It’s that time again, where I take a look at a pair of popular mortgage programs to determine which may better suit certain situations. Today’s match-up: “15-year fixed mortgage vs. 30-year fixed mortgage.” As always, there is no one-size-fits-all solution because everyone is different and may have varying real estate and financial goals. For example, [&hellip
The post 15-Year Fixed vs. 30-Year Fixed: The Pros and Cons first appeared on The Truth About Mortgage.
Weâve had many readers write in after a divorce and ask how to split their assets with an ex-spouse. One of the most common questions is how to remove an ex or another cosigner from a car loan and title. Hereâs how to go about it.
Whatâs the Role of a Cosigner?
It can be challenging to remove a cosigner from a loan. To gain a better understanding of why, letâs look at why a cosigner is used at all. Essentially, a cosigner is needed when the borrowers own credit and/or income isnât enough to qualify for the loan by himself or herself. The cosigner, presumably, has stronger credit and income, and is required by the lender or creditor to help guarantee that the loan will be repaid.
Loans involving a cosigner include a cosigners notice. The notice asks that the cosigner guarantee the debt. This means that if the original borrower fails to make payments on the debt, then the cosigner becomes responsible for the balance. The cosigner then is obligated to make payments until the debt is paid when the borrower canât.
Co-signing a loan is risky for the cosigner, because it can affect the cosignerâs credit if the borrower doesnât satisfy the debt and the cosigner has to take over. The debt can ultimately affect the cosignerâs credit scores and access to revolving credit, such as credit cards.
Before co-signing a loan, a cosigner should be sure that he/she is able to comfortably take on the monthly payments if it comes to that. The cosigner should also make sure he/she doesnât need to get a loan of his/her own over the course of the cosigned loans terms.Â Cosigning on the borrowerâs debt will affect the cosignerâs overall credit utilization and ability to secure other credit opportunities in the meantime.
Now that you know the role of a co-signer letâs look at what you can do to remove them from a car loan if needed.
Refinance the Car Loan to Get the Cosigner Off
You may be able to refinance a car loanÂ in your own name to get your cosigner off the loan. In essence, youâll buy the car from your ex-spouse and go through the car buying process again.
The spouse who is responsible for the car loan payments, the primary signer, should ideally assume credit liability for the loan. Itâs a also good idea to go through this process right away, regardless of what your divorce decree states.
Removing your ex from the carâs title, if the car already paid for, is similar and requires working with the Department of Motor Vehicles (DMV). Youâll both need to sign a change of title/vehicle ownership form and return it for processing. You can check online or call your stateâs DMV for details and forms.
In some states you can file a transfer of title between family members, if the divorce has not been finalized yet. A transfer of title lets you avoid getting any needed inspections or certifications and paying taxes on the vehicle based on the purchase price. (If you live in the state of California, for example, research changing vehicle ownership versus transferring a car title.)
See if You Have a Cosigner Release Option
Some car loans include conditions that remove the cosignerâs obligation after a specified number of on-time payments are made by the primary borrower.
If youâre unsure if this is an option, talk to the lender and check any loan documents you have. The cosigner release option is probably one of the easiest methods of taking a co-signers name off a car loan.
Pay Off the Loan
Another option to get a cosigner off a car loan is to pay off the loan either directly or by selling the car. If you sell the car, you can use the money to pay off the loan. With luck, the sale value of the car will be sufficient to cover the remainder of the loan.
Be aware that if you are the cosigner, and the primary borrower fails to make payments, you can likely seize the asset and sell it.
This article was originally published February 20, 2013, and has since been updated by another author.
This year took so many twists and turns we havenât been able to keep countâ often leaving us in complete overwhelm with a whirlwind of thoughts and emotions. Grief, anxiety, and sheer disappointment are just a handful that comes to mind when we reflect on the endless amount of curveballs life has thrown over the past year. Tragedy and loss plagued the entire world, leaving us speechless day after day. Despite the darkness that loomed for what seems like an eternity there has been an outpour of positives that we canât forget to remember. As 2020 quickly comes to a close, letâs take the time to decompress and reflect on the happier moments we were lucky enough to live through and witness. Even though Thanksgiving may look less traditional than previous years, we still can readily name some things that shift our hearts to a place of gratitude.
