               they               must               modify((meaning               they               will               make               more               over               the               length               of               the               loan               in               interest).

If               it               shows               that               the               lender,               after               taking               into               consideration               the               NPV               will               come               out               making               more               profit               foreclosing,               then               they               will.

The               problem               with               the               formula               is               that               if               a               borrower               has               significant               equity,               they               are               pretty               much               doomed               in               receiving               a               modification.
               For               example               if               the               borrower               who               is               going               for               modification               has               a               home               with               a               mortgage               of               $200,000,               but               the               NPV               says               the               home               is               worth               $400,000.

Then,               when               considering               modifying,               the               lender               computes               they               will               make               less               money               than               the               $200,000               profit               based               on               the               change               of               interest               rate               and               extension               of               length               of               the               loan,               the               lender               will               choose               to               foreclose               and               sell               the               home.
               The               NPV               guidelines,               include               property               values,               home               price               appreciation               assumptions,(funny...I               remember               a               comment               about               assuming               anything!),               foreclosure               costs               and               borrower               possible               redefault.
               The               other               issue               with               NPV               is               that               with               lenders,               such               as               OneWest               Bank,               formerly               IndyMac               Bank,               who               have               a               special               deal               with               the               FDIC(which               covers               80%               full               face               value               loss               on               homeowners               loans),               is               lack               of               full               disclosure               to               the               borrower.

There               is               no               way               for               the               borrower               to               know               if               the               NPV               in               these               circumstances               are               being               tested               against               the               deal               that               is               in               place               with               our               government.

There               is               a               possibility               of               deceit               and               error               against               the               borrower.
               According               to               a               loan               modification               specialist,               working               in               the               escalation               department               of               one               of               the               large               lenders               participating               in               HAMP.

the               borrowers               who               are               denied               to               the               NPV               are               not               given               the               specifics               of               how               it               worked               against               them.
               Although,               borrowers               are               to               receive               modifications               based               on               the               formula               of               the               US               Treasury               Department               HAMP's               program,               there               are               cases,               such               as               with               Bank               of               America,               who               purchased               Countrywide,               who               is               giving               out               automatic               modifications               to               borrowers               who               are               behind,               without               even               a               modification               package               submitted.

Some               of               these               borrowers               are               more               than               2               years               behind               in               their               mortgage               payments!
               The               problem               with               using               the               NPV               formula               against               homeowners               in               distress,               is               that               it               can               reward               those               that               financially               extended               themselves               the               most               during               the               housing               boom,               than               those               that               are               going               through               difficult               times               due               to               job               loss,               illness,               etc               and               were               more               conservative.

If               you               have               equity               in               your               home,               and               cannot               refi,               you               may               be               in               more               danger               of               losing               it               with               a               modification               according               to               HAMP               or               the               home               affordable               modification               program               based               on               your               NPV.

Especially               if               your               lender               chooses               to               use               it               or               if               your               lender               has               a               special               deal               set               up               with               the               Treasury               Department.
               If               you               have               received               a               trial               modification,               be               proactive               and               request               information               on               your               loan               regarding               if               your               lender               is               using               the               NPV.

Also               question               if               your               permanent               loan               modification               is               being               denied               due               to               the               lender               being               in               a               better               financial               position               by               foreclosing               and               selling               your               home.

Its               all               about               profits               and               little               about               humanity.






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    About 'is debt ratio a percentage'|The debt-to-equity ratio as a fishing lure







    About 'is debt ratio a percentage'|The debt-to-equity ratio as a fishing lure








    When               my               husband               and               I               refinanced               our               home               loans               early               this               year,               we               were               told               several               times               how               our               "credit               utilization               ratio"               was               on               the               high               side.

    This               came               as               a               surprise               since               I               consider               myself               to               be               rather               shrewd               when               it               comes               to               money               matters.

    Credit               utilization               ratio               is               bank-speak               for               describing               the               ratio               of               what               is               owed               on               a               credit               card               compared               to               your               available               credit               line.

    This               ratio               is               so               important               that               it               actually               accounts               for               about               30%               of               a               credit               score.

    In               our               situation,               our               credit               utilization               ratio               was               high               because               instead               of               spreading               our               debt               evenly               over               several               cards,               I               put               everything               on               the               card               with               the               lowest               interest               rate.

    While               this               makes               sense               in               terms               of               saving               on               interest,               it               also               throws               off               the               ratio               which               impacts               a               credit               score.
                   Calculating               the               Credit               Utilization               Ratio
                   Calculating               the               ratio               is               super               simple.

    All               that's               required               is               a               calculator               and               a               copy               of               your               current               credit               card               statement.
                   1.

    Divide               the               current               credit               card               balance               by               your               limit,               also               known               as               the               "credit               line"               .
                   For               example,               if               you               have               a               $10,000               limit               and               have               $4800               charged               on               the               card,               divide               4800               by               10,000               to               come               up               with               .48.
                   2.

    Multiple               this               number               by               100               to               convert               the               fraction               into               a               percentage.
                   Using               this               example               .48               becomes               48%.

