9 Factors to Consider Before Changing Jobs

Sometimes, the grass really is greener on the other side. Sometimes, it’s just more of the same.

So when it comes to leaving your current job for a new one, how can you tell beforehand if the opportunity is really worth it?

While there’s always going to be risk involved when changing employers, you can make a more confident choice by considering some key factors. Here are the most important variables to take into account before changing jobs.

Work-from-Home Flexibility

As the Covid-19 pandemic has shown, many employees can work from home just as efficiently as they would at the office. While some companies have vowed to continue letting people partially or permanently work from home, others have steadfastly refused to make working from home the new normal.

If you prefer a more flexible schedule because of family commitments, chronic health problems, or any other reasons, work-from-home flexibility should be a high priority.

Health Insurance

Health insurance is one of the most important factors to consider. A company that pays your premiums is essentially giving you hundreds of dollars in benefits every month.

Ask about the health insurance coverage before you accept a new position, specifically how much the monthly premiums will cost. Many small businesses are not required to provide coverage for their employees. If you’re applying to work at a small company, inquire about health insurance early on.

If the company does not provide coverage, you’ll have to buy a policy from the HealthCare Marketplace, where you’ll be 100% responsible for the premiums.

Paid Time Off

Paid time off is another major consideration to take into account before leaving one company for another. If your employer has a generous vacation policy, you may be surprised to find out that other companies are more strict.

Paid time off includes vacation days, sick days, holidays, and parental leave. If you plan to have kids soon, examine your company’s maternity leave policy so you can compare it to prospective employers.

Retirement Contributions and Stock Options

If you currently receive matching 401(k) contributions from your employer, double-check the vesting schedule of your new job. The vesting schedule outlines how quickly you’ll earn 100% of the employer contributions.

Many employers have a graded vesting schedule, which means that every year you will earn a certain percentage of the employer contributions. For example, if your company has a five-year vesting schedule, you’ll pocket 20% of their contributions every year. Once you’ve worked there for five years, you’ll receive 100% of the contributions.

Others use a cliff vesting schedule, which has an all-or-nothing requirement. You have to work there for a certain number of years to be eligible for 100% of the employer’s contributions. If you work less than that, you won’t be eligible for any of it. If you don’t plan to stay at your next job very long, then it’s important to understand the vesting schedule.

Public companies often provide stock options to their employees, which can be worth thousands of dollars in extra benefits. Employees with a stock purchase plan can buy company stock at a discount and resell it later for a profit.

Educational Benefits

If you plan to go back to school, look for a company that provides tuition reimbursement. Many employers will pay for all or part of your tuition, but the benefits vary.

Some will require that your degree applies to your current position, while others will be more lenient. If you don’t want a full degree, you may be able to convince your employer to pay for special courses or certificates that will also boost your resume.

Some companies have begun to offer student loan reimbursement. With these programs, employers contribute to your student loans by either matching payments or providing a set amount each year. Like a 401(k) match, you may have to work there for a certain period of time to qualify.

Room for Advancement

If you’re searching for a firm where you can stay for several years or more, it’s important to consider if there’s room to grow. The bigger the company is, the more likely it is that you can stay there and get promoted to another position. That’s harder to do at smaller companies where room for advancement may be limited.

Company Culture

The general office environment can impact your overall job satisfaction, but it’s a topic often neglected during the interview process. If you’re interviewing in-person, notice how the office looks and how employees are acting.

Do you hear laughter or is it dead quiet? Do they have a diverse staff? Are there fun initiatives, like casual Fridays, or does there seem to be a strict dress code? Depending on what you’re looking for, the answers to questions like these are crucial.

Company Stability

No one wants to get a job only to be laid off months later. Before switching companies, investigate your prospective employer to see if they’re in danger of shuttering or being sold.

Look through recent press clippings, especially from the local newspaper or business journal. If you have friends in the industry, ask if they think the company is stable.

Sometimes you can’t help but take a risk, like if you’re working for a start-up or in a volatile industry. In this case, you should have a sizable emergency fund and keep your resume and LinkedIn profile updated in case you lose your job.

Education and Training

When you’re interviewing at a job, ask if they pay for employee education, like attending industry-wide conferences or local training sessions. It’s valuable to work for a company that cares about employee professional development.

If you don’t expand your breadth of knowledge, then you may find yourself in a tough spot years later when looking for another job, with out-of-date skills.

Use Your Intuition

If you’ve considered all the factors listed above but are still getting a bad vibe about the new job, don’t hesitate to back out. Your gut intuition may be telling you something important about the company that you can’t verbalize clearly.

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Source: mint.intuit.com

How Much of a Down Payment Do You Really Need to Buy a House?

Article originally published August 20th, 2014. Updated October 29th, 2018

Looking to get your foot in the door (of your new home)? If you’re a renter who’s tired of paying someone else’s mortgage, now may be the time to pursue the American dream of homeownership. In fact, the days of needing a 20% down payment are long gone.

While you can always elect to put down the full 20% or more, there are now many alternatives available. Here’s what you want to know if buying a house is in your future.

In the mortgage industry, 20% down is considered the benchmark down payment for looking strong on paper as a home buyer. While this a general standard for financial strength, it is by no means a requirement, nor is it necessarily expected.

However, keep in mind that your purchase offer amount – your buying power — drives negotiation. How strong you are on paper does help, but when you make an offer to buy a home, the seller of the property has no idea of your financial strength other than what your real estate agent tells them and what’s on your pre-approval letter.

The price dictates whether you’re in the game for the house, or whether you’ll continue to be on the search.

So, let’s say you don’t have 20% down for a home. While there are many benefits to having more equity in the home you’re buying, that doesn’t mean you’re out of the running for becoming a homeowner.

There are options for lower down payments.

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An FHA (Federal Housing Administration) loan differs from conventional loans because it does not require a sizable down payment. They are often the best option for first time buyers or borrowers who may still be establishing their credit.

It is also a good choice for borrowers that may have a bankruptcy or foreclosure on their credit file that may hinder their ability to qualify for a traditional mortgage loan.

When you get an FHA loan, you also have to pay a funding fee. This is basically a monthly insurance premium alongside the upfront premium which will add to the overall cost of the mortgage.

Additionally, you should remember that an FHA loan requires that you continue to pay a monthly mortgage insurance premium even when you have accrued equity on the home.

FHA loans were created to help stimulate housing and provide lenders a way they can operate with less of a financial risk.

FHA loans also allow you to get approved for a loan even if you have had some credit hiccups along the way or if you are in need of some additional funding for renovations or repairs.

Qualifying for an FHA loan is much easier than trying to qualify for a conventional mortgage loan. No matter your income level, you can gain access to an FHA loan. You can check with several different lenders to see what their requirements are and there is no minimum income level required to qualify.

However, you should still have a reasonable debt-to-income ratio, so you can show you can afford the monthly payments. Borrowers with lower credit scores or less-than-perfect credit are also likely to get approved for the 3.5% down payment. However, if you can pay a bit more toward the down payment of the home, your score can even be between the 500 and 580 mark, and you could still qualify.

For an FHA loan, the minimum down payment you would need to buy a home is 3.5% down. Most lenders can lend up to $417,000 with the exception of Alaska, Hawaii, and Guam. An FHA loan comes with a monthly mortgage insurance premium, which can make it more expensive than a conventional mortgage.

In some more affluent markets, the higher loan amounts (per county) allow someone with strong income and less cash to still get into the market.

Another popular choice for buyers is using a conventional loan with 5% down. There are loan size amounts up to $417,000 (with the exception of Alaska, Hawaii, and Guam) going as high as $417,000 with as little as 5% down. An alternative to the higher-priced FHA loan, the conventional loan allows for getting rid of the PMI after accumulating 20% equity after a minimum of 24 months.

Two options exist for 0% down financing, one being through the U.S. Department of Veterans Affairs. The program allows a veteran to purchase a house for literally no money down. Yep, the purchase price and loan amount are equal.