Letâs face it â the hustle and bustle of life impact our family and friends more than weâd like to admit. Competing schedules, conflicts, and not making enough time for those that matter are often reasons why we are unable to nurture the people we hold near and dear. Because of restrictions on travel and other entertainment, we were forced to become more creative with our time indoors; in turn, helping us to restore the meaning of family and work-life balance. Quite frankly, it allowed us to hit the pause button on everything that probably was unintentionally too high on the priority list in the past. Our families served as the safety net itâs supposed to be when the weight of the world (and social media) became overbearing with less than desirable news. We utilized technology to a new degree when scheduling virtual happy hours, catch up sessions with our loved ones, and birthday celebrations in other geographic areas. It made us truly appreciate the very thing we took for granted; all the people that make up our family tribe. Â
Curating and developing passions
2020 generated a newfound level of introspection, leaving our minds to really consider what it is that we really cherish the most. Whether it be career-related or new passion projects, this year made room for some much-needed self-reflection, making us reassess where our fulfillment really comes from. Leveraging books, social media outlets, and various streams of consuming knowledge-based information sent us on a path of rediscovery. Remember that âotherâ to-do list thatâs filled with the things you really donât want to do around the house? It even made that list appear fun-filled! Home improvement projects and DIY tasks were done with enjoyment while being budget-friendly. Adulthood can be full of things that arenât as exciting, but mustering up the courage to take ideas from ideation to execution served as a second wind. New business ventures and side hustles were birthed with unmatched creativity, a place many of us havenât been in quite some time. Existing businesses were able to thrive despite the unprecedented events occurring nationally. Funding was also provided to various business owners which granted many small businesses to increase their visibility while positively generating profit.Â
The importance of sustainment
There are a countless number of families that were impacted by job loss and/or unexpected expenses. It doesnât matter if things started off rocky financially â what matters most is youâre still standing. Getting caught up on bills, eliminating some debt and saving are all things to be very proud of. Temporary hardships donât have to turn into permanent problems. Creating a plan of action and sticking to it no matter what arises will always be rewarding. Celebrating the small wins should never be overlooked. Weâve all handled this year in different ways â but whatâs most important is discovering what works for you. Rule of thumb for those that are battling with the ânot enoughâ emotions: donât believe the hype. While there is a multitude of people accomplishing great things, there are also many imposters. Social media is a highlight reel, a virtual platform where people can share whatever information they choose, at their discretion. People are more likely to share their highs versus their lows, so be sure to keep in mind you may only be getting a small piece of the overall story. Donât look at someone elseâs life and fail to recognize what youâve done on your own. Financial progress, no matter how insignificant you may think it is â is still progress. We all make financial missteps and life has a way of making things very difficult that hit us where it really hurts. Keeping your head above water, remaining afloat, maintaining your health, and providing for your family should never be considered a small feat. Grant yourself some grace and reflect on the dedication it took for you to get (and stay) where you currently are.
Back to the basics
This year forced us to really hone in on what matters and prioritize accordingly. This applies to our lives, but most importantly our finances. Pulling back the curtain to really take a look and evaluate where money was going served as a constant reminder that we should be doing this more than the occasional once or twice a year. Itâs never too late (or too early) to create new money habits! Financial stability is essential â and maybe the cushion we imagined should be enough proved itself to be untrue. Our willingness to make changes at a faster rate to ensure the financial security of our families felt less painful and so much more intentional. The uncertainty of everything occurring allowed us to complain less while redefining comfort levels with our contingency plans.
No matter what has transpired this year, what are you most thankful for? As things come to mind be sure to jot them down. Reference them when your days seem laborious or when your feelings try to force you to reflect on things that arenât as positive. Itâs clear we donât know what the future holds, but we do know (and have been reintroduced) to the moments, things, and people that continually keep us hopeful and thankful â no matter what lies ahead.
The post Gratitude in a Difficult Year appeared first on MintLife Blog.
When you make a payment with a credit card not all of that money goes to the merchant. Your payment has to be authorized by multiple companies or banks along the way and some of them will deduct fees for their services. A portion of your payment goes to your card issuerâs bank, the merchantâs bank, the big payment networks such as Visa and Mastercard as well as payment processing companies. Hereâs what you need to know about credit card processing fees.
What Happens When You Make a Credit Card Transaction
Before we break down the individual credit card processing fees, itâs helpful to give a quick rundown of what happens when you make a payment with your credit card.
When you try to make a purchase with your card, whichever credit card processor the merchant uses will need to receive authorization to complete the transaction. To do that, the first step is to send your information and the transaction details to the appropriate payment network, Visa, Mastercard, American Express or Discover.
The payment network then contacts the bank that issues your credit card. Your card issuer has to confirm that you have enough available credit to cover the purchase you are trying to make. If you have enough available credit, it will approve the transaction. If you donât have enough, it will deny the transaction. That approval or denial goes back to the payment network, who sends its approval (or denial) of the transaction back to the merchantâs bank.
This entire process only takes a few seconds but it happens every time you make a purchase with your card. It doesnât matter whether you swipe, insert a card with an EVM chip or manually enter your credit card number.
Average Credit Card Processing Fees Average Credit Card Processing Fees Visa 1.40% â 2.50% Mastercard 1.60% â 2.90% Discover 1.56% â 2.30% American Express 1.60% â 3.00%
The table above lists an an average range for credit card processing fees from each major credit card provider. These ranges are meant only to give you an idea of how it works. There are a number of things that go into the final processing fees for any individual merchant (more on that later). Credit card issuers also are not always transparent with their fees and how they change over time. This is particularly true of Discover and American Express. However, credit card processing fees generally average around 2%. Another key trend is that American Express regularly charges higher fees.
Credit Card Processing Fees: Interchange Fees
An interchange fee is money that merchants pay every time they make a credit or debit card transaction. Itâs typically a percentage of the transaction plus a flat rate for each transaction. For example, an interchange fee might be 1% of the transaction plus a flat fee of $0.25 per transaction.