    Your               credit               utilization               ratio               on               this               particular               credit               card               is               then               48%.

    This               exercise               should               be               repeated               on               all               your               credit               cards.
                   What               is               a               good               range
                   The               FICO               score               looks               at               the               credit               utilization               ratio               in               two               different               ways.

    They               will               calculate               the               ratio               ~               like               you               just               did               ~               on               each               card               to               determine               an               overall               score.

    Next,               they'll               add               up               all               your               credit               card               balances               and               divide               this               number               by               the               total               credit               line               for               another               score.

    If               either               of               these               numbers               is               too               high,               then               your               credit               score               is               impacted               negatively.
                   When               it               comes               to               a               good               range               for               a               credit               utilization               ratio,               I've               seen               answers               anywhere               from               25%               to               75%               (read               creditscoring.com               to               view               what               experts               are               saying.)               According               to               my               personal               banker               at               Key               Bank,               the               ideal               credit               utilization               ratio               in               today's               economy               is               between               30-40%.
                   More               by               this               author:               
                   How               Credit               Card               Management               can               Impact               a               Home               refinance.


                   How               to               Get               a               Lower               Interest               Rate               on               a               Credit               Card






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    2013년 11월 29일 금요일

    About 'financed by debt'|Debt Proof Your Christmas by Mary Hunt-Personal Finance Book Review-All-Cash Holidays







    About 'financed by debt'|Debt Proof Your Christmas by Mary Hunt-Personal Finance Book Review-All-Cash Holidays








                   I               casually               dug               a               small               trench               some               years               back,               dabbling               with               a               shiny               plastic               card               and               my               new               found               spending               power.

    I               paid               that               card               down,               and               spent               again,               and               paid               it               down               and               spent               again.

    I               was               rewarded               with               an               ever-increasing               credit               limit,               and               my               credit               score               climbed               little               by               little.
                   I               was               on               top               of               the               world.

    I               managed               my               payments               wisely,               made               sure               that               I               could               afford               them,               and               added               another               shiny               card.

    I               spent               a               little,               paid               a               little,               spent               a               little               more,               paid               a               little,               spent               a               little               more,               paid               a               little.

    Soon,               the               balance               had               grown               to               a               large               amount.

    The               combination               of               my               two               shiny               plastic               cards,               a               financed               vehicle,               and               an               auto               repair               place               line               of               credit               was               becoming               a               monster.
                   So               I               worked               harder,               and               paid               more.

    The               first               time               I               missed               going               somewhere               because               I               couldn't               buy               tickets               because               my               cards               were               maxed               out               and               my               bank               account               was               empty               due               to               making               the               payments,               I               felt               a               little               deflated.

    All               my               spending               power               and               suddenly,               I               was               the               only               one               of               my               friends               who               couldn't               buy               a               hundred               dollar               ticket.

    Oh               well,               I               made               my               payments               just               the               same.
                   In               the               middle               of               the               growing               debt               problem               (and               addiction               to               credit),               I               had               a               couple               kids.

    Kids               are               expensive.

    I               found               that               we               missed               out               on               some               fun               things               because               of               the               increased               living               expenses               and               the               unbeatable               debt-monster.

    It               just               kept               hanging               around.

    At               this               point,               I               had               never               missed               a               payment,               because               my               credit               score               was               like               a               crucial               key               to               my               identity.

    Missing               a               payment               and               messing               that               up               would               be               devastating               to               me.
                   My               credit               score               hit               a               plateau,               I               had               too               many               high               balances.

    So,               the               score               was               a               high               number,               but               it               carried               with               it               a               lack               of               buying               power               because               my               balances               were               too               high.

    This               was               infuriating,               because               I               wanted               my               buying               power               back.

    I               was               stuck               with               this               addiction               to               raising               my               credit               score,               feeling               powerful               because               of               my               good               credit,               and               a               sudden               inability               to               use               that               credit.
                   Along               the               way               I               learned               about               debt               free               living,               and               thought               it               sounded               "cool."               I               kept               hearing               about               it,               and               even               knew               a               few               people               who               were               trying               to               become               debt               free.

    They               were               following               this               zero               budget               and               a               debt               snowball,               and               were               raving               mad               about               this               guy               named               Dave.

    So               I               started               checking               out               that               guy               named               Dave's               material.

    Now,               I               have               a               debt               snowball.

    I'm               only               on               baby               step               #1,               but               instead               of               worshipping               a               credit               score,               I               want               to               worship               God.

    He's               pretty               clear               in               that               good               ol'               book,               ya               know,               the               Bible,               about               not               being               slave               to               the               lender.
                   
                   If               you're               interested               in               living               debt               free,               but               don't               know               how               to               get               started               on               the               right               path,               then               check               out               Dave               Ramsey.

    I               haven't               taken               the               course,               but               I've               heard               lots               of               recommendations               for               his               Financial               Peace               University.

    If               you               have               a               lurking               debt-monster,               and               would               like               to               kick               it               to               the               curb,               Dave               has               tools,               tricks,               and               advice               that               will               help               you               do               just               that!






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