The caveat? Actually, there are two: the program is for military veterans only, and the home must pass a clear pest report. This option could be optimal for brand-new construction or for property where any pest damage can be fixed in time for closing.

An alternative to this program is a loan guaranteed by the U.S. Department of Agriculture, USDA. You need not be a veteran for this particular loan; however, in some areas, you may not be eligible to use the program due to tighter and more restrictive qualifying income-to-payment ratios and location.

The program also only works for homes designated rural by USDA. Additional income limitations also apply. For example: For a family of four, a household income cannot exceed $96,400 per year.

All of these options allow for the use of gift funds. Family members are excellent sources to tap for possible down payment or closing costs (usually about 2% of the home price).

Even if you already own a home and are looking to upgrade, all of these programs could present a viable option to bridging the gap between buying a home for the right price in the right area of vs. continuing to be on the search.

Mortgage Tip: If you qualify for a smaller loan size, it could be more challenging to actually close escrow on your first home. Buying power is important, especially when negotiating in competitive markets. Pure and simple, the bigger the loan you qualify for, the more opportunity.

Conventional Conforming Loan — With conventional loans, you can get 95% financing up to $417,000. In counties where the maximum conforming loan limit is higher than $417,000, you can have up to 90% financing. For example: In Sonoma County, California, the maximum high-balance loan limit is $520,950. A loan exceeding $417,000, and up to $520,950, would require a 10% down payment.

 VA Loan – This type of loan allows for 100% financing all the way through the maximum conforming loan limit in the county in which the property is located. In fact, a VA loan can allow for even higher than the maximum conforming loan limit if you do have a down payment.

Here’s how: the buyer would need a 25% down payment only on the amount greater the conforming loan limit. For example, with a $520,950 loan (the maximum loan limit for Sonoma County) with a purchase price of $700,000. The difference is $179,050 – and the buyer would need to put down 25% of that difference — $44,763 – in order to get the additional VA loan financing.

USDA Loan – These loans allow for financing up to $417,000, but here’s the kicker: A buyer would need an income of $95,000 to qualify for a $417,000 loan — which is getting very close to the USDA loan maximum income limitation of $96,400. More importantly, lending qualifying ratios are more stringent for this program than any other.

To qualify for a USDA loan, your proposed house payment before debts cannot be more than 29% of your gross monthly income, and the house payment plus other debts cannot be more than 31% of your gross monthly income.

 FHA Loans – An FHA loan will allow for as low as a 3.5% down payment up to the maximum conforming loan limit in the county in which the property is located.

 Jumbos Loans – These loans usually can go as high as $750,000 with as little as 10% down.

Remember: When you’re putting less than 20% down on a home, your monthly property taxes and fire insurance terms are required to be built into your monthly mortgage payment, and you’ll likely pay private mortgage insurance, too.

Some lenders might offer an alternative option called lender-paid mortgage insurance — where the lender actually pays the monthly PMI, despite not using 20% down to purchase a home. Make sure to do your homework, and talk to your lender, so you know what your options are.

Of course, it’s always important to have your credit in the best shape possible. Before you start your home search, give yourself time to work on your credit so that you can qualify for better rates.

Check your free annual credit reports for errors or any problems that could be hurting your credit scores.

Using free tools on Credit.com can also help you identify problems with your credit that you can work on to raise your scores — and you also get a free credit score updated every 14 days, which can help you track your progress.

Source: credit.com

What Are the Best Alternatives to Payday Loans?

If you’ve ever been strapped for cash and need money quickly, you may have considered taking out a payday loan. Whether you’ve seen a corner store offering loans with no credit checks or an online lender boasting fast funding times, be sure to look before you leap.

mother and daughter

Even though payday loans come with several benefits, there are significant disadvantages to be aware of as well. In fact, it’s even worth considering other options to meet your financial needs. What kind of alternatives are there to payday loans? Keep reading to find out.

What is a payday loan?

Before diving into alternatives, understand what exactly is involved with a payday loan. In short, it’s a small cash advance borrowed for a short period of time. The most common loan terms are two weeks because that’s how long it takes most people to receive their next paycheck.

Payday loans cover short-term needs like paying rent when your budget falls short or when an unexpected expense like a car repair pops up. Perhaps most appealing about them is the fact that there are very few requirements for approval and most lenders don’t run a credit check.

Payday Loan Requirements

Consequently, you can have bad credit — or none at all — and still qualify. You will need to have a checking account in most cases and provide the lender with a check or account number.

On the loan’s due date, the lender then automatically debits the amount you owe, plus whatever fees or interest are included. This helps protect the lender from losing out on money. If you don’t have the money in your account, you have the option to roll it into another term, along with another set of fees.

Payday Loan Debt Cycle

This is where payday loans get tricky. Many people quickly get stuck in a cycle of debt because they can’t pay the original amount owed. On top of that, they keep accumulating expensive fees every time they renew the loan.

What likely started off as a loan to bridge a short-term financial need can quickly snowball into a long-term burden of debt. Be sure to have a solid repayment plan if you decide to take out a payday loan. Even better, consider using an alternative financing method.

Are payday loans bad?

Payday loans are expensive and the way they’re structured can be deceptive. In the United States, each state has different rules about how much interest can be charged on a payday loan. But in most situations, you’ll typically pay somewhere between $10 and $30 for every $100 you borrow.

Usually, this amount needs to be paid back in two weeks. You might be thinking, “$20 isn’t much money to pay in order to get the cash I need to fix my car!” But let’s look at things in a different light.

High Interest Rates

Let’s say you borrow $300 to get your car worked on, and you’re charged $30 ($10 for each $100 borrowed). Your APR is actually more than 260% because the amount of interest you’re paying is extraordinarily high compared to the length of time for repayment and the loan amount.

Think about your credit card with the highest annual percentage rate (APR). No matter how high it is, it’s nowhere near 260%! When you put things into perspective, you can see that they are extremely expensive.

Payday Loan Fees

Plus, that fee only applies to a single two-week repayment period. In actuality, most people are likely to roll over their loan, meaning they can’t repay the money by the original due date. A 2014 study from the Consumer Financial Protection Bureau discovered that a full 80% of payday loan borrowers renewed their loan after 14 days.

That leads to more fees and interest continues to grow each time the loan is renewed, and extremely dangerous (and expensive) cycle to get caught in.

What is the best payday loan alternative?

There are many different alternatives. Some are quick, some take more preparation time, and some require varying degrees of positive credit. But within this list, you’re sure to find something to help avoid getting a payday loan.

Tap Into Your Emergency Savings Fund

The best way to avoid having to take out a loan is to have a savings cushion for emergencies. This might not be an instantaneous solution to your problems, but can be a game-changer in the long run. Start by saving up $1,000 for your emergency fund.

As an exercise in changing your perception of the definition of an emergency, keep the money in a bank account that’s not easy to get to. Then, don’t activate your online account. In order to get the money, you’ll need to make an inconvenient drive, causing you to think twice about whether you truly need it.

Anytime you use some or all of your savings, you should immediately begin repaying yourself. That way, you always have that buffer to hedge against a rainy day.

Once that’s taken care of, next start building an even bigger financial safety net. This should typically amount to three to six months of your expenses. So if you lose your job or have hours cut back, you can still meet all of your financial obligations until your situation gets better.

Take Out a Personal Loan

Online lenders have made it extremely easy to access funds quickly through personal loans. You can even find personal loans for bad credit. Unlike payday loans, these unsecured loans have a longer term with consistent installment payments. They also have more reasonable collateral requirements, renewal limits, and only a single penalty fee for paying late.

Personal installment loans are much more consumer-friendly than payday loans. Plus, they give you a clear path to repayment since you know how much and for how long you’ll be making payments. Payday loans, on the other hand, are likely to catch you in an ongoing cycle of debt.