This fee goes to the credit (or debit) cardâs issuing bank so that it can cover its own fees. In general, a credit card issuer will charge higher fees for cards that offer more perks of benefits. However, the biggest fee that your card issuer has to pay is an assessment fee. This goes to the credit card network (e.g. Visa or Mastercard) and all networks charge the same assessment fee.
Interchange fees make up the majority of credit card processing costs for a merchant. There is a base part of the interchange fee that is non-negotiable because it is the same no matter what credit card companies a merchant works with. There is also a markup fee, which is an additional cost on top of the base fee. The markup goes to credit card processing companies (learn more about them in the next section) and they vary between processors. These fees are negotiable so a merchant should always compare these fees before choosing a company to process their transactions.
Credit Card Processing Fees: Merchant Service Providers
Even though merchants have to contact card-issuing banks to approve every transaction, they do not directly contact those banks. Instead, the transaction goes through a middle man that allows merchants and banks to communicate. This middle man is a merchant service provider (MSP). Common MSPs are Square and Payline.
MSPs charge merchants a certain fee for every transaction, whether itâs a sale, declined transaction or return. They may also charge the merchant a setup fee, a monthly usage fee and a cancellation fee.
Some merchants may have a bank that provides these services, but the majority of merchants have to use a third party MSP.
Online Versus In-Store Transactions
Credit card processing fees are cheaper if you pay in-person versus online. Thatâs because there is a greater risk of fraud with online payments. If you buy something in a store, the merchant has the ability to confirm that someone if using a real card and that they are the cardholder. This is harder to do with an online payment. The result is higher fees as companies try to protect themselves from fraudulent payments.
MSPs also charge additional fees for providing the software that makes an online payment transaction possible for a merchant.
The Bottom Line
It only takes a few seconds for a credit card transaction to go through, but there is a lot going on behind the scenes. Multiple banks and companies help facilitate transactions and they all want their cut of the profit. This is where credit card processing fees come in. A merchant has to pay an interchange fee every time a transaction is made, some of which is non-negotiable and some of which varies depending on the merchant service provider that a merchant uses.
A merchant bears the brunt of credit card processing fees and some merchants cannot afford to pay all the fees. This is a common reason why smaller merchants do not accept credit cards. These fees are also the reason that some merchants will require a minimum transaction amount in order to use a credit card.
Common Credit Card Fees to Avoid
Some credit cards charge an annual fee. This is a fee the cardholder pays each year simply for the privilege of having the card. Annual fees are particularly common for credit cards that offer valuable rewards. Shop around though because you can avoid an annual fee with some of this yearâs best rewards credit card.
If you plan to travel, using your card outside of the U.S. could leave you paying a foreign transaction fee. Luckily, we have some cards with no foreign transaction fee in our list of the best travel credit cards.
One fee that you can avoid with responsible credit card usage is a late payment fee. This is a fee that your card issuer will charge if you do not pay your bill by the due date. You should always pay on time because paying late will not only result in a fee but your credit score could also be negatively impacted.
New Year's resolutions. According to Inc. Magazine, 60% of us make them. But many of us know that when it comes to actually keeping New Year's resolutions, the odds aren't exactly in our favor. Research shows that, despite our best intentions, only 8% of us accomplish those annual goals we set for ourselves.
If you're anything like me, 2020 has left you hungrier than ever for fresh starts and clean slates.
What keeps us coming back every year? Well, as PsychCentral tells us, it’s partly tradition (we are creatures of habit!) and partly the allure of a fresh start, a clean slate. And let’s be honest, if you're anything like me, 2020 has left you hungrier than ever for fresh starts and clean slates.
That fresh start can apply to your professional life just as easily as it applies to dropping a few pounds, quitting your Starbucks habit, or taking up hot yoga. So, let's talk about some strategies to help you set career resolutions and, most importantly, actually keep them.
Goals versus resolutions
Every year I hear people say “My New Year’s resolution is to lose 20 pounds.” But technically speaking, that’s not a resolution, it’s a goal. It’s an outcome that you either do or don’t achieve.
A New Year's resolution is “a promise that you make to yourself to start doing something good or stop doing something bad on the first day of the year” according to the Cambridge English Dictionary.
Two things I love most about resolutions are that I have a chance to win every day, and I have complete control over my success.
A goal might be to achieve a revenue target, land an interview with someone you admire, or strike up a coveted partnership.
A resolution defines the experience you want to have. It’s about the how not the what. When I think of resolutions, I think of habits that will bring out the best version of myself—something like a promise to plan my day the night before so I'm ready to jump in fresh first thing in the morning.
The two things I love most about resolutions are that I have a chance to win every day, and I have complete control over my success.
4 strategies to help you set (and keep!) professional resolutions
1. Reflect on what you’d like to change
Resolutions begin with an honest look at the year closing behind you. For me, 2020 has had some highs, but on balance, it wasn’t my cutest. There’s a lot I’d love to change next year. And my resolutions focus on a few key areas that live within my locus of control.
There is no shame or blame here; there is only space for reflection.
So where am I choosing to focus? For me, there are three distinct experiences I had this year that I plan not to repeat in the one upcoming.
