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Mortgage Rates Lowest Ever, Woo.

Last updated on December 19th, 2017


About a month ago, I discussed whether mortgage rates could drop any lower. At that time, the en vogue 30-year fixed-rate mortgage averaged 4.32%, per Freddie Mac data.

Today, expectedly, it hit a fresh all-time low, falling to 4.12%. Freddie attributed it to “market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August.”

In other words, more bad economic news we all knew was coming came through the door, putting downward pressure on bond yields, which go hand in hand with mortgage rates.

This was no surprise, given the ongoing negative sentiment that simply won’t go away. The good news is that all the stock market swings are making someone rich, but probably not you or I.

It almost seems orchestrated now, the upswing, the downswing, and repeat. Meanwhile, mortgage rates go up, go down, hover in place, and repeat.

Of course, rates have been trending lower and lower because economic news got progressively worse after a brief bright spot.

But I still believe there probably isn’t much more rates can do in the improvement category. Why?

Well, the 10-year bond yield, which essentially dictates their direction, has a historic floor of around 2%, which happens to be its current level, more or less.

It hit a low of 1.93% earlier this week, but has since risen back above 2%. It’s rock-bottom, at least historically, so chances are it doesn’t get any better.

And, as I mentioned in the previous article, most banks and corporations are much better positioned now than they were when the mortgage crisis first struck.

While things are certainly bad, there’s not really too much new drama. There are a lot of lingering problems that will take a long time to sort out, but probably nothing that would surprise any of us at this point.

That said, mortgage rates on the popular 30-year may flirt with the 3% range, but likely won’t do much more than that.

Does Anybody Really Care?

Regardless, nobody seems to be interested in the low mortgage rates anyway.

Purchase-money mortgage applications continue to falter, at a time when affordability for first-time home buyers is at unprecedented levels.

That’s due to a lack of confidence, a lack of employment, and so on. And perhaps a view that buying a home now is like catching a falling knife.

Move-up buyers are screwed because they’ve got no home equity to use as a down payment, let alone to offload their current home, and those looking to do a simple rate and term refinance are stifled by the same problem, assuming the government doesn’t step in soon.

Finally, mortgage lenders could actually be holding rates a bit higher than they need to be (Chase) to keep demand in line with their reduced staff and risk appetite.

So even if they could go lower, they may not. Either way, I don’t think it’s mortgage rates that are holding us back, it’s real estate in general.  It’s just not that attractive anymore.

If you’re wondering whether to lock in your mortgage rate or float it, note that the Fed is considering buying more long-term Treasuries to lower mortgage rates.  But this is only expected to lower rates by 0.1 or 0.2 percent.

Again, I see 3.99% pretty much being the bottom for the 30-year fixed.  What do you think?  Comment below.

Read more: Mortgage rates vs. home prices.

(photo: rightee)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.


How to Fix Common Damage Issues Before Moving Out

Moving out of your apartment can be bittersweet. You pack up all of your things, begin moving furniture, start taking down wall art– and, find yourself face to face with that golf ball-sized hole in the wall you accidentally made one night, then covered with art.

After living in an apartment for at least a year, there’s bound to be some small damage here and there. While some wear and tear is normal and should be built into your lease, fixing minor damage before moving out will ensure you get your full security deposit back. Plus, you’ll stay on good terms with your landlord, who you may need for references down the road.

To make sure you leave your apartment in good condition before moving out, take a look at these normal damage issues and their fixes:

Small holes

After taking down the photos from your gallery wall, you probably noticed the many small holes left by nails that were used to hang the frames. Patching small holes left by nails, tacks and screws is simple and will leave the walls looking great again.

You’ll need some spackling paste, a putty knife and some sandpaper. Squeeze a small glob of the spackle into each hole, then use the putty knife to spread and blend it over the hole and wall. Once the spackle is dry, use the sandpaper to lightly sand the area, especially around the edges, to leave a smooth, flat wall.

In a real pinch, you can use some materials around the apartment to fill the hole. Plain white toothpaste or baking soda mixed with white glue can also work to fill nail holes, but aren’t recommended unless you absolutely have no time to get the right materials.

Large holes

Now it’s time to tackle that large hole you hid under your favorite painting. Mending large holes in drywall isn’t as easy as some of the other fixes, but it will most likely cost you less than if you were to let your landlord handle it and deduct it from your deposit .

Pick up a mesh repair patch at the hardware store to use with your spackle. Then, cut the patch so that it fits over the hole and the surrounding wall. Cover the patch with spackle, and after it dries, sand down the edges so they blend into the wall completely.

Scuff marks

Though scuff marks likely aren’t going to cost you any of your security deposit, they make the apartment appear dirtier than it is and make more work for whoever has to clean thee apartment.

Since I seem to make an inordinate amount of scuffs on the walls of my apartments, I typically don’t try to tackle them all– just really noticeable and large ones. A magic eraser works wonders to get rid of them, so pick up a couple and your walls will be white again in no time.

Broken blinds

Another common damage issue I’m guilty of is bending or even breaking some of my window blinds. Before moving out, dust your windows and blinds, and make sure none are bent or cracked. If bent, do your best to straighten them out as much as possible. If you can’t straighten them, or if one of the blinds is broken, start by looking at the bottom – there’s often a spare slat in any set of blinds. If not, look for blinds of the same size and color at your hardware store. Replace the broken slat with the new one, and your landlord won’t ever know the difference!

Carpet stains

If you’re a red-wine drinker living in a carpeted apartment, you probably know a thing or two about removing carpet stains. Tackling stains before they get a chance to set will help your carpet look better overall, but before moving out, peruse the carpet for any stains you might have missed.  Try using baking soda or carpet cleaner first. If that’s not strong enough to remove the stains, consider renting a carpet cleaner from your hardware or grocery store. They’re easy to use, and your carpets will be unrecognizably clean when you’re done.