If you have trouble qualifying for a personal loan on your own, consider adding a co-signer. This allows you to add another person’s credit score and income to the loan application. It can potentially increase your chances of qualifying, and with better terms. Just remember that any late payments and defaults you make on the loan will impact your co-signer’s credit score as well.

Check Out Our Top Picks:

Best Online Personal Loans for 2021

Use a Credit Card

If you have a credit card that isn’t maxed out, consider using it for your financial emergency in lieu of a payday loan. Even if the APR is high, it’s unlikely to be higher than a payday loan, especially if you need more than two weeks to repay it.

If you don’t have a credit card you can use, consider applying for a new one. Online applications make the process fairly quick these days and there are plenty of options for all credit types.

With bad credit, you’ll likely pay higher interest rates, but again, it’s still a better option. In the event your financial need can’t be charged, most credit cards offer a cash advance. The interest rate is higher than normal charges, but you can avoid it altogether by paying the balance before your next billing cycle.

Talk to Your Creditor

When you’re considering a loan to help pay off existing credit card debt, you should first talk directly to the creditor. Explain your issues to them and see if they can help you out.

They may be able to give you a brief reprieve from making payments if your financial hardship is temporary. Or they could consolidate your debt to lengthen the repayment period and lower your monthly payments. You’ll end up paying more interest compared to the original payoff plan. However, you don’t have to worry about the added risk and expense of a payday loan.

Borrow Money from Friends and Family

Assuming you need cash now and can’t wait to save the money, consider asking friends or family. While this might not be the best option for some people, it does help you avoid expensive fees and potential damage to your credit.

Obviously, you want to make sure you can repay the loan on time so that you don’t end up damaging a personal relationship. But if you and your friend or family member are both comfortable with the situation, it can be a low-cost or even free way to make ends meet.

Just be sure to draw up an agreement so that both of your expectations are on the same page. Will you pay interest on top of the amount owed? Does your friend expect the money to be repaid within a certain timeframe? Have a frank discussion so no one is surprised. Be honest with your friend and yourself about how realistic the proposed payment plan actually is.

Look for Community Resources

Many local communities have financial resources available, you just need to ask. Check with your church or other community groups to see if there is any assistance available. You can also check for government resources that are aimed to help people through financial hardships.

The SNAP program (similar to food stamps) and WIC both help to afford groceries each month so you can spend your money on other obligations. You can also search for help from the government’s Low Income Home Energy Assistance Program. They can possibly help you lower your heating and cooling bills throughout the year.

Start a Side Hustle

One way to avoid taking out a loan is to sell some of your things or earn extra money, whether through a second job or side hustle. This idea can also help you put money in your bank account when you’re first getting started.

You probably won’t make millions going through your attic, but even just pulling together a few dollars here and there can help. If you have a marketable service, you can also advertise online and get friends to help spread the word. Alternatively, you can ask for extra hours at work to help fill a short-term financial need.

Contact a Counselor

When you’re not sure how to get control over your finances and your life, it’s time to get help. A consumer counseling agency can help you review your financial situation and explore your options for moving forward.

This is especially helpful if you’re overwhelmed with debt and are having trouble making your payments. Talk to a professional to develop a debt management plan that actually works for you.

Payday Loan Alternatives to Avoid

When exploring alternatives to payday loan, there are a few products worth avoiding. One is a title loan, where you use your vehicle title as collateral for a cash loan. But just imagine the trouble you’d run into if your car ended up being repossessed.

How would you get to work and pay your other bills? This option invites far too many problems. A payday installment loan is a way payday lenders can offer you larger amounts of money. But with soaring interest rates, you can end up paying thousands of dollars beyond the original principal balance.

Bottom Line

Payday loans should only be used as a last resort. Whether you end up getting one or not, it’s smart to come up with a plan to get your finances on track. The first step is to build that emergency fund, whether it requires cutting back spending in certain areas or trying to earn more money.

It’s not easy, especially if you’re already working hard and living paycheck to paycheck. But if you find yourself with few options, it’s vital to come up with a long-term solution to avoid the same situation further down the road.

Source: crediful.com

Ready for Homeownership? 8 Steps to Prepare Your Finances

If you dream of buying a home, you’re facing a huge, expensive decision. Use these steps to prepare your finances, and in the process, discover whether homeownership is the right move for you.

By

Laura Adams, MBA
March 3, 2021

repairing and building credit help you get approved for a mortgage, but it’s a critical way to qualify for a low-rate loan, which saves a massive amount of interest. 

For example, if you have excellent credit and get a $200,000 fixed-rate mortgage, you pay about $145,000 just in interest over the life of a 30-year loan. But if you have average credit, you’ll pay close to $190,000 in interest, or $45,000 more, for the same loan!

Your credit scores get calculated using data in your credit reports, which frequently changes as new information gets added and old data falls off. Check your credit reports and get any errors, such as incorrect account balances, payment dates, or personal information, corrected as quickly as possible. 

You can access your information directly from the national credit bureaus: Equifax, Experian, and TransUnion. There are also many free credit sites, such as AnnualCreditReport.com, Credit Karma, and Credit Sesame.

3. Repair your credit

If you have black marks on your credit, such as late payments or accounts in collections, start making repair efforts at least six months to a year before applying for a mortgage. You can’t remove accurate negative information, which stays on your credit reports for seven years, even if you pay off an overdue balance. However, the older a delinquent account gets, the less it hurts your credit scores.

Before submitting a mortgage application, consider paying off any past due balances or negotiating settlements with creditors. Getting caught up on late payments helps clean up your report, making you look less risky to a lender.

One word of caution is that if you have old past-due accounts, making a payment can restart the statute of limitations, resulting in legal risks. So, if you have a large amount of delinquent debt, consult with an attorney before you speak to your creditors or send a payment. 

Read The Statute of Limitations and 4 Options for Old Debt for more information about dealing with old debts wisely.

4. Check your debt-to-income (DTI) ratio

Before applying for a mortgage, figure your DTI and see what changes you may need to make. Mortgage lenders evaluate a few debt-to-income ratios to know how your expenses stack up against your income. It’s a good indicator of how comfortably you could take on additional debt.

Most home lenders require your future mortgage payment to add up to less than 30% of your income. And for all your debts, including the new mortgage, a typical acceptable ratio is no more than 40%.

Most home lenders require the payment on the mortgage you’re applying for to add up to less than 30% of your income. And for all your debts, including the new mortgage, a typical acceptable ratio is no more than 40%. If you exceed these lending limits, you may need to pay down debt balances. But every lender has different underwriting guidelines, and they may adjust DTI ratios based on your financial situation.

When you’re preparing to buy a home, be sure to pay your bills on time, reduce your debt as much as possible, and avoid applying for new credit accounts, such as a credit card or auto loan. Those actions boost your credit and help lower your DTI.

5. Calculate how much you can afford.

The next step is to consider all the home-buying costs you’ll have to cover. Check out Bankrate’s How Much House Can I Afford? Calculator, which allows you to input your monthly income and estimated home expenses.

In addition to a mortgage payment, here are some additional expenses to keep in mind:

  • Property taxes are owed to the local government and vary depending on where you live. An average amount could be in the range of $3,000 to $4,000 per year.
     
  • Home insurance is required by mortgage lenders to protect the property from various disasters, such as fire, windstorms, and vandalism. The price depends on many factors, including the home’s value, location, and amenities. An average premium could be in the range of $800 to $1,500 per year.
     
  • Private mortgage insurance (PMI) is another requirement when you pay less than a 20% down payment. The premium depends on your home’s value but could add a range of $50 to $150 to your monthly mortgage payment until you have sufficient equity for your lender to cancel it.
     
  • Homeowner association (HOA) fees may be required in some neighborhoods or communities to pay for communal amenities such as a pool, boat dock, or landscaping. The cost could be $50 per month or much more.
     
  • Home maintenance should always be expected. A good rule of thumb is to save at least 1% of your home’s value each year for upkeep. For example, if you have a $300,000 home, budget $3,000 per year to pay for potential repairs such as an HVAC system or a water heater that quits working.