Overwhelm. That not-so-adorable feeling that the world is sitting on my shoulders—that my clients’ success and my kids’ education and my aging parents’ welfare are all relying on me. Can’t do it again next year.
Reacting from a place of fear. Holding my breath, taking on more work than I know I should because what if the economy doesn’t bounce back? Will not repeat this one in ’21.
Loneliness. Hi, I’m Rachel, and I’m an extrovert! (Here's where all you fellow extroverts respond with, "Hi, Rachel!") If travel and face-to-face meetings won’t be an option for a beat, then I’ve got to be intentional about finding ways to bring more connection into my life.
These three experiences put a damper on my 2020. Note there is no shame or blame here; there is only space for reflection.
Be thoughtful about what aspects of the year felt heavy for you and commit to changing your experience next year.
Maybe your experience of 2020 was grounded in anxiety, or you’ve felt job-insecurity, or maybe just boredom. There are no wrong answers, so be thoughtful about what aspects of the year felt heavy for you and commit to changing your experience next year.
2. Project what "better" would look and feel like
Ask yourself: If these are the experiences I don’t want to have again, what would it feel like to be on the other side?
Here’s what I came up with.
Shedding overwhelm would mean having a clear plan of attack each day. Rather than scrambling and juggling, I’d have a set of daily priorities ensuring clients, kids, mental health, and all significant constituents have what they need from me. The most critical things get done each day, and if nothing else gets done, I’ve still won.
Not feeling reactive and fearful? That will mean a shift in mindset from “What if the market doesn’t need what I offer?” to “How am I evolving my products and solutions to meet the changing needs of the market?”
And finally (sigh …) the loneliness. I talked about this in a quick video on my Modern Mentor page on LinkedIn. I miss the energy I take, the creativity I see triggered by moments of collaboration and brainstorming. It’s that very sense of ideas building on ideas that I want to recreate in 2021.
Now it’s your turn. What would your “better” look like in 2021?
If you’re job-insecure, maybe "better" means adding skills or certifications to your resume. If it’s anxiety you're wrestling with, maybe your “better” includes more self-care and relaxation.
The only wrong answers here are the ones that don’t resonate with you. You’re less likely to stick with a resolution that isn’t personally meaningful.
3. Define sustainable practicesthat will move you there
The words “sustainable” and “practices” are key here.
“Lose 20 pounds” doesn’t qualify as a resolution because it’s an outcome you can’t fully control. What you can control are the habits designed to get you there, like eating better or exercising. And if exercising every day feels unsustainable, then shoot for twice a week to start. Make it an easy win for yourself!
I’ll take the three experiences I want to have and translate those into habits and practices I can control.
So how does this translate into the professional realm? I’ll take the three experiences I want to have and translate those into habits and practices I can control. Here’s my working list.
In 2021 I will:
Choose my One Thing
I'll begin each day by identifying the one thing I need to achieve in service of:
My kids (Example: Check my 6th grader’s math homework)
An existing client (Example: Develop slides for next week’s leadership workshop)
My health (Example: Yep, it's a workout!)
My business growth (Example: Pitch an article to a big publication)
Once I get all that done, whatever else I do that day is gravy.
Make weekly client connections
I will schedule one call per week with a past or current client for the sole purpose of listening. I won't be there to sell or help, but just to hear what’s on their minds, and what needs they've anticipated for the near future. This will allow me to be more planful and proactive in designing my offerings.
Set up virtual office hours
I will host bi-weekly office hours. I’ll share a Zoom link with a dozen of my friends and colleagues and invite people to pop in … or not. No agenda, no one in charge, just an open space for sharing ideas, challenges, and even some occasional gossip.
Pay attention to the fact that all of these resolutions are within my control. I’m not waiting for circumstances to change, and I’m not holding myself accountable to an outcome, I'm just committing to doing these things.
4. Track and celebrate
And finally, the fun part. Each resolution gets a page of its own in my Bullet Journal, which means lots of colorful checks and boxes! I keep track of how many days or weeks per month I stick with my resolutions. I set small goals for myself, and I give myself little rewards for hitting milestones. My reward might be an afternoon off, an extra hour of Netflix (do not tell the kids!), or an outdoor, socially distanced coffee with a friend. Celebration is so important. It motivates me to repeat the habit and have a better experience.
So there you have my secrets to setting and keeping my resolutions. I would be so grateful if you’d share yours with me on Twitter, Facebook, or LinkedIn. I’d be delighted to be your accountability buddy!
Numerous programs exist to help veterans and service members who are first-time buyers with their closing costs and other expenses.
Indeed, itâs perfectly possible for those who are eligible for VA home loans to become homeowners with very little â or even nothing â in the way of savings.
Check today's VA rates by completing this quick online form.
Advantages of VA home loans for first-time buyers
The most famous housing benefit associated with the VA loan program is the zero down payment requirement. That can be hugely valuable for first time home buyers.
But itâs just one of a whole range of advantages that come with a VA home loan. Here are some more.
Low mortgage rates for VA loans
According to the Ellie Mae Origination Report, in October 2020, the average rate for a 30-year, fixed-rate mortgage backed by the VA was just 2.75%. That compares with 3.01% for conventional loans (ones not backed by the government) and 3.01% for FHA loans.