Fix damage to the carpet

Now that you’ve fixed the stains on the carpet, is it still intact? If there are damaged patches, or if it’s started to come loose around the edges, or any other damage, you’ll want to get it fixed. Even if you have to hire someone, it’s likely going to be cheaper than having your landlord take it out of your deposit.

Scratches on hardwood

Renters love apartments with hardwood floors because they’re much easier to clean than carpet, but they do have one common problem: Hardwood is easy to scratch. There are a couple of quick fixes for the shallower scrapes, though. Many people swear by the walnut method, which involves rubbing a raw walnut along the scrape until the scratch blends into the rest of the floor. This method works well, just not on deep scratches and darker woods.

For deeper scratches, look for a wood-colored marker or pencil at the hardware store. These products are specifically made for filling in and disguising the scrapes.

Replace light bulbs

If any light bulbs burned out in places that you can easily access, now is the time to take care of them. If there are some that are difficult to reach, such as in high up or complicated fixtures, you might need help or for your landlord to handle them. Even so, replacing any easily accessible ones that burned out will give your landlord less to repair and take out of your deposit.

General dirtiness

Deep cleaning your apartment is recommended to ensure you get your full deposit back, and to give your landlord less of a headache when he or she is trying to ready the unit for the next renter.

Give everything a good wiping, sweeping and dusting, but spend extra time in the kitchen and bathroom. The refrigerator, microwave, oven and stove should all be thoroughly cleaned, along with the toilet, shower, tub and sink.

Take pictures

This isn’t a repair but is crucial to getting more of your deposit back. Take pictures of the current state of everything in the apartment that you couldn’t fix yourself. Having this documentation helps as later defense, in case your landlord takes too much out of the security deposit. Having pictures will work much better than your word against theirs in case things end up in front of small claims court.




Understanding the Role of the Real Estate Agent

Not sure you need an agent to help with your real estate transaction? Here are seven ways they bring value you might be missing out on.

The road to homeownership can be bumpy, and it’s often filled with unexpected turns and detours. That’s why it makes sense to have a real estate pro help guide the way.

While real estate websites and mobile apps can help you identify houses you may be interested in, an experienced agent does much more, including:

1. Guide. Before you tour your first home, your agent will take time to learn more about your wants, needs, preferences, budget and motivation. A good real estate agent will help you narrow your search and identify your priorities.

2. Educate. You should expect your agent to provide data on the local home market and comparable sales. The home-buying process can be complicated. A good agent will explain the steps involved – in a manner that makes them understandable – and provide counsel along the way.

3. Network. An agent who is familiar with your target neighborhoods will often know about homes that are for sale – even before they’re officially listed. Experienced agents tend to know other agents in the area and have good working relationships with them; this can lead to smooth transactions. Your agent may also be able to refer you to trusted professionals including lenders, home inspectors and contractors.

4. Advocate. When you work with a buyer’s agent, their fiduciary responsibility is to you. That means you have an expert who is looking out for your best financial interests, an expert who’s contractually bound to do everything in their power to protect you. If you find yourself in a situation where the same agent represents both the buyer and seller, things can get trickier, advises Scottsdale, Arizona-based real estate agent Dru Bloomfield.

“A lot of people think they’ll get a lower price by going straight to the listing agent, but that’s always not true,” she says. “If I was representing both the buyer and seller, I’d be hard-pressed to take a low-ball offer to the seller. But, as a buyer’s agent I’d do it, because I have no emotional ties or fiduciary responsibility to the seller. Buyers should work with an agent who can fully represent them.”

5. Negotiate. Your agent will handle the details of the negotiation process, including the preparation of all necessary offer and counteroffer forms. Once your inspection is done, the agent can also help you negotiate for repairs. Even the most reasonable consumers can become distraught when battling over repair requests; an agent can do “the ask” without becoming overly emotional.

6. Manage minutia. The paperwork that goes along with a real estate transaction can be exhaustive. If you forget to initial a clause or check a box, all those documents will need to be resubmitted. A good real estate agent understands the associated deadlines and details and can help you navigate these complex documents.

7. Look out. Any number of pitfalls can kill a deal as it inches toward closing; perhaps the title of the house isn’t clear, the lender hasn’t met the financing deadline or the seller has failed to disclose a plumbing problem. An experienced real estate agent knows to watch for trouble before it’s too late, and can skillfully deal with challenges as they arise.

Professional real estate agents do so much more than drive clients around to look at homes. Find an agent you trust and with whom you feel comfortable working; you’re sure to benefit from their experience, knowledge of the local market and negotiation skills.


Originally published July 21, 2014.


Uses for aluminum foil

Aluminum foil is a Penny Hoarder’s BFF when it comes to preserving leftovers. But if you’re just using that handy foil to wrap up day-old food, you’re totally missing out on so many other uses for this extraordinary kitchen standby.

The Many Uses of Aluminum Foil

You might be dating yourself if you are still calling the shiny workhorse “tin foil” though it’s not uncommon to hear that phrase used. Foil was made of tin until after World War II when the stronger and cheaper aluminum became widely used. Now you know. Read on for 10 clever money-saving ideas.

1. Sharpen Scissors

Don’t toss a pair of dull scissors or pay someone else to sharpen them. Sharpen scissors with aluminum foil, says Rachel Timmerman, a Virginia blogger with The Analytical Mommy. Fold a piece of 10-by-10-inch aluminum foil three times. Then, cut the foil about 20 times with the scissors to make them as sharp as the day you bought them.

2. Substitute for Dryer Sheets

Crumble a ball of foil and toss it into your dryer, says Gladys Connelly, technical writer for The HouseWire, a product review site. This works exactly the same as a dryer sheet would, Connelly says. “It eliminates static and fluffs up your clothing,” she says. Spray lavender oil or your favorite scent into the middle of the aluminum sheet before you crumple it to make the foil smell just as good as a dryer sheet, Connelly recommends.