6. Save a healthy down payment

If your goal is to buy a home, you’ve probably been thinking about how to save money for a down payment. To qualify for a mortgage, you must prove to a potential lender that you have enough savings to fund a down payment. 

Since lenders don’t finance 100% of a home’s price, the down payment affects the balance you owe, in addition to the proceeds from a mortgage. The more you can pay, the less risky you are to a lender. And the larger your down payment, the smaller your mortgage and monthly payments will be. 

While a down payment could be in the range of 5% to 20% of a home’s purchase price, you may have additional upfront expenses to pay at the closing table, including:

  • Credit check 
  • Loan origination or underwriting fee 
  • Appraisal
  • Home inspections 
  • Mortgage discount points (which allow you to get a lower interest rate)  
  • Property survey 
  • Title insurance 
  • Deed recording

When you make a purchase offer on a home, one tip is to request that the seller pay some of your closing costs. You can also haggle with your mortgage lender not to charge specific upfront fees. In real estate, just about everything is negotiable, so don’t be shy about asking for concessions. 

If you’re a first-time homebuyer, a veteran, have a low income, or want to buy property in a rural area, it’s possible to qualify for down payment assistance through these programs:

The benefits of down payment assistance programs vary depending on their rules and your circumstances, but they offer low or no down payment, making it much easier to become a homeowner. 

The money for a down payment can come from your savings or gifts from your family. And if you’re already a homeowner, your down payment can come from the money you make when you sell your current home.

Here are some ways to save a down payment quickly:

  • Downsize your housing by moving into a less expensive place so you can save money for your down payment fund. 
  • Automate your savings by having a portion of your paycheck deposited into a dedicated savings account or setting up a recurring monthly transfer.
  • Bundle services to pay less for utilities such as cable, internet, and wireless plans. 
  • Shop your insurance if it’s been a while since you compared prices for auto or renters insurance.
  • Save all extra money such as raises or bonuses at work, gifts, and tax refunds. 
  • Start a side hustle to create additional income to squirrel away for a new home. 

7. Tap retirement accounts cautiously

Another way to come up with a down payment on a home is to tap a retirement account, such as IRA or 401(k). While I don’t recommend this option, some provisions allow it.

Another way to come up with a down payment on a home is to tap a retirement account, such as IRA or 401(k). While I don’t recommend this option, some provisions allow it.

For a traditional IRA, you’re allowed to withdraw up to $10,000 for a down payment if you’re a first-time homebuyer. You must pay taxes on the withdrawal—but even if you’re younger than 59½, you won’t get hit with the 10% early withdrawal penalty.  

If you have a Roth IRA, you can withdraw your original contributions without owing taxes or a penalty, no matter your age. However, tapping the earnings portion of the account before age 59½ means that taxes and the early withdrawal penalty would apply. 

If you have a workplace 401(k) or 403(b), they typically allow “hardship” withdrawals, which include buying or repairing a primary home. However, making a distribution means paying income taxes and a withdrawal penalty if you’re younger than 59½. Plus, you may get restricted from making contributions to your retirement account for six months.

Some workplace retirement accounts allow loans. You may be permitted to borrow half of your vested balance, up to $50,000. You must repay it with interest to your account within five years. However, the term may be longer for a home purchase. If you repay a loan on time, you don’t have to pay income tax or a penalty on the borrowed funds. 

One of the biggest problems with taking a loan from your 401(k) or 403(b) is that if you don’t repay it on time, the outstanding balance becomes an early withdrawal. That means you must pay income tax plus an additional 10% penalty if you’re younger than age 59½.

While taking a loan or withdrawal from a retirement account may make sense for some home buyers, the best scenario is to have plenty of savings, so you don’t need to touch your retirement nest egg in the first place.

If you leave your job or get fired, you’ll probably have to come up with the entire outstanding loan amount within a short period, such as 60 days. So be sure to read your retirement plan document or ask your benefits administrator for all the details on taking a loan before signing up. 

To sum up, if you need to tap a retirement account to buy a home, taking a modest withdrawal from your Roth IRA is the best possible option. However, in general, I don’t recommend draining a retirement account for any reason. It comes with too many downsides, including not being allowed to make new contributions for a period, missing employer matching, being left with a depleted retirement account, giving up the opportunity to build wealth. 

While taking a loan or withdrawal from a retirement account may make sense for some home buyers, the best scenario is to have plenty of savings, so you don’t need to touch your retirement nest egg in the first place. Always speak with a financial adviser to carefully weigh the pros and cons of dipping into your retirement account for any reason. 

8. Get a mortgage preapproval

Once you’ve reviewed your credit, calculated how much you can afford, and have enough of a down payment, it’s time to get pre-approved for a mortgage. You might apply with several potential lenders and compare quotes.

In a preapproval, a lender checks your credit, verifies your income, and approves various documentation. They offer a maximum loan amount and interest rate for a period, such as 30 or 60 days, while you find potential homes.

Remember that just because you qualify for a mortgage doesn’t mean you should take out the maximum amount. It’s a big commitment that has to fit in with your overall financial goals. For some, spending the full amount may be a wise decision. However, if it would leave you “house poor” with an exceptionally tight budget, consider spending less or delaying your home purchase until you’ve saved up a larger down payment.


About the Author

Laura Adams, MBA

Source: quickanddirtytips.com

Business Personal Loans

What You Need to Know before Taking out a Personal Loan

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Did you know the average American is approximately $38,000 in personal debt, with credit card debt being the leading source? With such a large amount of debt, personal loans are becoming more and more popular, especially for credit card debt consolidation. In the last year alone, 34% of Americans took out a personal loan.

Personal loans can be used for a variety of reasons, whether that be for debt consolidation (the most popular reason for taking out a personal loan), medical expenses, home improvements, etc. But how do you know if a personal loan is right for you? Everyone’s financial situation is unique, so you want to make sure you understand personal loans before you determine if a personal loan is the best way to go.
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Here are a few things you should know before taking out a personal loan.

Using Personal Loans for Debt Consolidation Isn’t for Everyone

Although personal loans are a common solution for debt consolidation, that doesn’t mean it’s right for you. Here are a few indicators that debt consolidation through a personal loan is not the best solution and you’d be better off seeking debt counseling or another financial avenue.

Consider these statements and compare current debt costs to the costs of a personal loan to determine if debt consolidation is the best option. Also, note that not all personal loan providers are the best for debt consolidation. Some lenders specialize in debt consolidation, whereas others don’t have good enough offerings to make debt consolidation with their loans worth it.

Personal Loans Can Be Secured or Unsecured Loans

The majority of personal loans are unsecured loans. This means you do not have to offer up any sort of collateral to receive the loan. Types of collateral could include owned property, a house, a car, etc—anything the lender can use to pay back the money owed if you default on the loan.

However, not all personal loans are unsecured, and some lenders offer secured loans that require collateral. For example, if you have little to no credit or a poor credit score, lenders may only offer you a secured loan because your credit report isn’t a good enough indicator that you will pay back the loan. If you don’t mind putting up collateral and you intend to pay back the loan in full, secured loans don’t have to be a bad thing.

You Should Compare APRs before Selecting a Personal Loan Provider

The APR (Annual Percentage Rate) combines the personal loan interest rate and any additional loan fees, and it fluctuates based on the personal loan provider. APRs typically range between 5% and 36%, and this is partly determined by your credit history.

Popular personal loan providers, such as Best Egg and FreedomPlus, are known for low APRs, especially if you have an above average credit score. However, if you have a quality credit score and a loan provider is still requiring a high APR, you might want to consider looking into the best personal loan companies for a better APR. A bad APR could cost you hundreds of unnecessary dollars over the course of the loan.