So VA home loans have lower rates. And that wasnât just a one-time fluke. VA mortgage rates are lower on average than those for other loans â month after month, year after year.
Lower funding fees for first-time buyers
When you buy a home with a VA loan, you need to pay a funding fee. However, you can choose to pay it on closing or add it to your loan so you pay it down with the rest of your mortgage.
But, as a first-time buyer, you get a lower rate. For you, itâs 2.3% of the loan amount (instead of 3.6% for repeat purchasers) if you make a down payment between zero and 5%.
Thatâs $2,300 for every $100,000 borrowed, which can be wrapped into the loan amount. Itâs a savings of $1,300 per $100,000 versus repeat buyers.
Put down more and your funding fee drops whether or not youâre a first-time buyer. So itâs 1.65% if you put down 5% or more, and 1.4% if you put down 10% or more.
Although it might seem like just another fee, the VA funding fee is well worth the cost since it buys you the significant financial benefits of a VA home loan.
No mortgage insurance for VA loans
Mortgage insurance is what non-VA borrowers usually have to pay if they donât have a 20 percent down payment. Private mortgage insurance typically takes the form of a payment on closing, along with monthly payments going forward.
Thatâs no small benefit since mortgage insurance can represent a significant amount of money. For example, FHA home buyers pay over $130 per month on a $200,000 loan — for years.
Mortgage insurance vs funding fee
Letâs do a side-by-side comparison of the mortgage insurance vs. funding fee costs of a $200,000 loan:
Payable on closing
$133 per month**
Paid after five years (60 months)
*First-time buyer rate with zero down payment: 2.3%. $200,000 x 2.3% = $4,600 ** $200,000 loan x 0.8% annual mortgage insurance = $1,600 per year. Thatâs $8,000 over five years. $1,600 divided by 12 months = $133.33 every month
Itâs clear that mortgage insurance can be a real financial burden â and that the funding fee is a great deal for eligible borrowers.
Better yet, that makes a difference to your buying power. Because, absent mortgage insurance, youâre $133 a month better off. And that means you can afford a higher home purchase price with the same housing expenses.
Ready to buy a home? Start here.
Types of first-time homebuyer programs for VA loans
You may find two main types of assistance as a first-time buyer:
Down payment or closing cost assistance
Mortgage credit certificates
Down payment and closing cost assistance
There are thousands of down payment assistance programs (DAPs) across the United States and that includes at least one in each state. Many states have several.
Each DAP is independent and sets its own rules and offerings. So, unfortunately, we canât say, âYouâre in line to get this â¦â because âthisâ varies so much from program to program.
Some help with closing costs as well and down payments. Some give you a low-interest loan that you pay down in parallel with your main mortgage. Others give âforgivableâ loans that you donât pay back â providing you stay in the home for a set period. And some give outright grants: effectively gifts.
Mortgage credit certificates (MCCs)
The name pretty much says it all. In some states, the housing finance agency or its equivalent issues mortgage credit certificates (MCCs) to homebuyers â especially first-time ones â that let them pay less in federal taxes.
The Federal Deposit Insurance Corporation explains on its website (PDF):
âMCCs are issued directly to qualifying homebuyers who are then entitled to take a nonrefundable federal tax credit equal to a specified percentage of the interest paid on their mortgage loan each year. These tax credits can be taken at the time the borrowers file their tax returns. Alternatively, borrowers can amend their W-4 tax withholding forms from their employer to reduce the amount of federal income tax withheld from their paychecks in order to receive the benefit on a monthly basis.â
In other words, MCCs allow you to pay less federal tax. And that means you can afford a better, more expensive home than the one you could get without them.
Speak with a mortgage specialist today.
Dream Makers program
Unlike most DAPs, the Dream Makers Home Buying Assistance program from the PenFed Foundation is open only to those whoâve provided active duty, reserve, national guard, or veteran service.
You must also be a first-time buyer, although thatâs defined as those who havenât owned their own home within the previous three years. And you may qualify if youâve lost your home to a disaster or a divorce.
But this help isnât intended for the rich. Your income must be equal to or less than 80% of the median for the area in which youâre buying. However, thatâs adjustable according to the size of your household. So if you have a spouse or dependents, you can earn more.
Itâs all a bit complicated. So itâs just as well that PenFed has a lookup tool (on the US Dept. of Housing and Urban Development (HUDâs) website) that lets you discover the income limits and median family income where you want to buy.
What help does the Dream Makers program offer?
Youâll need a mortgage pre-approval or pre-qualification letter from an established lender to proceed. But then you stand to receive funds from the foundation as follows:
âThe amount of the grant is determined by a 2-to-1 match of the borrowerâs contribution to their mortgage in earnest deposit and cash brought at closing with a maximum grant of $5,000. The borrower must contribute a minimum of $500. No cash back can be received by the borrower at closing.â
So supposing you have $2,000 saved. The foundation could add $4,000 (2-to-1 match), giving you $6,000. In many places, that might easily be enough to see you become a homeowner.
You donât have to use that money for a VA loan. You could opt for an FHA or conventional mortgage. But, given the advantages that come with VA loans, why would you?