3. Lower Your Heating Bill

If you have cast-iron radiators, you can DIY a heat reflector out of aluminum foil. Tape some heavy-duty aluminum foil to a piece of cardboard with the shiny side up. That’s literally it. Place the heat reflector behind your radiator or under the radiator’s top. The heat waves will naturally bounce from the foil into the room instead of going into the wall behind the radiator.

4. Cover Your Paint Tray

Don’t toss your plastic paint tray after each use. Keep the tray clean by wrapping it in aluminum foil. When you’re done, just pull off the foil and your paint tray will look as good as new, Connelly says.

A woman uses aluminum foil to get gel nail polish off her nails.
Getty Images

5. Remove Gel Nail Polish

You can’t use acetone and a cotton pad to remove gel nail polish. Instead, you’re supposed to soak your nails in acetone. But it would be wasteful to use a bowl of acetone just to remove the polish. So Malaika Desrameaux, a Miami content creator with Self Care Sunday Love, figured out an aluminum foil method. 1. File the tops of your gel nails to get rid of the glossy layer. 2. Soak a cotton ball with acetone and put the cotton ball over your nail. 3. Wrap your nail (with the cotton on top) with a 3-by-5-inch piece of aluminum foil. 4. Repeat on all fingers, and let them sit for 10 to 15 minutes. 5. Remove cotton and aluminum foil, and peel off the gel nail polish.

6. Polish Silver

No need for a special polish or even any elbow grease to make Nanny’s heirloom silverware gleam again. Place a sheet of aluminum foil into a pan, add cold water and 2 teaspoons of salt. Put silver into the pan, and leave it for two minutes. Rinse off with water and let it dry. The aluminum causes a molecular reaction, cleaning the silver for you.

7. Clean Jewelry

Similar to the process for polishing silver, you can use aluminum foil to clean jewelry by creating an ion exchange (a molecular reaction with the aluminum). Place aluminum foil in a bowl, and fill the bowl with hot water and 1 tablespoon of bleach-free powdered laundry detergent. Soak jewelry in the solution for one minute, rinse with water and air dry.

8. Battery Replacement

You’re desperate for a battery to fire up the flashlight. Try aluminum foil, says Melanie Musson, a home safety expert with US Insurance Agents. “If your flashlight requires two C batteries but you only have one, you can fill the empty space with compacted foil,” Musson says. It may not be at full strength, but you’ll have a little light to get you by.

9. Garden Buddy

Aluminum foil will miraculously improve your green thumb. Birds are afraid of the shiny foil because of the noise it makes. So tie foil strips around the branches of your fruit trees, you’ll keep the birds from nibbling at the bounty. Same goes for mice and rabbits. These creatures don’t like the feel of the aluminum foil, so placing bits of it on your shrubs serves as a natural deterrent. Bugs bugging you and eating your plants? Nestle foil with soil or stones at the base of plants. Or mix some strips of aluminum foil in with your mulch. In both cases, the foil will keep the moisture in your soil and prevent the weeds from growing while keeping the pests at bay.

10. Custom Cake Pan

Don’t run to the store every time your child wants a cake that looks like something other than a rectangle. Need a dog-shaped pan? A heart pan? Make the shape out of heavy-duty aluminum foil, and place your DIY foil creation into a baking pan big enough to accommodate the shape.

11. Grill Cleaner

Don’t bother purchasing pricey grill scrubbers when a rolled up ball of aluminum foil works perfectly well, Connelly says. The foil ball should be large enough – about 3 inches around – to hold comfortably with tongs (remember that the grill is hot). Grab the foil ball with the tongs and swipe back and forth across the grate before it has cooled. Food bits will be easier to remove when the grate is warm. If you already have stubborn burnt food on the grill, then put a piece of aluminum foil on the grate, and close the grill. Turn on the heat and let it run for a few minutes. Then, remove the foil, turn off the heat and try the original cleaning method. It should be easier now because the foil sheet trapped the heat to help loosen any stubborn debris.

12. Ironing

Aluminum foil is a natural heat reflector. So if you place a piece of it under the cover of your ironing board, the aluminum foil will speed up your ironing time.

Danielle Braff is a contributor to The Penny Hoarder.




Types of mortgage loans – Lexington Law

You’ve worked hard and now you’re ready to buy a new home. Find out about the types of mortgage loans to understand your options and make an educated decision.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

As of mid-2019, around 37% of homeowners in the U.S. owned their property free and clear, which means any mortgage they had was paid off. That leaves 63% of homeowners still making that payment every month. What you might not realize is that there are many types of mortgage loans, and those millions of homeowners have different rates and terms. Understanding all your options is one of the first steps in choosing the type of mortgage that’s right for you and your situation.

What Is a Mortgage?

A mortgage is a loan that you get to buy property, such as land or a home. Like any other loan, mortgages have components such as principle and interest. But since they’re for such large amounts, they can be more complex than other loans. Some common components involved in mortgages include:

  • Principal. This is the part of the loan that is what you borrowed—or what’s left of that amount as you pay it down.
  • Interest. Interest is what you pay to be able to borrow the principal amount. It’s usually charged as a percentage of what you owe.
  • Terms. This typically refers to the structure of your loan, such as how many years it’s for.
  • Insurance. You may need to pay homeowners’ insurance as part of your mortgage payment. This is property insurance that helps cover losses if your home is damaged or lost in a fire or other covered disaster. Depending on how much you put down on your mortgage or what type of mortgage loan you have, you may also have to pay private mortgage insurance. PMI is coverage for the lender—if you fail to pay the mortgage, it helps them recoup some of their losses.
  • Taxes. Depending on where you live, you might need to pay property taxes on your home. This can be rolled into the mortgage and your monthly payments.