Getting a Personal Loan Is a Hard Inquiry on Your Credit Score

A hard inquiry is when a lender or creditor pulls your credit for the purpose of offering you a loan. This will ding your credit and decrease your credit score by five to ten points. The hard inquiry will remain on your credit report for up to two years. However, if you pay back your loan on time and take care of your credit in the meantime, your credit score will recover.

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It’s also important to note that you should keep your loan shopping to a minimum. In other words, only apply for personal loans for a span of two weeks to a month at the most. Any longer and you might receive multiple dings on your credit report rather than just one.

Accepting the Max Loan Offer May Not Be the Best Option

Personal loans can range between $2,000 to $50,000, and some lenders, such as SoFi, offer as much as $100,000 loans. With that in mind, you may qualify for a large amount, but that doesn’t necessarily mean you should take the highest offer. Consult your finances and budget before deciding what personal loan amount to accept because if you accept one for more money than you can afford, you will likely regret this down the road.

Check Your Credit before Applying for a Personal Loan

Most personal loan providers require at least a 640 credit score. However, some companies such as FreedomPlus and UpStart, offer loans to 620 credit scores and up. Keep in mind that if you pay your personal loan payments on time and responsibly handle your other credit responsibilities, a personal loan can increase your credit in the long run and immensely help your credit card utilization rate if you choose to use it for debt consolidation.

Before you determine if a personal loan is right for you, make sure to check your credit. You can pull your credit score for free at any time as well as get one free copy of your credit report each year.

Source: credit.com

Business Student Loans

What Happens If You Lie on Your FAFSA?

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Every student getting ready for college is hit with the reality of how expensive higher education can be. It might be tempting to lie on the FAFSA. However, lying on FAFSA can come with serious consequences. You could face criminal charges of fraud, and most of the time, you have to payback any financial aid you received under false pretenses. Find out more about this issue and how you can avoid these problems when you apply for financial aid.

What Is the FAFSA?

FAFSA stands for Free Application for Federal Student Aid. It’s a form that every student attending or planning to attend college can fill out for free to see if they qualify for federal financial aid. The types of financial aid you can receive include Pell grants or other funds you don’t have to payback as well as federally backed student loans.

Whether or not you qualify for aid via this process depends on a number of factors, including household income. This is one of the most common things people lie about on the FAFSA because lower income can mean increased financial aid options.

Even if you don’t qualify for financial aid via the FAFSA, there are other programs that can help your financial situation. These include private student loans, scholarships or other awards to help you pay for college. If you’re planning to leverage private loans, make sure you address other debts to position yourself for the best terms possible.

What Are the Penalties for Lying on the FAFSA?

The Higher Education Act of 1965 allows for penalties of up to five years in prison and a fine of $20,000 if someone is caught lying on the FAFSA. You will also have to payback any financial aid, so the monetary consequences are even greater. In many cases, the FAFSA is based on parental income and information. In this case, it would likely be the parent who ends up facing the consequences unless it’s proven that another party completed the form without that individual’s knowledge.

The cost of college and the seemingly robotic nature of the online FAFSA form are two reasons people are tempted to try to cheat the system. But Mark Kantrowitz says no one should think FAFSA fraud is easy to get away with. “College financial aid administrators are more skilled and experienced at detecting lies than families are at perpetrating them,” he says.

Kantrowitz says there are numerous ways of identifying discrepancies on the FAFSA, and many times the student actually lets the cat out of the bag — either on purpose or by accident. “When a school has credible information about fraud, they are required to investigate it,” he says.

What Happens if Your FAFSA Is Selected for Verification?

Around a third of all FAFSA forms are selected for verification. When this occurs, the college financial aid office requests additional documentation from you. You might also need to complete verification forms. Refusing to provide this information can mean giving up access to financial aid funds.

The verification process often singles out one or more data elements, not the entire form. Some types of information that might be verified include income, taxes, education tax credits, child support, high school completion status or number of members in your household. You can reduce the chances of a verification by importing information from your FAFSA directly from the IRS’s data retrieval tool. Information from this tool that was not modified by you will never require verification.

How Do I Fill Out FAFSA to Get the Most Money?

The best way to fill out the FAFSA is honestly. The questions on the form don’t typically come with answers that could be one or the other, and trying to answer them in a way to get more money could mean you’re lying or fudging the numbers.

Does FAFSA Check Your Bank Accounts?

FAFSA doesn’t check anything, because it’s a form. However, the form does require you to complete some information about your assets, including checking and savings accounts. Whether or not you have a lot of assets can reflect on your ability to pay for college without financial aid. If your FAFSA is picked for verification, you may have to provide documentation proving the amounts you entered for bank accounts was accurate.

Does the FAFSA Affect My Tax Return?

Your FAFSA form does not directly impact your tax return. Your tax return — including whether you filed it and paid your taxes — does impact your ability to complete the FAFSA and receive financial aid.

However, certain types of financial aid may be deemed taxable income. This can include some work-study payments and grants or scholarships that are used to cover living expenses. If your awards are considered taxable income, you must report them on your next tax return form, and they could change the amount of refund you receive.

How Your Credit Plays a Role in Funding College (and Vice Versa)

If you don’t receive enough federal student aid to fund college tuition and can’t foot the bill without a loan, there are private options. Make sure your credit situation is in order before you apply for them.

Consider starting with Credit.com’s services to order your annual credit reports. And once you have student loans, make sure to pay them on a consistent and timely basis to keep them from negatively impacting your credit in the future.

Source: credit.com

Business Student Loans

Can Private Student Loans Garnish Wages?

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The average student loan debt has risen to $31,172, which can be a heavy weight over individuals who are ready to move on and experience life. Ignoring student loan payments for more interesting pursuits may be tempting, but defaulting on your student loans can have disastrous consequences, including wage garnishment.

If you’re one of the many Americans struggling to pay back private student loans, here’s what you need to know about wage garnishment and your options for avoiding it.

The Difference Between Federal and Private Student Loans

Federal student loans and private student loans both help you pay for your higher education, but they have distinct differences. Federal student loans have fixed interest rates, are guaranteed by the government and include a range of protections for borrowers mandated by the Higher Education Act.

Private loans, also known as alternative loans, are issued by banks and other financial institutions without any direct financial backing from the federal government. Because private loans aren’t subsidized by the government, they’re not regulated as closely and often carry higher interest rates and fewer protections for the borrower.

>> Tip: Want to reduce your student loan payments? Compare your options.

Private loans have variable interest rates and require credit checks that may necessitate a cosigner if you don’t have a good credit history. You may not be eligible for the same types of deferment, forbearance, discharge and forgiveness options as you would for federal loans. It’s wise to fully exhaust your federal loan options before looking for private loans.

What Happens If You Default on Private Student Loans

When you default on your private student loans, one of the first things lenders do is report it to the credit reporting agencies. If your loan had a cosigner, this negative mark may also go on their credit reports as well. This negative information stays on your credit reports for seven years, making it difficult for you and your cosigner to get other forms of credit or reasonable interest rates.

Lenders may then send your student loan debt to a collections agency. Debt collectors contact you and any cosigners to attempt to get you to repay your debt. You may receive several phone calls and letters demanding this payment. You might also face hefty collections fees added to your student loan debt, increasing your total balance.

You may also face a lawsuit if the lender has trouble collecting from you and decides to sue. Your cosigner is also on the hook for repayment, so they may also be named in the lawsuit. If the lender wins a judgment, they can pursue a wage garnishment against you and your cosigner.

If you think your student loans have been sent to collections erroneously, review your credit report and consult a professional for assistance.

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Wage Garnishment Explained

Wage garnishments are basically a lender’s last-ditch effort to collect on the debt you owe by going after your paycheck. In most states, creditors must obtain a court order before initiating a wage garnishment, which means they must sue you and win a judgment in a court of law. Although federal student loans offer a nine-month period before your loan goes into default, the U.S. Department of Education can garnish your wages without a court order. Your employer is then required to withhold the amount garnished and forward it to your lender.