The Dream Makers program is probably the most famous of those offering assistance to vets and service members. But there are plenty of others, many of which are locally based.
For example, residents of New York should check out that stateâs Homes for Veterans program. That can provide up to $15,000 for those who qualify, whether or not theyâre first-time buyers.
Start your home buying journey here.
State-By-State Home Buyer Assistance Programs
We promised to tell you how to find those thousands of DAPs â and the MCC programs that are available in many states.
It takes a little work to find all the ones that might be able to help you. But you should be able to track them down from the comfort of your own home, online and over the phone.
A good place to start is the HUD local homebuying programs lookup tool. Select the state where you want to buy then select a link and look for âassistance programs.â
Your best starting point is probably the stateâs housing finance office though it might be called something slightly different. You should find details of programs or just a list of counties with phone numbers. Call the number where you want to buy, explain your situation and ask for advice. Itâs their agentsâ jobs to point you to local, state, or national programs that can help you.
If you look in the right place, you could secure some very worthwhile financial help to assist you in buying your first home.
Check today's VA rates by completing this quick online form.
Once you decide to become a homeowner, itâs likely that you will need to take out a mortgage to purchase your new home. While the conclusion that you need a mortgage to finance your home is usually easy to arrive at, deciding which one is right for you can be overwhelming. One of the many decisions a prospective homebuyer must make is choosing between a 15-year versus 30-year mortgage.
From the names alone, itâs hard to tell which one is the better option. Under ideal circumstances, a 15-year mortgage mathematically makes sense as the better option. However, the path to homeownership is often far from ideal (and who are we kidding, under ideal circumstances weâd all have large sums of money to purchase a house in cash). So the better question for homebuyers to ask is which one is best for you?
To help you make the most informed financial decisions, we detail the differences between the 15-year and 30-year mortgage, the pros and cons of each, and options for which one is better based on your financial priorities.
The Difference Between 15-Year Vs. 30-Year Mortgages
The main difference between a 15-year and 30-year mortgage is the amount of time in which you promise to repay your loan, also known as the loan term.
The loan term of a mortgage has the ability to affect other aspects of your mortgage like interest rates and monthly payments. Loan terms come in a variety of lengths such as 10, 15, 20, and 30 years, but weâre discussing the two most common options here.
What Is a 15-Year Mortgage?
A 15-year mortgage is a mortgage thatâs meant to be paid in 15 years. This shorter loan term means that amortization, otherwise known as the gradual repayment of your loan, happens more quickly than other loan terms.
What Is a 30-Year Mortgage?
On the other hand, a 30-year mortgage is repaid in 30 years. This longer loan term means that amortization happens more slowly.
Pros and Cons of a 15-Year Mortgage
The shorter loan term of a 15-year mortgage means more money saved over time, but sacrifices affordability with higher monthly payments.
Lower interest rates (often by a full percentage point!)
Less money paid in interest over time
Higher monthly payments
Less affordability and flexibility
Pros and Cons of a 30-Year Mortgage
As the mortgage term chosen by the majority of American homebuyers, the longer 30-year loan term has the advantage of affordable monthly payments, but comes at the cost of more money paid over time in interest.
Lower monthly payments
More affordable and flexible
Higher interest rates
More money paid in interest over time
â¢ Lower interest rates
â¢ Less money paid in interest over time
â¢ Lower monthly payments
â¢ More affordable and flexible
â¢ Higher monthly payments
â¢ Less affordability and flexibility
â¢ Higher interest rates
â¢ More money paid in interest over time
Which Is Better For You?
Now with what you know about the pros and cons of each loan term, use that knowledge to match your financial priorities with the mortgage that is best for you.
Best to Save Money Over Time: 15-Year Mortgage
The 15-year mortgage may be best for those who wish to spend less on interest, have a generous income, and also have a reliable amount in savings. With a 15-year mortgage, your income would need to be enough to cover higher monthly mortgage payments among other living expenses, and ample savings are important to serve as a buffer in case of emergency.
Best for Monthly Affordability: 30-Year Mortgage
A 30-year mortgage may be best if youâre seeking stable and affordable monthly payments or wish for more flexibility in saving and spending your money over time. The longer loan term may also be the better option if you plan on purchasing property you couldnât normally afford to repay in just 15 years.
Best of Both: 30-Year Mortgage with Extra Payments
Want the best of both worlds? A good option to save on interest and have affordable monthly payments is to opt for a 30-year mortgage but make extra payments. You can still have the goal of paying off your mortgage in 15 or 20 years time on a 30-year mortgage, but this option can be more forgiving if life happens and you donât meet that goal. Before going this route, make sure to ask your lender about any prepayment penalties that may make interest savings from early payments obsolete.
As a prospective homebuyer, itâs important that you set yourself up for financial success. Fine-tuning your personal budget and diligently saving and paying off debtÂ help prepare you to take the next steps toward buying a new home. Doing your research and learning about mortgages also helps you make decisions in your best interest.
When picking a mortgage, always keep in mind what is financially realistic for you. If that means forgoing better savings on interest in the name of affordability, then remember that path still leads to homeownership. Try out these budget templates for your home or monthly expenses to help keep you on a good path to achieving your goals.