The Main Types of Mortgages

Many types of mortgages exist. Find out about some of the most common below.

Government-Backed Mortgages

What is it? Government-backed mortgages are at least partially ensured by the federal government. The loans don’t come from the federal government, however. They still come from commercial lenders.

Pros: Because the loan is government-backed, it’s seen as less risky than a conventional mortgage for the lender. That means that you might be able to get approved for one of these loans with a lower credit score or smaller down payment.

Cons: Some government-backed loans mandate PMI, which can make them potentially more expensive in situations where someone has good credit and a large down payment.

Types of Government-Backed Mortgages

  • FHA Loans. Loans insured by the Federal Housing Administration can be approved with a credit score as low as 500 under certain conditions. If you have a higher credit score, you might be able to qualify for an FHA loan with only 3.5 percent down.
  • USDA Loans. These loan options typically involve the purchase of homes in qualified rural areas. Borrowers must meet certain income and credit requirements.
  • VA Loans. The VA provides a number of programs to assist veterans and their families with housing, including one type of loan directly from the VA. The VA also backs three types of loans, and these loans often require no down payment.
Government-backed mortgages

Conventional Mortgages

What is it? These are traditional commercial mortgages that aren’t backed by another entity such as the government.

Pros: If your credit is good enough and you have a large down payment, you might be able to score a low interest rate. You’ll also potentially save money because, with a 20 percent down payment, you won’t have to pay PMI.

Cons: Conventional mortgages typically require a credit score of 640 or more. You might also have to wait a longer period of time after a major negative item on your credit report—such as a bankruptcy—than you would have to wait when applying for government-backed loans.

Conforming Mortgages

What is it? Conforming mortgages are conventional mortgages that comply with standards set by Freddie Mac and Fannie Mae. These are two government-controlled agencies that buy commercial mortgages after they’ve been issued. The agencies pay the banks for the mortgages. The lenders then have more capital so they can fund new mortgages—it’s an effort that was started decades ago to help make homeownership more accessible.

Pros: The loans have to conform to standards, which means lenders must do some due diligence to ensure the borrower is not high risk. While that does mean you must have a decent credit score and debt-to-income ratio, it also means the loan will likely have a decent interest rate.

Cons: Conforming loans are limited to certain amounts. In 2020, the limit is $510,400 for single-family homes. The limits do vary slightly by location, with higher limits in especially expensive areas.

Jumbo Mortgages

What is it? Jumbo mortgages are those that surpass the limits set by Freddie Mac and Fannie Mae for conforming loans. In 2020, then, that would mean mortgages for more than $510,400 in most areas.

Pros: Jumbo mortgages allow you to get funding for expensive or luxury properties.

Cons: Because of the size of the loan and the fact that it’s not eligible for purchase by Freddie Mac or Fannie Mae, the underwriting process can be extensive. You may have to demonstrate excellent credit as well as produce a variety of financial documents.

Interest-Only Mortgages

What is it? This is a type of adjustable-rate mortgage (you’ll learn more about this in a moment) where you only pay toward the interest for the first few years of the loan. After the introductory period is over, you pay both interest and principle, which means your monthly payments likely go up. Your interest rate is also adjusted each year based on various economic factors.

Pros: Paying interest only can significantly lower your mortgage payment at the front end of your loan.

Cons: Your payment will go up and you won’t have a fixed interest rate. Depending on what the markets do, that could increase your costs unexpectedly.

Mortgage Interest Rates

Mortgage interest rates are typically fixed or adjustable. Which one you choose depends on your financial situation and the type of loan you can qualify for.

Fixed-Rate Mortgages

With this type of loan, your interest rate is set in the contract and doesn’t change over the years. The advantage of this is that you know exactly what you’re going to pay and what rate you have. The downside is that if you buy a home during a time when interest rates in the market are high, you might get stuck with a higher rate.

You can seek a lower rate by refinancing your mortgage, though you’ll have to pay closing costs and other fees, and your credit and income might be reviewed again. Many people do refinance to get a lower rate to save money if they have a better credit and financial situation than they did when they bought their home.

Adjustable-Rate Mortgages

In an adjustable-rate mortgage, or ARM, your rate is variable. That means it fluctuates periodically. How often the interest rate might change depends on your mortgage contract. The downside of an ARM is that you can be surprised with large interest rate hikes. The upside is that if you buy a home when interest rates are high, you might see a lower rate if the markets swing that direction in the future.

Mortgage Terms

Terms refer to how long you take out a mortgage loan for. Many options exist, but the two most common are summarized below.

15-Year Mortgages

This means that you borrow the money for 15 years. The benefits of a short-term mortgage like this are that you pay your home off and own it outright much faster, and you do so with significant interest savings. The downside is that by squeezing the mortgage into only 15 years, you will have much higher monthly payments.

30-Year Mortgages

This is what most people consider the traditional mortgage term. The benefit is that you spread your loan out over a longer period, so you pay less each month. The downside is that by stretching out your payments, you pay more in interest over the life of the loan.

Mortgage terms

How to Get the Best Loan Terms

To save money on your home purchase, you want the most favorable terms possible. That means you want the best length of time for your needs and a good interest rate. Try these tips to achieve your goal:

  • Ensure your credit score is good or excellent. If your credit score is lackluster, you might want to consider taking time to improve it before buying a home.
  • Have a decent down payment. Putting 20 percent down on a home keeps you from having to pay PMI, for example. But even putting 10 percent down might help you get better rates than if you put only three percent down.
  • Compare lenders and rates to find the best deal. Shopping around for a mortgage within a short period of time doesn’t hit your credit hard because generally, the credit bureaus consider multiple mortgage applications within a few weeks of each other to be a single inquiry.

