DEAR BENNY: I was reading in one of your columns about paying off your mortgage faster by making an extra payment each year. You said to make sure your coupon clearly indicates you are making an extra payment. I did this at the end of 2008, but didn’t know whether it should go under an extra payment or payment on the principal. I paid it on the principal because otherwise it wouldn’t show up until January as a payment.

I called the mortgage company and could not get a straight answer from them. I was told I could do it either way, which was not helpful. Did I do the right thing by paying the extra payment on the principal? I was setting up our payments to come out of our checking bimonthly so the extra payment would be included each year. We also have money going into our escrow account to pay our taxes and homeowners insurance. I am confused. –Lynette

DEAR LYNETTE: I am also a little confused about your question, but let me try to answer it this way. I always recommend that if you can make at least one extra monthly payment each year, you can lower the amount of interest you will ultimately pay as well as shorten the term of the loan. For example, one additional monthly payment per year should reduce a 30-year loan down to approximately 22 years.

You can make this extra payment in several ways. In December of each year, you can make that extra payment. Or, better yet, divide the monthly payment by 12 and add that amount to your payment each and every month.

I recommend that you call it “extra payment” and include it in your coupon as an “extra payment.” To be on the safe side, I also would include the amount as a note on the bottom on your check, and again call it “extra payment.” If you are using an automatic payment account, instruct the organization paying the loan to make sure they label the extra payment as such.

And in January of each year, do your own calculations to make sure that these extra payments have, in fact, been included in your new mortgage loan balance.

DEAR BENNY: My wife and I (via our LLC) own a two-story brick building built in 1890. We are eight years into a 15-year fixed-rate mortgage with payments of $816 monthly, and a $42,000 balance. We have a successful business, which my wife operates, on the first floor.

For the last several years there has been a successful historic renovation of our downtown. Many of the second-story lofts have been or are being renovated into urban living spaces. Our second-story loft has 1,800 square feet and 11-foot ceilings with 8-foot windows, but has been bricked up since the 1950s. We are considering moving forward with a renovation, but we must borrow to complete this work. Our economy has experienced a downturn recently and our county currently has a 10 percent unemployment rate. I am uncertain if we should continue under these circumstances and if we do, is it wise to refinance the total building or extend our HELOC?

We are debt-free (except for our home and business mortgage), own four small businesses, have no children, own other free-and-clear rentals, and we have a six-month reserve on hand in the bank. I have proposed a budget of about $100,000 to complete this work, and other downtown rentals are running at about $1,100. What advice can you offer given the current economic situation and our borrowing needs? I do feel confident that given a 90 percent occupancy rate we can accomplish a slightly positive cash flow over our PITI. –Michael

DEAR MICHAEL: I always appreciate hearing positive things from my readers. You have asked the $100,000 question, but I can provide only general information. Only you can make the final decision. Since you wrote this question to me, (a few months ago) the economy has not gotten better, and indeed it has declined further. Perhaps the new Obama administration will create hope and optimism similar to Camelot when John Kennedy became president back in 1960.

You indicate that the unemployment rate in your county is quite high, but you will need a 90 percent occupancy rate to make a profit. What guarantee do you have that you will reach that goal? Keep in mind that being a landlord means you will have vacancies.

Have you lined up any potential tenants, and checked out their financial and credit ratings? That’s the first thing I would do before launching in the project.

Only you can make the final decision. However, if it were up to me, I would hold off at least until we see some signs of an economic recovery. You can always do this later, but if you fail now, you could lose the building.

DEAR BENNY: In June 2007, I purchased a house with a fixed-rate mortgage. A year later, the mortgage company requested an extra payment of $715. Six months later, they sent me another bill, claiming an extra payment was required.

I am being told that a mistake was made on the original amount needed for insurance and taxes, and they cannot be sure if or when additional extra payments will be required. And nobody seems sure whether I will be allowed to take over payment of my own insurance and taxes, which I’ve always done in the past.