Most private student loan creditors must sue you and win a judgment in a court of law before they can initiate wage garnishment.

An administrative wage garnishment for defaulted federal student loans are limited to 15% of your disposable pay. Depending on the state, a wage garnishment for private student loans can be up to 25%. Lenders can also get a court judgment against you or your cosigner to seize assets, including financial levies on bank accounts, and place liens against property owned by either of you.

Can Your Taxes Be Garnished for Private Student Loans?

Your taxes can’t be garnished for private student loans, but tax refund garnishment is possible for federal student loans. However, if you deposit your refund into your bank account, it could be fair game to private lenders, depending on the laws in your state.

Do Private Student Loans Have a Statute of Limitations?

Private student loans do have a statute of limitations, which varies by state. Lenders can’t collect the debt through the court system once it expires. This time limit varies between three and 15 years, but the most common statute of limitation on private student loans is six years after loan default. Federal student loans don’t have a statute of limitations.

Can a Private Student Loan Be Discharged?

You can discharge a private student loan through bankruptcy, but it’s more difficult than other types of debts because of the Bankruptcy Abuse Prevention and Consumer Protection Act. The easiest way to discharge student loans is by proving that paying the loans causes an undue financial hardship. Private student loans that don’t fit the definition of a qualified educational loan could be treated like other types of unsecured debt and won’t require you to prove undue hardship.

How to Stop Loan Garnishment

If you have defaulted on your private student loan payments and your creditor has threatened wage garnishment via lawsuit, you have a few options:

Although there are more protections for borrowers of federal student loans, depending on the terms of your private student loan, you may still have access to similar options to stop a wage garnishment.

Step 1: Demand Proof

Before the garnishment is granted, demand proof that the debt belongs to you and the amount of the debt is correct. If the lender can’t produce the proper paperwork, the lawsuit can’t proceed.

Step 2: Fight the Lawsuit

“There are ways to fight and win these [wage garnishment] lawsuits,” says Heather Jarvis, a public interest lawyer and student loan expert at AskHeatherJarvis.com. “If the lender gets a judgment, they have a specific length of time in which they can enforce the judgment, but most states let lenders renew this time repeatedly.”

With the help of a legal professional, you may be able to argue that the creditor has miscalculated the amount due, charged too much for attorney’s fees or collection costs, charged fees not allowed by law, waited too long to sue you or attempted to collect more than you agreed to pay.

Step 3: Ask for Forbearance

Not all private loan lenders offer forbearance, but it’s possible to temporarily lower your student loan payments by making interest-only payments for an approved length of time. This strategy provides short-term relief, but it also increases the amount you pay back over time, and it’s typically available for only a limited time over the life of the loan.

Step 4: Ask for a Settlement

Settlements are difficult to get for private student loans and usually require a large lump sum. Most private lenders won’t even discuss a settlement until the loan is in default or written off, which means you may deal with a collection agency instead of the original lender. On the plus side, collection agencies often settle for lower amounts than the originating lender. When dealing with a collection agency, you have the same debt collection rights to fight back against abuse and harassment as you would any other debt, even if you’re in default.

Step 5: Consider Refinancing

Refinancing your private student loan once it’s defaulted makes it current again, and it may even lower your monthly payment. However, your credit score takes a hit when you default, so it could be difficult to secure a new loan.

Step 6: Consolidate Your Loans

If you have more than one private student loan, consolidating them can reduce your payments and get you caught up on those in default. Like refinancing, consolidation requires a new loan, which can be difficult with negative marks on your credit reports from defaults.

>> Tip: If you have other debts that are making it difficult to pay off your student loans, consider consolidating that debt.

Step 7: Rehabilitate Your Loan

Rehabilitating your loan requires you to make a specific number of on-time payments to prove your renewed ability and willingness to repay your debt. Borrowers with federal student loans are entitled to a rehabilitation program under federal law, but private lenders aren’t required to offer rehabilitation. The terms of your contract tell you whether this is a viable option.

Step 8: Explore Financial Hardship

If you prove to the judge that the proposed garnishment would create an extreme financial hardship, you might be able to stop private loan garnishment. You must prove this hardship through documentation, including extensive details about your finances.

Step 9: Pay Your Debt in Full

Paying your debt in full is the fastest way to stop your wage garnishment, but it’s not always possible. Defaulting on your private student loan damages your credit, so look for every possible avenue to pay off your loan, such as using your savings or asking relatives for assistance.

Step 10: File bankruptcy

It’s possible to discharge private student loans under the right circumstances. However, filing bankruptcy severely hurts your credit scores, so explore all your other options thoroughly first. If you’ve looked into other possibilities and you’re still considering bankruptcy, consult with a legal professional to discuss your options.

>>Tip: If you decide you need to consider bankruptcy, some of Lexington Law’s attorneys and of-counsels practice bankruptcy law as part of their non-credit repair work. Check out the Firm profiles for your state and see if someone could help you. You will need to call their office to schedule an appointment, as bankruptcy representation is not provided online.

Build Your Credit After Student Loan Default

If private student loan defaults have negatively impacted your credit score, learn how to fix your credit with helpful tips from Credit.com. Start by reviewing our easy-to-understand Credit Report Card that breaks down your credit report information using letter grades and two credit scores updated every 14 days for free.

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Source: credit.com

Business Loans

Best Dental Loans for Bad Credit

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A trip to the dentist often leaves your mouth feeling numb and your pockets significantly lighter. Unfortunately, dental procedures are often extremely expensive. Whether it is a quick filling or a more substantial toothy problem, you might need to come up with hundreds or even thousands of dollars.

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If you do not have dental insurance to cover the cost, then you may be in need of dental financing. Luckily, you have many ways to fund your dental emergency.

We will dive into your many options below.

Dental Financing Options

Dental care is not one size fits all. Likewise, you have a variety of dental financing options to cover your dental procedures and financial situation.

Once you have an idea of what the dental care will cost, you’ll need to determine which option is best for you.

Long Term Installment Loans for Dental Financing

If you need to fund a major dental emergency, then a long term personal loan can be a good option. Personal loans are installment loans that allow you to finance a large amount of cash for your dental bill. You’ll repay the principal and interest of the loan over a set number of months.

Even with bad credit history, there are many lenders that are willing to work with you.

Before you choose a lender, you should shop around and compare rates from several lenders. A slightly lower interest rate can save you a significant amount of money over the course of the loan. It pays to do your research!

Here is a closer look at some of our favorite long-term loan providers.

PersonalLoans.com

PersonalLoans.com can connect you to loans that can be used to fund your dental emergency. Even more expensive procedures are easily covered by their maximum loan amount of $35,000.

The APR for these loans ranges from 5.99% to 35.99%. If you have a bad credit score, then you should expect to pay a higher APR. Personalloans.com offers flexible loan terms which range from 6 to 72 months. You can choose exactly how quickly you’d like to repay the installment loan. If you are able to repay it early, then you will not have to pay a prepayment penalty.

The lenders on PersonalLoans.com are able to fund your loan quickly to help your dental care go smoothly.

Read our full review of PersonalLoans.com

OneMain

OneMain Financial provides loans to borrowers between $1,500 and $25,000. The limits vary by state, so you should contact your local office to see exactly how much you can apply for.

The company offers both secured and unsecured loans. If you are hoping to score a reasonable interest rate with bad credit, then a secured loan might be the better option.

Once you apply, you’ll be offered a loan with an APR ranging from 25.10% to 36% with a term of up to 60 months. Origination fees for these loans range from $25 to $40.

Read our full review of OneMain Financial

Short-Term Loans for Dental Financing

If you have a small dental problem, then a short-term personal loan might be more appropriate. A smaller loan may be able to cover a simple filling or a toothache.

MoneyMutual

MoneyMutual works to match borrowers to short-term loans. Although the company does not provide the loans, it allows you to simplify the loan application process. You’ll be able to apply to multiple lenders at one time. Plus, the company works exclusively with short-term loans so you’ll likely be approved with bad credit.