Mortgages can be complicated, and there are a lot of professionals who can help you figure out which one is best for you. When it comes to working on your credit score, the team at Lexington Law might be able to help you out by investigating and disputing inaccurate negative items on your credit report. Get in touch with us today to find out more.

Reviewed by Alexis Peacock, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona. In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.


Dealing with medical debt

A father holding his son on his shoulders.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

According to a 2018 Consumer Reports survey, almost 30% of insured Americans had medical debt sent to collections in a two-year time span. That number might sound high, but there are many reasons why medical bills go unpaid long enough to end up in collections.

For one thing, healthcare expenses are often costly and unplanned, leaving people struggling to pay their bills in a timely manner. And close to a quarter of people surveyed told Consumer Reports they didn’t realize there was even an amount due to be paid.

If you are dealing with medical bills in collections or
are worried about a medical bill making it to collections, find out more below.

According to a 2018 report, almost 30% of insured Americans had medical debt sent to collections in a two-year time span.

When Does Medical Debt Go to Collections?

First-party medical creditors—this is the organization that provided the healthcare service or the agency contracted to handle billing on its behalf—can typically send you to collections at any time. The key is that they must follow their own policies consistently.

In most cases, first-party medical creditors will send you
at least one bill. Some may send multiple bills over the course of several
months. At some point, if you don’t pay those bills, the account will go to
collections. When that happens, it can be reported to the credit bureaus as a
medical account in collections.

How Do Medical Bills in Collections Affect Your Credit?

There’s some good news: the 2017 changes to the credit reporting rules offer some provisions to help protect your credit from unplanned medical bills. Specifically, there’s a waiting period before medical debt can show up on your credit report and reporting on medical debt is removed from your credit report if it has been paid or is being paid by insurance.

The credit bureaus must wait at least 180 days after a medical debt is reported to them before they add it to your report. That provides up to 6 months for you to dispute medical bills, work with insurance companies or settle the debt with the creditor, if you choose, before it impacts your credit score.

In addition, if a medical debt does appear on your reports
after the 180-day period but has been or is being paid by insurance, then it
must be removed from the reports.

If medical bill collections do end up on your credit
report and they are not paid by insurance, they may remain for up to seven years—even
if they’re paid. However, they may not impact your score as much as other types
of collections. Both the FICO Score 9 model and VantageScore 4.0 weigh medical
debt less heavily than some other kinds of debt.

What Can You Do About Medical Debt in Collections?

Just because medical bills don’t necessarily have the impact on your credit score that other debts do, it doesn’t mean there’s no impact at all. Consumer Reports notes that almost one-fifth of Americans say their credit has been negatively impacted by medical bills in collections. Try some of the steps below to help resolve the matter and positively impact your credit history for the future.

Almost one-fifth of Americans say their credit has been negatively impacted by medical bills in collections.

Know What Your Insurance Covers

Start by ensuring that you really do owe this money.
Review the explanation of benefits, also called an EOB, provided by your
insurance company. You should receive an EOB statement from your insurance
company anytime a provider bills medical expenses to your insurance. (Keep in
mind that an EOB is not a bill.)

In most cases, insurance companies don’t allow the full
amount a provider bills it for. Your EOB will show:

  • How much
    of the bill was allowed and how much was disallowed.
    Your provider must
    write off disallowed amounts and typically can’t bill them to you if they
    agreed to accept insurance payments.
  • How much
    of the bill was paid by the insurance company.
    This is the amount you do
    not owe and do not need to worry about.
  • How much
    of the bill is the patient’s responsibility.
    This is the amount you do owe,
    according to your insurance. If you’re being billed by the medical creditor for
    more than this, it could be a mistake.

If you don’t think you owe the amount being sought, you may choose to dispute it. Ask for documentation proving that you owe the amount. If the account is being reported on your credit report, consider sending a dispute letter to the credit bureau in question if you believe there is an error in the reporting.

Negotiate with the Service Provider

Once you understand how much you owe, you may choose to
reach out to the provider to negotiate. You may be able to get a discount,
particularly if you didn’t use insurance and you can pay a large sum toward the
amount billed.

Negotiation with providers may work better earlier in the game, so it may be helpful to not put off this step. Make sure you know what you might owe and how you can pay it even before services are rendered, if possible.

Suggest a Suitable Payment Plan

If you receive a medical bill and you can’t pay it all
at once, you may ask for a payment plan or suggest an arrangement. If you can
pay the bill off in a short period of time, such as a few months, many medical
providers will not send you to collections.

Use a Credit Card Only If You Must

Paying for medical debt with a credit card converts a bill with little to no interest to one that might come with a large amount of interest. Only use a credit card to pay medical bills if you have no other options.

Consider Seeking Debt Settlement

If the account has already gone to collections, you may
try negotiating a settlement. In some cases, the older a debt is, the less
likely the organization is to collect it. This could make it more likely to
accept a smaller amount to consider the account paid in full.

Make sure you have the ability to make an immediate payment if you do negotiate a settlement. You may ask for the collections account to be deleted from your credit report in return for making the settlement payment, but not all collection agencies can or will do this. However, they do have to mark the account as paid, which looks better on your credit history than an unpaid account.

Whatever you do when settling a debt, get it in writing. You might need to demonstrate there was an
agreement later.

Work with a Medical Billing Advocate

If you’re feeling overwhelmed by medical bills and all
the information that comes with them, you might consider working with a medical
billing advocate. These individuals help you understand your bills, appeal
costs to hospitals and ensure your insurance company covers everything it
should. That can help reduce the total cost of your medical expenses.

Regularly Check Your Credit Report

Staying on top of your credit report by checking it
regularly is important, especially because you might never see a notice in the
mail about your debt going to medical collections. When you review your credit
regularly, you can respond to and handle negative items quickly and
proactively, giving you a better chance at protecting or positively impacting
your credit in the future.