Since I’m not a first-time homebuyer and have excellent credit and have managed house insurance and taxes in the past, this all seems highly weird. –Willi

DEAR WILLI: I personally dislike the concept of having to pay money monthly into an escrow fund managed by a lender to pay real estate taxes and insurance. However, it is legal and most lenders (especially FHA and VA) require this.

My objections are twofold. First, most lenders use this money as collateral and do not pay any interest on it. Second, lenders sell/assign loans all over the country, and often a lender in one state does not know where or how to pay the real estate tax in your particular county.

But whether you are a first-time homebuyer or have good credit, if you want the loan you have to comply with the lender’s requirements.

You should obtain and carefully review the lender’s financial records regarding your loan. Find out the costs of your tax and insurance, and compare those costs to what the lender has been charging — and paying. By law, lenders have the right to a two-month cushion, just in case you miss a mortgage payment.

Finally, I recommend that every borrower who escrows for taxes and insurance send a demand letter once a year (or twice a year if real estate taxes are paid every six months) requesting proof that your lender did, in fact, make the required payments. This is especially true in today’s market economy, when many mortgage lenders are no longer in business.

DEAR BENNY: My mother recently applied for a reverse mortgage. I have been trying to find a benchmark for reasonable costs associated with this loan to no avail. Could you please guide me in the right direction? –Peter

DEAR PETER: Congress recently enacted a law putting a maximum limit of $6,000 on closing costs for federally insured reverse mortgages. But different lenders will have different costs. I recommend that you do a search for “Reverse Mortgage” at your favorite Internet search engine. Specifically, AARP has a lot of helpful information, which can be found at www.aarp.org.

DEAR BENNY: I have an investment property I would like to use in a 1031 tax-deferred exchange. I have great credit scores (770), but my debt ratio will not allow me to qualify for a loan on the new property. I currently own the current investment property in my own name.

I now have a significant other in my life. Can he go on the new loan and title work, allowing me to take advantage of the 1031 tax exchange rules and qualify? We plan on the new property being our retirement home eventually. –Kathy

DEAR KATHY: It all depends on the price of the properties. Your current property is the relinquished property and the new one is called the replacement property.

Since you own the relinquished property by yourself, the replacement property must also be in your name only. However, let’s take this example. The relinquished property will be sold for $500,000, and the replacement property will cost $750,000. If you and your significant other take title to the replacement property as tenants in common, with your interest equaling two-thirds (i.e. $500,000), I believe this would fly through the Internal Revenue Service. But confirm this with your own tax and legal advisors.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column.

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We will get change and we will do it on our own no doubt in my mind about that.  The injustice of it won’t stand and it will not be the only battle we the people will wage, there are many fights for us to ponder and mobilize on.  I feel the people have just begun to fight back and try to take the country back. We will succeed!

Now for the logical part of this diatribe. It seems to me that we have developed a system in this country that is completely run and owned by vested interests. Pharma has more power then all the people in the US. Yes they do, they can hold the Senate hostage to their demands. We can’t import drugs. Why was opening up the boarders to China and other countries for trade okay  and it but not for pharmaceuticals? It was because Pharma wanted it so. So guess who pays? We do Republican morons as well as Democratic ones.  We can’t even get these idiots to see that lowering the cost of Medicine is critical to the health of this countries economy never mind the people themselves. Providing for real reform would have been a tremendous boost to our economy on all levels including the personal level. I find it incredulous to hear educated people quote morons like Glen Beck and O’Reilly. What about getting reform and I mean real reform is mysterious? I will continue finishing this article a little later I need to go throw up.

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WE JUST GOT RUN OVER BY THE INSURANCE COMPANIES AND THE SPECIAL INTERESTS!

The propaganda machinery of the medical industrial complex is now spinning stories of how insurance companies don’t like the bill, well this is sheer poppy cock. They love the bill, they can’t say that because the game would be up. After getting things in the bill tweaked just so they now have to pretend they don’t love it, they do! Not only are they saved but will get bigger and profits will be larger. Here’s a tip buy their stock. The reform won’t kick in till 2013 I can’t believe they could wait that long.