Sources: Consumer Financial Protection Bureau
The post 15-Year vs. 30-Year Mortgages: Which is Better? appeared first on MintLife Blog.
Thereâs something weird happening with the real estate markets today. Normally in a recession, demand for rentals goes up while demand for houses goes down. But if thereâs anything 2020 has taught us, itâs that everything is turned on its head right now.
Instead, weâre seeing an interesting trend: despite the ongoing pandemic, home-buying is experiencing higher demand now than they have been since 1999, according to the National Association of Realtorsâ (NAR). If youâve been hoping to buy a home soon, youâre probably already aware of this weird trend, and excited. But is it the same story everywhere? And is a pandemic really the right time to buy?
How the Pandemic is Changing Homeownership
This pandemic is different from any other in history in that many people â especially some of the highest-paid workers â arenât being hit as hard as people who rely on their manual labor for income. This, coupled with an ultra-low mortgage rate environment and a new lifestyle thatâs not fit for a cramped apartment, is creating the perfect storm of high-dollar homebuyers.
âI didnât want to pay someone elseâs mortgage to have three roommates,â says Amy Klegarth, a genomics specialist who recently purchased a home in White Center, a suburb of Seattle where she was formerly renting. âI moved because I could afford to get a house with a large yard here for my goats, Taco and Piper.â
Whether you have goat kids or human kids (or even no kids), youâre not the only one looking for a new home in a roomier locale. According to the NAR report, home sales in suburban areas went up 7% compared to just before the pandemic started. In some markets, itâs not hard to understand why people are moving out.
Where Are People Going?
Apartments are small everywhere, but theyâre not all the same price. For example, homes in cities tend to be 300 square feet smaller than their suburban counterparts. Some of the hottest home-buying markets right now are in areas where nearby rents are already too high, often clustered around tech and finance hubs that attract high-paid workers. After all, if you canât go into the office and all of the normal city attractions are shut down, whatâs the point of paying those high rental costs?
According to a December 2020 Zumper report, the top five most expensive rental markets in the U.S. are San Francisco, New York City, Boston, San Jose, and Oakland. But if youâre ready to buy a home during the pandemic, there are nearby cheaper markets to consider.
If You Rent in San Francisco, San Jose, and Oakland, CA
Alternative home-buying market:San Diego, Sacramento
Average rent: San Francisco, $2,700, San Jose, $2,090; Oakland; $2,000
Average home value (as of writing): San Diego ($675,496) and Sacramento ($370,271)
Estimated mortgage payment with 20% down: San Diego ($2,255) and Sacramento ($1,236)
Big California cities are the quintessential meccas for tech workers, and thatâs often exactly whoâs booking it out of these high-priced areas right now. Gay Cororaton, Director of Housing and Commercial Research for the National Association of Realtors (NAR), offers two suggestions for San Francisco and other similar cities in California.
First, is the San Diego-metro area, which has a lot to offer people who are used to big-city living but donât want the big-city prices. An added bonus: your odds of staying employed as a tech worker might be even higher in this city.
âProfessional tech services jobs make up 18% of the total payroll employment, which is actually a higher fraction than San Jose (15.5%) and San Francisco (9.3%),â says Cororaton.
If youâre willing to go inland, you can find even cheaper prices yet in Sacramento. âTech jobs have been growing, and account for 7% of the workforce,â says Cororaton. âStill not as techie as San Jose, San Francisco, or San Diego, but tech jobs are moving there where housing is more affordable. Itâs also just 2 hours away from Lake Tahoe.â
If You Rent in New York, NY
Alternative home-buying market: New Rochelle, Yonkers, Nassau, Newark, Jersey City
Average rent: $2,470
Average home value (as of writing): New Rochelle ($652,995), Yonkers ($549,387), Nassau ($585,741), Newark ($320,303), or Jersey City ($541,271)
Estimated mortgage payment with 20% down: New Rochelle ($2,180), Yonkers ($1,834), Nassau ($1,955), Newark ($1,069), or Jersey City ($1,807)
Living in New York City, it might seem like you donât have any good options. But the good news is you do â lots of them, in fact. They still might be more expensive than the average home price across the U.S., but these alternative markets are still a lot more affordable than within, say, Manhattan.
New Rochelle and Yonkers
Both New Rochelle and Yonkers are about an hourâs drive from the heart of New York City, says Corcoran. If you ride by train, itâs a half hour. Both New Rochelle and Yonkers have been stepping up their appeal in recent years to attract millennials who canât afford city-living anymore (or donât want to be âhouse poorâ), so youâll be in good company.
âNAR ranked Nassau as one of the top places to work from home in the state of New York because it has already a large population of workers in professional and business services and has good broadband access,â says Cororaton. If you have ideas about moving to Nassau youâll need to move quickly. Home sales are up by 60% this year compared to pre-pandemic times.
Newark or Jersey City
If you donât mind moving to a different state (even if it is a neighbor), you can find even lower real estate prices in New Jersey. This might be a good option if you only need to ride back into the city on occasion because while the PATH train is well-developed, itâs a bit longer of a ride, especially if you live further out in New Jersey.