Reach out to the credit consultants at Lexington Law if you want to learn more about your credit report and how you can work to improve your credit.

Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.


Pros and Cons of using Gas Credit Cards

The choice on whether to go for gas credit cards or use other financial tools at the pump is not an easy one. This cashless system is marketed as a convenient and easy way to fuel your car. That said; there are high rates and other limitations to contend with. To help you make an informed decision, here are the pros and cons of using gas credit cards.


Discounts on Purchases

Gas Credit CardsGas Credit CardsOne of the driving factors of having a gas credit card is the discounts associated with their use. With most of these cards you get to pay less per gallon than the fuel pump price. Considering the ever increasing gas prices, this cash backs can go a long way in saving you money which can go towards other purchases.

These programs are structured in a way that you get larger discounts during the first few months after card issuance. For example, the ExxonMobil fuel card offers 12 cents off per gallon for the first 2 months and 6 cents off thereafter.

Accumulating Reward Points

Another incentive to using a fuel card is the reward program. These are points per gallon that you accumulate with each gas purchase. A typical reward of 1 point per gallon gives the average American driver about 540 points yearly. This calculation is based on an estimate of 25 Miles/Gallon and 13,476mi which is the average annual miles per driver. Reward points can be redeemed once they accumulate to 100 and over. These can be used for gas or other needs like snacks and carwashes at select businesses.

A Hassle-free and Convenient Payment System

When using cash, one has to line up at the till to pay for gas. This can lose you precious time from your busy life. However with a gas card, all you need is to pull up at the gas station, fuel and swipe at the pump and in a few minutes you are back on the road.

Another plus on using a gas card is the convenience that it offers. This comes in handy because you may not always have cash to fuel your car. Just like other credit cards, you get billed at the end of the month for your purchases. This helps you in keeping track of your gas bill; essentially making you stick to your budget.


High Interest Rates

One of the major disadvantages of using a gas credit card is the high interest rates that they attract. On average they charge 24% on interest. That is 9 percentages points more than the average rate for all credit cards which is currently at 15% APR. A card whose balance is not cleared at the end of the month can end up accruing a sizable debt. This may be much more than the discounts and rewards can make up for.

Simply put, continued misuse of the card can lower your credit score. One of way to mitigate this is going for cards with a 0% introductory offer. This will at least cushion you for a few months as you get your gas budget in order.

Ease of Spending

When using cash, you can’t gas your car with more than what is in your wallet. A gas card on the other hand eliminates this ‘inconvenience’. However the card can lead to uncontrollable spending with total disregard to your budget.

Think of it this way; without gas money, you will probably have to do with public transport. This will unconsciously save you money when you are cash-strapped. But why would you go through the hassle if that small plastic card can fill up your tank?

Usage Limitations

If you depend on your credit card for all your fueling, you may find yourself with fewer options on where to buy. This is because the cards are mostly issued by gas stations to be used in their own branded outlets. This puts you at a disadvantage if you move or drive to a state where the brand doesn’t operate, or has few outlets.

Bottom Line

Gas credit cards are a convenient way of fueling your car. They come with reward points and can save you money via their discount programs. The advantages can however be diminished by high interest rates and the danger of overspending. It is therefore advisable to weigh both the pros and cons before you make your decision.


Worried about Your Child’s Inheritance If They Divorce? A Trust Can Be Your Answer

I recently met with a client to update her will, and her big question was whether she still needs a trust for her daughter. Her child has graduated college, is on her second well-paying job, got married and is now a new mom. Her daughter has been maturing into a responsible young adult.  But there’s another factor that weighs heavily on my client’s mind – her son-in-law and the potential for divorce.

My clients don’t want money they’ve worked hard for to pass down to their son’s or daughter’s ex-spouse, if the unfortunate reality of divorce happens.

With the current federal estate tax exemption in 2021 at $11.7 million per person or $23.4 million for married couples, setting up a trust to save taxes upon death is not as much of a driving force as it used to be. Even if the estate tax limit is cut in half, most people will still be protected, as far as taxes go.

The larger question becomes how well they think their children will handle receiving a large sum of money.  As they watch their children mature, in most cases my clients eventually feel their child is up to the task.  Yet they still want a trust because they worry about their adult child losing thousands, if not millions, of dollars of their inheritance as a result of a failed marriage. By establishing a trust as part of their will, these clients can help protect their child’s assets in a divorce settlement.

Let’s examine how this works.  In many cases, if a child receives an inheritance and combines it with assets they own jointly with their spouse – such as a bank account, car or house – depending upon the state in which they live, the inheritance may become subject to marital property division if the adult child and spouse later divorce.

But if the child’s inheritance remains in a trust account, or they use trust funds to pay for assets only in their name, the inherited wealth can further be protected from a divorce.  This gives the adult child their own assets to fall back on in the event of a divorce.

One of my clients left his daughter’s inheritance in a trust after her first divorce because he was afraid his hard-earned dollars might end up squandered if she remarried.  It turns out my client was spot on – she married again; it did not work out, but her second ex-husband never got a dime from her trust.

Trusts can be complex and involve extra administrative work and costs, which may cost more compared with leaving assets outright to your children. In addition, a person or company must be named as a trustee to oversee these funds throughout the trust’s existence. But many people are willing to pay these costs to protect their child’s wealth.