Just for the record I am and always was for a single payer system. No where in the bill am I reading about the cost of health care coming down, that is the actual cost and prices of medicine and services being lowered which is really where our problem is, rather that insurance will be available for all and if you don’t buy one they will be penalties. People who are earning over the poverty level will be asked to pay around 2.5% to as much as 12% in some financial categories of their income for this insurance, it doesn’t say what the co -payments are and believe me there will be those. What are they smoking in DC?  This category of income cant afford to even live in the worst parts of any major city yet they are being compelled to have buy insurance. This we call health care reform.

I read some of the comments made on several blogs and websites by people about how they have insurance and made the wise choices in life that is why they can afford it. Then the 17% of people who lost their jobs and are currently employed made the wrong choices right? Others were commenting about the deficit and the debt being increased and the government take over. I guess we should trust business to do the right thing, that is why we are in such a good shape?

Why did they remove the Kucinich amendment which allows states to implement their own single payer system if they choose to. Why? What gives them the right to take away our rights and force us to accept their choices. What is so threatening about this amendment.  I can tell you why, this is how Canada was able to get the single payer actually eventually enacted.

This reform is a sham.

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It is beginning to be clear after reading through several pages of the bill the sham that it is. The bill includes all these explanations and requirements and the rest of the pages of garbage. It is simply trying to allow the insurance companies to survive and thrive. Bottom line is it is requiring all of us to get insurance one way or another. The biggest burden goes on small businesses. These very same businesses that are providing a job for many Americans and the true crucible of this economy to bear the burden. I have been a small businessman all my life. The additional cost of paying insurance wasn’t even an option there was no money. Why do we still insist on supporting the private business of insurance companies.  Why do we allow the crooks to dictate. How can these politicians with a straight face accept and then try to pass this law on us. They should be ashamed of themselves.

This bill will create it’s on structure to navigate this inefficient system. The Blue Dogs or was it Blood Dogs are basically scuttuling a healthier bill for the narrow interest of their minute little peanut populations. The changes in this bill are adding another 85 billion to the cost. That is money we could spend on education or anything we want. Perhaps even another bailout of BANKS!!!

We the people need to stand up, we should be screaming shrill at our government wait a minute not our government rather the corporate representatives we call government.

WHERE IS OBAMA IN ALL THIS!!! WHERE IS OUR SINGLE PAYER PLAN!!!!

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There are many issues we need to fight for as citizens. and we have some monumental battles ahead of us. I am committed besides I can’t think of a better thing to do with my life.

The links below will take you to some incredibly disturbing reports on PBS. They are directly accessible on PBS but for your convenience I have posted them here.

America’s Economy Reformed?

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If one is to believe the MSM coverage of health care you would think that it’s dying a swift and rancorous death. It is fairly obvious there is a negative slant by said MSM on health care reform, specially where it concerned single payer option. They lead you to believe that the general population is resistant to the Obama plan. This is the furthest thing from the truth. The vast majority of people attending this Town hall meeting were most definitely for reform. The thing that really gets to me is that when you first go on Google news, you will right away see a negative story on health care. When you look to see the source invariably it is FOX. Now how do you suppose FOX gets to be the first story on Google News. Well it’s simple, you buy the spot. So if you click on the Google News link that is what comes up. This then gives the impression that Health care reform is in trouble. We all know about the garbage FOX puts out. Thank you Rupert!! The good news is that these outlets will eventually die a slow death of the Internet revolution. It is already happening his empire is in trouble.

People I am here to tell you it will happen, that is Health Care reform. It must and there are so many better ways and much cheaper. To see a few just click on the link below.

Bill Moyers: The Journal: Profits Before Patients

The Health Care Industry Versus Health Reform

How LA’s massive free clinic event came together

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