If you have a minor dental emergency, then receiving between $250 to $2,500 from a lender can help get you through the dental procedure.

Read our full review of MoneyMutual

BadCreditLoans

BadCreditLoans works with a wide range of lending partners. With their wide network, you’ll have a good chance of finding the short-term dental loan that works best for you.

The loan amount is between $500 and $10,000. Loan terms range between 3 and 36 months which should be plenty of time to repay this smaller sum. Most of the loans offered through this network are unsecured which means you may be able to avoid putting down any collateral.

Read our full review of BadCreditLoans.com

CashAdvance.com

CashAdvance.com is another company that works to connect borrowers with lenders. You can apply for a loan directly on CashAdvance.com to gain access to a large network of lenders.

Within minutes, lenders that are willing to work with you will send you the details of their offer. You’ll have the opportunity to choose the best lender for you at that point.

CashAdvance.com lenders provide loans between $100 and $1,000. If you need to cover a minor dental emergency, then this could be the perfect place to find that cash.

Read our full review of CashAdvance.com

NetCredit

NetCredit is a Chicago based company that provides bad credit loans in most states. The company offers unsecured loans between $1,000 and $10,000. However, the loan’s terms and conditions vary greatly by state and will depend on your credit score.

Although the rules in each state vary, you may have the option to choose a short repayment timeline. In a matter of months, you may be able to pay down this debt back quickly.

Read our full review of NetCredit

Medical Credit Cards for Dental Financing

Dental loans are not the only way to fund a dental emergency. You can also use medical credit cards to get your through. However, credit card debt is not something to play around with. Unlike installment loans, credit card debt is more difficult to get rid of. Instead of monthly payments for a set term and manageable interest rates, a credit card balance can quickly get out of control due to high APRs.

If you cannot find another way to fund the loan, then a credit card might be your last resort. Of course, there are still some credit cards that offer more favorable terms to borrowers with bad credit history. We’ve outlined a few good options below.

CareCredit

CareCredit is a medical credit card offered by Synchrony Bank. It specifically designed for healthcare expenses, including dental financing. You can cover a variety of dental procedures using this card. After the procedure, you’ll be able to slowly pay it back over time.

How to Limit the Cost of Dental Care

Although taking out a loan to fund dental work is an option, it will come at a cost. You’ll not only have to pay for the dental procedure itself but also the interest and fees associated with the loan.

Here are a few tips to limit the cost of dental expenses over time.

Ask Your Dentist for a Payment Plan

Some dentists offer in-house financing to their patients. Instead of paying for the entire procedure upfront, you may be asked to pay for it over the course of several months. If you require ongoing treatment such as braces or dental implants, then the cost may be spread over the entire course of the treatment plan.

The benefit of this payment plan is that there is often no interest associated with it. You’ll be more able to budget out a monthly payment than a lump sum. However, you won’t be saddled with the interest that comes along with a traditional loan. It’s a win-win!

Not all dentists have in-house payment plans, but it doesn’t hurt to ask. The worst thing they can say is no.

Take Care of Your Teeth

Brushing and flossing can go a long way when it comes to taking care of your teeth. Preventative maintenance like regular cleanings can also help to reduce the likelihood of problems down the road.

Make it your business to take care of your teeth. The best visit to the dentist is one that does not end in an expensive procedure.

Build an Emergency Fund

An emergency fund is meant to cushion your life against unexpected expenses along the way. At some point, an emergency will happen. Whether it is dental work or a flat tire, life will throw some unexpected expenses your way.

Take action and start saving to prepare for these minor emergencies along the way. Learn how to save $1,000 in 90 days here.

Bottom Line

A dental emergency is not a pleasant experience. If you don’t have the money to fund the procedure then it can feel even more stressful. Take advantage of these resources and find a way to fund your emergency today.

Source: crediful.com

Business Loans Mortgage Real Estate Uncategorized

4 Mistakes Millennials Make When Buying a House

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June 8, 2019 Posted By: growth-rapidly Tag: Buying a house

Many millennials start the home buying process without a real understanding of what it takes be a homeowner.

In fact many of them don’t even know the many upfront costs when buying a house — including coming up with a down payment, moving costs, closing costs, renovating costs, and so many others.

They think that if they have a sizable down payment and a stable job, the hard yards are over. Well, not quite…

Wondering how these mistakes can affect your overall financial plan? Talk to a local financial advisor.

That lack of knowledge can lead them to make costly mistakes, including paying thousands of dollars in loan interests, defaulting on their home loan, or going bankrupt. Here are some of the biggest mistakes millennials make when it comes to buying a house — and what can be done instead.

Check out: 5 Signs You’re Not Ready to Buy a House.

1. Not understanding the importance of a good credit score.

One of the most important things a mortgage lender looks at when deciding to pre-qualify or qualify you for a mortgage loan is your credit score.

Yet, many millennials don’t know the importance of maintaining a good credit score. Lacking that fundamental knowledge could cost them a lot. One is that you will have a hard to get qualified for a loan.

Second, even if a mortgage lender offers you a mortgage loan, you will likely get a high mortgage rate. A high mortgage rate can cost you thousands of dollars in interest – money that you could contribute towards your retirement savings.

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To avoid this mistakes when buying a house, millennials should first figure out their credit scores through a free monitoring service like MyFreeScoreNow. A good credit score is around 730.

Once you have an idea of what your credit score is through your credit report, take steps to improve it. One way to raise your credit score is not to max out your credit limit.

Maxing out your credit cards can hurt your credit score significantly. So keep your credit utilization rate under 30 percent.

Another way to improve your credit score is to pay your bills on time. Payment history accounts for 35% of your overall credit score. So it’s very important to pay your bills promptly.

Check out: How To Raise Your Credit Score to 850.

2. Not understanding how much down payment is enough.

A down payment on a house is the single most important factor when it comes to buying a house. Unless you are so wealthy that you can buy a house with outright cash, you will need to come up with a down payment.

The recommended down payment is 20% of the home purchase price. But many first time home buyers can be qualified for a FHA loan, where the down payment is 3.5%.


Feeling Overwhelmed With Your Finances?, You have options and there are steps you can take yourself. But if you feel you need a bit more guidance, simply speak with a financial advisor. SmartAsset’s free tool matches you with fiduciary advisors in your area in 5 minutes. If you are ready to meet your goals, get started with Smart Asset today.


However, the disadvantage of putting less than 20% is that you will have to pay Private Mortgage Insurance (PMI). A PMI is extra fee added to your monthly mortgage payment.

Another disadvantage is that it will take you longer to pay off your mortgage. And your monthly mortgage payments will be much more.

One way to not have to worry about a PMI is to save for a 20% down payment before starting the home buying process. Saving for a down payment should not be that hard if you have a savings strategy in place.

See: What is a Typical Down Payment on a House?

Taking out a mortgage loan to purchase a house is the most expensive financial decisions you can ever make in your life. So it’s important to have the best mortgage rates possible so you don’t end up paying thousands of dollars in interest over the life of the loan.

Yet, most millennials only speak with one lender when buying a home. That is a big mistake. When you speak with one lender, you don’t know what other mortgage rates are available to you. A good mortgage rate means less interests. So not speaking with multiple lenders is one of the mistakes to avoid when buying a house.

4. Not knowing other upfront costs associated with buying a house

You might think that just because you’ve found a home and you have been approved for a loan, that your hard work is over. Well, not quite. In addition to coming up with a down payment, there are several other upfront costs when buying a house.

There are inspection costs. Before you buy a house, it’s always a good idea to inspect the house for defects. In fact, it is mandatory. Lenders will simply not offer you a loan unless they have seen an inspection report.

There are loan application fees. Some lenders may charge you a fee for applying for a loan. This fee typically covers tings like credit check for your credit score or appraisal.

There are repair costs. Unless your house is perfect from the very first time you occupy it, you will need to do some repair. Depending on the condition of the house, repair or renovating costs can be quite significant.