How do parents decide whether to leave assets in trust for their children because of the possibility of a failed marriage? Here are three scenarios to consider:

  1. Children 18 or younger. If your child is under 18, you’re probably not thinking about the marriage/divorce angle!  However, due to their youth, leaving assets in trust for them is often a good idea.  A trustee will be named to oversee the child’s assets and will be able to guide them to make wise decisions with these funds. And the trustee has the power to deny any financial requests, which can be valuable if a young person is immature or easily influenced.
  2. Is your child newly married? Nearly all couples are happy in the first years of marriage, but the road can turn bumpy as life becomes more stressful and complex — whether it’s a job loss, a decline in health, financial stress or simply the demands of raising children. Instead of deciding to set up a trust right after your child’s marriage, it’s best to watch how the marriage progresses over the next five to 10 years.
  3. How is the marriage going?  Even after five years or more, consider how comfortable you are with your child’s relationship and how you feel about your son- or daughter-in-law.  If there is constant fighting or you simply have that bad “gut feeling,” setting up a trust for your child’s inheritance might be a wise move.

I encourage my clients to think about estate plans as five-year plans: Review your wills, trusts and other documents every five years. It isn’t necessary to constantly change these documents, but reviewing them periodically helps a person to carefully evaluate relationships, finances and the emotional dynamics of their families. In addition, an estate lawyer can modify or delete the trust during your life, as your family circumstances change.

Partner and Wealth Advisor, Brightworth

Lisa Brown, CFP®, CIMA®, is author of “Girl Talk, Money Talk, The Smart Girl’s Guide to Money After College.” She is the Partner in Charge for corporate professionals and executives at wealth management firm Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she’s an avid runner and supporter of charitable causes focused on homeless children and their families.


What Are Round-Up Savings?

Round-ups are a feature offered by some financial services companies in which each time a customer makes a transaction, that amount is rounded up to the nearest dollar, and the change is deposited into a savings or investment account.

Once upon a time, people saved up their spare change in jars, cashing their coins in for a tidy sum once the jar was full.

And while the notion of that old coin jar may seem quaint now, there’s a new cashless version of that old tradition. It’s called round-ups.

The theory behind coin jars is as simple as can be.

Back when cash and coins were the most standard form of payment, savers would accumulate change throughout the day—paying for their morning coffee, buying lunch, or making other small routine purchases.

At the end of the day, they’d empty their pockets of coins and deposit all that loose change into a jar, where it would accumulate over time into a more sizable sum.

Once the jar was full, that money would be deposited into a savings account.

How Does Round-Up Savings Work?

Much like the cash jars of yore, round-up savings are also based on the principle that small amounts of money can add up to big savings over time.

For example, let’s say a round-up user makes a purchase for $28.15. If they were paying with cash, they’d have 85 cents remaining in change. With round-ups, the financial institution rounds up the value of the transaction and transfers those 85 cents into a savings account.

5 Types of Savings You Should Consider Having

Round-Up Savings Can Add Up

While saving 85 cents may not sound like much, any jar saver who ever went to the bank with $100 in change will attest that putting away small amounts can add up fast.

For example, saving just five extra dollars a week in round-ups adds up to $260 over the course of the year. This may not sound like a lot of money to save in total, but it can provide a nice boost to augment a more intentional savings strategy.

And that’s not the full amount someone could gain from participating in a round-up program.

Just like other savings or investments, round-ups deposited into a savings or an investment account have the potential to earn interest.

If the proceeds of round-up purchases are deposited to a savings account on a regular basis, that spare change would grow—and could continue growing—each time interest compounds.

For round-up investing, those small savings can, over time, help in the purchase of additional shares which may also grow in value.

Reasons For Considering Round-up Savings

Many Americans have trouble saving money.

For example, more than a third of U.S. adults would not have the extra funds to cover an unexpected $400 expense , and a quarter of Americans don’t have any retirement savings.

There are lots of reasons people have trouble saving—and for some, setting up round-ups can help them consistently set money away without having to think about it.

This can help to eliminate some of the pain and effort of saving.

Round-ups Make Everyday Transactions More Rewarding

One reason round-ups can be a useful tool to help someone stick save is that round-ups help someone pay themselves with each transaction.

Kind of like tipping oneself, round-ups pay the saver a little something extra on their transactions, making everyday spending a little more rewarding.

Round-ups are Automatic

Part of why saving can feel painful is that it requires the saver to make difficult decisions on a regular basis.

Each time money is put into a savings or investment account, the individual must consciously choose to save over other possible expenditures, decide how much to put away, and actually remember to perform the funds transfer.

But once they’re set up, round-ups happen automatically—without requiring conscious sacrifice.

Automating personal finances can be a helpful tactic to keep everyday funds flowing, avoid late fees and other stresses, and encourage healthy habits.

When it comes to automating savings, round-ups are yet another tool that can assist consumers in putting away small amounts of money.

Round-ups Take Some of the Pain Out of Saving

Saving money can be hard emotionally. In addition to the reasons mentioned above, each time an individual makes the decision to save they’re putting their future goals ahead of immediate pleasure.

That may be rewarding in the long run, but saving also typically requires an individual to make some sacrifices now. But because round-ups transfer such small amounts to savings on each transaction, people may not even feel a pinch.

For those who are already putting money into savings on a regular basis, taking advantage of round-up features can help to grow that money more rapidly, putting the ability to achieve your savings goals within even closer reach.

Round-ups May Help Counter Savings Procrastination

While some people save early and often, others may put it off. There are lots of reasons for procrastinating on starting a savings plan.

For those in their 20s, for example, retirement or even things like starting a family and buying a house can seem a long way off. Meanwhile, there can be lots of temptation to spend now, especially for those earning entry-level salaries.

SoFi Money®, account holders can enroll in the Round-up program, so long as they have at least one Vault set up. Vaults allow users to save for different goals within the same account. With the round-up program, transactions will be rounded up to the nearest dollar and deposited into the Vault selected by the account holder. There are also no fees and it’s possible to earn cashback when you spend.

Learn more about how SoFi Money can help you achieve your savings goals.

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Take the Financial Compatibility Test for Couples: How Do You Match Up?

You’ve heard time and again that money is the number one source of strain in romantic relationships, but just how problematic are finances for couples?

A 2013 study by TD Ameritrade found couples fight about money five times per year, on average.

Interestingly, 40 percent of survey respondents said they do not trust partners to manage their combined finances fully, yet only 5 percent stated money was an important factor when choosing a partner.

There’s an apparent disconnect between what couples expect from each other financially, and how those expectations are communicated.

Undoubtedly, much of this arguing and distrust could be eliminated if couples would test their financial compatibility during the early stages of their relationships, rather than ignoring the subject of money until it becomes a source of tension.

That’s why we put together this simple financial compatibility test for couples.

Find out if you and your partner are a financial match made in heaven — or a money mess waiting to happen.

Related Articles:

Money Quiz: Financial Compatibility Test for Couples

Answer the questions below and keep track of which numbers you select (1-5) for each. The answer key on the next page will explain what your choices say about your financial compatibility.

How often do the two of you talk about your finances?

1. Never – Only one of us is in charge of the household finances so we don’t need to talk about them.

2. Rarely – We only talk about money if there’s a problem — and so far, so good.

3. Regularly – We maintain a budget and check in to keep each other accountable for sticking to it.

4. Constantly – Money is either tight, or one of us is not sticking to our budget — either way, finances are a constant topic of conversation.

5. Not applicable – We maintain separate finances, so there’s nothing to discuss.

I’m comfortable with how much money my partner spends.

1. True, I think – He/she has ups and downs that can mess up our budget every now and then, but overall I think my partner’s spending is okay.

2. False – I’d like it if my partner spent less on non-essentials.

3. True – When reviewing our finances, it’s clear he/she is responsible with money.

4. False – He/she is a shopaholic and spends way too much!

5. Not applicable – It is his/her money to spend — I stay out of it.

Have you set financial goals for the future and are working as a team to reach them?

1. Yes, maybe – We have goals to save for and I’m on track; hopefully, my partner is, too.

2. Not really – We set a few goals together, the only problem is one of us is holding us back from reaching them due to overspending or excessive debt.

3. Yes, definitely – We decided as a couple what we want to work jointly toward accomplishing financially, and are contributing and tracking progress together.

4. No – We never have any money leftover to save, so we haven’t bothered setting any goals yet.

5. Not applicable – We spend and save our own money as we see fit — my partner and I don’t share any financial goals.

Do you have any financial secrets that you’re hiding from your partner?

1. No – I don’t have any secrets — it’s my partner I’m worried about.

2. Yes – Sometimes I hide receipts or lie about how much something cost, but nothing huge.

3. No – We talk openly and honestly about money, and consult each other before making any big decisions that could affect us both.

4. Yes – I have a load of debt I’m hoping my partner won’t find out about.

5. Yes – I have my own bank accounts that my partner doesn’t know about — and they don’t need to know.

Have you saved an emergency fund together?

1. I’m not really sure what an emergency fund is — I hope we have one though!

2. Yes – We’re working on saving up the first $1,000.

3. Yes – We have about three months’ worth of expenses saved in case of a financial emergency.

4. No –  Between overspending and debt payments, we haven’t come close to starting an emergency fund.

5. No – I have plenty of savings in case I need it, but it’s up to my partner to save for their own emergencies.

Overall, I trust my partner to make smart financial decisions.

1. Yes – As far as I know, he/she has been making good decisions so far.

2. Not Really – I don’t think I’d be comfortable handing over the finances 100 percent.

3. Yes, Definitely – We are on the same page when it comes to our money, so I trust my partner’s judgement.

4. No Way – My partner is a disaster when it comes to managing money.

5. No – We keep our finances separate so we don’t have to worry about these things in the first place.

And my partner trusts me, too.

1. I’m not sure – I’ve never asked.

2. For the most part – I’m pretty good with our money and we rarely argue, so I assume my partner trusts me.

3. Yes – Our open communication lets me know my partner trusts me as much as I trust him/her.

4. Probably not – Considering how much we argue about money, I doubt my partner would trust me with the finances.

5. Doesn’t matter – It’s not my partner’s concern what I do with my money.

Answer Key

Which number did you chose most often?

Mostly #1: Clueless

Are you financially compatible? Who knows!? You take the “ignorance is bliss” approach to your finances.

If you want to ensure you are a fit financially, it’s time to sit down and get on the same page about money. Discuss how you both approach money management, your strengths and weaknesses, your goals and concerns, then devise a budget and individual responsibilities.

Mostly #2: Room for Improvement

There aren’t any big, glaring money issues between the two of you, but there could be potential problems down the road.

Remember, conversations about money don’t have to happen only when something’s wrong; set aside time to review your financial situation with your partner on a regular basis.

This will ensure you are both happy with where the household finances stand, and give you the chance to talk about areas for improvement before they blow up into major issues.

Mostly #3: A Perfect Match

You two understand and share each other’s goals and values when it comes to money. Communication is open and you both take responsibility for your finances.

Mostly #4: Financial Disaster

Your financial situation is a mess, and you’re both responsible. Whether you’re the one with spending problems or simply don’t speak up when your partner’s actions upset you, things can only get worse from here.

Don’t let them — it may be a good idea to see a financial planner or marriage counselor who can help you two sort things out and get on the right track with your money.

Mostly #5: Financially Uncommitted

The two of you lead financially independent lives. That’s not necessarily a bad thing, especially for couples who are not married, though some married couples choose to keep separate finances as well.

However, it’s important to at least talk about money and understand each other’s financial habits and goals, just in case you someday choose get married or merge finances, or face a situation that requires a joint financial decision (such as a home purchase or medical emergency) and can handle it with ease.

“Take the Financial Compatibility Quiz for Couples: How Do You Match Up?” was provided by 

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