There are moving costs. Depending on how far you’re moving and/or how much stuff you have, you may be up for some moving costs.

So avoid these mistakes when buying a house, and your home-buying experience should go as smoothly as possible.

10 First Time Home Buyer Mistakes to Avoid

How Much House Can I afford

5 Signs You’re Better Off Renting

7 Signs You’re Ready to Buy a House

How to Save for a House


Not All Mortgage Lenders Are Created Equally

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What Is a Good Interest Rate?

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With interest rates steadily climbing since after the recession of 2007, it’s important to be aware of what is a good interest rate when you’re planning on financing, whether it’s for a car, a home or your education. Take a closer look at what’s happening with interest rates in 2019 below and how you can make sure you’re getting the best rate possible for your situation.

Knowing What Is a Good Interest Rate

Being able to tell what is a good interest rate depends on the type of loan you’re thinking about getting. Here are some of the average, high and low interest rates for the most popular types of loans.

Credit Cards

According to Federal Reserve data, the average rate on all credit cards as of May 2019 was 15.13%, while the average rate charged to cardholders with a balance was 17.14%. But credit card rates can vary widely. According to U.S. News & World Report, average APRs for rewards-style credit cards ranged from 16.8% to 25.24%, as of August 1, 2019.

Lower rates than these are available, but you’ll need great credit to get them. Lowering your interest rates by just a couple of points can be helpful when you’re trying to make a dent in debt. If your current credit card rate seems high, consider transferring the balance to one of your existing cards with a lower rate or a new one with an introductory 0% APR offer. Just watch out for balance transfer fees that can total 2­–4% of the transferred amount.

Auto Loans

According to the Federal Reserve, the average 48-month new car loan rate was 5.35% as of May 2019. The National Association of Federal Credit Unions puts the average 5-year new auto loan rate from banks at 4.86% versus 3.69% through credit unions, as of August 2019. For a 5-year used car loan from a bank, the highest interest rate was 12.75% and the lowest was 2.69%.

Is 4.75% a good interest rate?

For an auto loan, 4.75% is probably a good interest rate. That’s under the current 5-year new auto loan average rate for banks. But if you have excellent credit, you may be able to get even lower if you shop around.

Caroll Lachnit, features editor and consumer advice expert for Edmunds.com, recommends consumers shop for financing before they shop for their car. Otherwise, you could fall victim to the yo-yo financing trap where you “think that you’ve done the deal but then you find out (the dealer) couldn’t do the deal.” So, what is a good interest rate for a car? As of August 2019, anything under 5% is going to be a good auto loan rate, and anything under 4% would be excellent.

If your current rate is higher than this and you have decent credit, you may be able to refinance to a lower rate. Just make sure that by doing so you reduce the interest rate without increasing the remaining term on the loan. Don’t refinance for any longer than the time left on your loan.

Student Loans

Unlike other types of debt, you can’t shop around to find out what is a good interest rate for federal student loans. That’s because these rates are set under the federal Direct Loan program. As of July 2019, the interest rate for direct subsidized and unsubsidized loans at the undergraduate level was 4.53%. Graduate-level unsubsidized loans have an interest rate of 6.08%, and direct PLUS loans have an interest rate of 7.08%.

Is 4.5% a good interest rate?

For undergraduate students, 4.5% is a good interest rate for a federal student loan. However, it may be hard to come by unless federal rates go down. “For new loans, there is only one way to reduce the rate and that’s to sign up for auto debit,” says Mark Kantrowitz, publisher of Finaid.org. In other words, you may be able to get a small reduction in your interest rate if you agree to have your payments automatically deducted from your bank account.

The good news is that your credit score won’t be a factor in determining the rate you pay for a federal student loan. However, “PLUS loans require that you don’t have an adverse credit history (no current delinquency of 90 or more days and other negative items in the last five years),” Kantrowitz explains.

What is a high interest rate for a private loan?

Many students have to look to outside funding to afford college, and private student loan interest rates can vary widely depending on the term and amount. According to the National Association of Federal Credit Unions, bank interest rates for a three-year unsecured loan range from 2.9% to 18.86%, with an average of 9.74%, which means anything over 10% is likely to be considered high.

For these loans, borrowers are clustered into tiers based on credit scores, says Kantrowitz. But you can’t find out the credit score ranges for those tiers in advance because that’s considered competitive data. “You have to apply and get a credit check before they will tell you how much they will charge,” he warns, adding that “the best rates go to about 5% of borrowers, while two-thirds get the worst rates.”

The best strategy is to max out federal loans first and shop around when it comes to private loans. And make sure to apply in a short period of time. “When lenders access your score, it creates an inquiry on your credit report, which can hurt your credit score. But certain types of inquiries are grouped together, so you can have any number of inquiries of a certain type, and they will only count as one, and student loans tend to fall into that category,” says Barry Paperno, former community director for Credit.com. “So, it’s a good idea to do your student loan shopping in a short period of time—ideally within a 14-day period but definitely within a 45-day period.”

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Mortgages

The National Association of Federal Credit Unions lists the average 30-year fixed mortgage rate at 3.937% through credit unions and 4.072% fixed through banks as of August 2019. Mortgage rates will vary depending on lender and loan terms, with average bank interest rates ranging from 2.5% to 8.75% for a 15-year fixed mortgage, for example.

Mortgage rates can be very confusing because so many factors come into play. “First, mortgage rates vary every single day. They fluctuate based upon many factors inside the United States and worldwide,” says Joseph Kelly, president of ArcLoan.com. “Secondly, mortgage rates vary based upon ‘cost.’ On any given day, there are a variety of interest rates available where the borrower may get a lower rate by paying additional cost or higher rates, which can even include a lender credit to the borrower.”

If you’re taking out a 30-year mortgage for $200,000 with $4,000 in closing costs, you might be able to choose between a rate of say 3.5% with closing costs or 3.875% with no closing costs. Kelly explains, “In the case of the 3.5%, the lender is giving the borrower a ‘credit’ for the closing costs. Is it worth paying approximately $4,000 to save an additional $69 per month in this example? That depends on how long you expect to be in the property and what you expect interest rates do in the next few years.”

It’s not always an easy decision. If you’re shopping for a new mortgage loan or to refinance your current loan, be sure to ask about closing costs as well as the interest rate and work with a reputable lender who can explain the differences and walk you through the process.

How to Get the Best Interest Rate

Getting the best interest rate on a loan often comes down to your personal credit history and how much time you have to shop around. Here are four tips to help you get a good interest rate.

1. Check Your Credit

Simply put, your credit score matters for most interest rates. Lenders develop tiers based on credit scores, and those with great scores typically snag the best deals on auto loans, mortgages, credit cards and private student loans. FICO scores above 760 usually get borrowers the best rates, but every lender sets its own standards. You can sign up to get your free credit score and reports at Credit.com.

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2. Watch Out for Fees

While a low rate may be appealing, the savings can easily get eaten up with fees—especially if the difference between two lenders’ rates is less than 1%. James Royal, former vice president and director of marketing for Informa Research Services, Inc., recommends considering the fees just as much as the interest rate.

3. Go for a Fixed Rate

When you can, get a fixed-rate loan rather than one with a variable rate that can change in the future. Interest rates are still trending higher, which makes locking in a low rate now a smart strategy. However, this may not be possible for every loan type. Credit cards, for example, usually offer only variable interest rates.

4. Comparison Shop

For most loans, what is a good interest rate is relative, which is why it’s important to shop around for rates online and with local brick-and-mortar stores. “Do your homework online,” says Royal. “Then talk to your financial institution. A lot of banks are trying to offer incentives in order to change consumer behavior, such as having your mortgage at the same place where you have your checking account,” he explains.

And always make sure to check with your local credit unions in addition to big-name banks. Credit unions are often able to offer better rates or more flexible loan terms and approvals than larger financial institutions.

Source: credit.com