If You Rent in Boston, MA
Alternative home-buying market: Quincy, Framingham, Worcester
Average rent: $2,150
Average home value (as of writing): Quincy ($517,135), Framingham ($460,584), or Worcester ($284,936)
Estimated mortgage payment with 20% down: Quincy ($1,726), Framingham ($1,538), or Worcester ($951)
Boston is another elite coastal market, but unlike New York, thereâs still plenty of space if you head south or even inland. In particular, Quincy and Framingam still offer plenty of deals for new buyers.
If you like your suburbs a bit more on the urban side, consider Quincy. Although itâs technically outside of the city, itâs also not so isolated that youâll feel like youâre missing out on the best parts of Boston-living. Youâll be in good company too, as there are plenty of other folks living here who want to avoid the high real estate prices within Boston itself.
Framingham is undergoing an active revitalization right now in an effort to attract more people to its community. As such, youâll be welcome in this town thatâs only a 30-minute drive from Boston.
âNow, if you can work from home, consider Worcester,â says Cororaton. âItâs an hour away from Boston which is not too bad if you only have to go to the Boston office, say, twice a week.â Worcester (pronounced âwuh-sterâ) is also a great place for a midday break if you work from home, with over 60 city parks to choose from for a stroll.
Average Rent for 1-Bedroom Apartment
Housing Market Options & Avg. Monthly Mortgage*
San Francisco, CASan Jose, CAOakland, CA
San Diego ($2,255) Sacramento ($1,236)
New York, NY
New Rochelle ($2,180) Yonkers ($1,834)Nassau ($1,955)Newark ($1,069)Jersey City ($1,807)
*Average home mortgage estimates based on a 20% down payment.
Should You Buy a House During a Pandemic?
Thereâs no right or wrong answer here, but itâs a good idea to consider your long-term housing needs versus just whatâll get you through the next few months.
For example, just about everyone would enjoy some more room in their homes to stretch right now. But if youâre the type of person who prefers a night on the town, you might be miserable in a rural area by the time things get back to normal. But if youâve always dreamed of a big vegetable garden or yard for the family dog, now could be the right time to launch those plans.
Another factor to consider is job security. And remember that even if youâre permanently working from home today â and not everyone has this ability â living further from the city could limit your future opportunities if a job requires you to be on-site in the city.
Finally, consider this: most homes in outlying areas werenât built with the pandemic in mind. For example, â… open floor plans were popular, pre-pandemic,â says Cororaton. âIf the home for sale has an open floor plan, youâd have to imagine how to reconfigure the space and do some remodeling to create that work or school area.â
Here are some other things to look for:
Area for homeschooling
Broadband internet access
Proximity to transport routes
Office for working from home
Is It More Affordable to Buy or Rent?
There arenât any hard-and-fast rules when it comes to whether itâs cheaper to rent or buy. Each of these choices has associated costs. To rent, youâll need to pay for your base rent, pet fees and rent, parking permits, deposits, renters insurance, and more. To buy, youâll have an even bigger list, including property taxes, maintenance and upgrades, HOA fees, homeowners insurance, closing costs, higher utility bills, and on.
Each of these factors has the potential to tip the balance in favor of buying or renting. Thatâs why it makes sense to use a buy vs. rent calculator that can track all of these moving targets and estimate which one is better based on your financial situation and the choices available to you.
In general, though, most experts advise keeping your housing costs to below 30 percent of your take-home pay when setting up your budget. The lower, the better â then, youâll have even more money left over to save for retirement, your kidâs college education, and even to pay your mortgage off early.
The post Popular Housing Markets During the Pandemic appeared first on Good Financial CentsÂ®.
Everyone knows that raising kids can put a serious squeeze on your budget. Beyond covering day-to-day living expenses, there are all of those extras to considerâsports, after-school activities, braces, a first car. Oh, and don’t forget about college.
Add caring for elderly parents to the mix, and balancing your financial and family obligations could become even more difficult.
“It can be an emotional and financial roller coaster, being pushed and pulled in multiple directions at the same time,” says financial life planner and author Michael F. Kay.
The “sandwich generation”âwhich describes people that are raising children and taking care of aging parentsâis growing as Baby Boomers continue to age.
According to the Center for Retirement Research at Boston College, 17 percent of adult children serve as caregivers for their parents at some point in their lives. Aside from a time commitment, you may also be committing part of your budget to caregiving expenses like food, medications and doctor’s appointments.
When you’re caught in the caregiving crunch, you might be wondering: How do I take care of my parents and kids without going broke?
The answer lies in how you approach budgeting and saving. These money strategies for the sandwich generation and budgeting tips for the sandwich generation can help you balance your financial and family priorities:
Communicate with parents
Quentara Costa, a certified financial planner and founder of investment advisory service POWWOW, LLC, served as caregiver for her father, who was diagnosed with Alzheimer’s disease, while also managing a career and starting a family. That experience taught her two very important budgeting tips for the sandwich generation.
First, communication is key, and a money strategy for the sandwich generation is to talk with your parents about what they need in terms of care. “It should all start with a frank discussion and plan, preferably prior to any significant health crisis,” Costa says.
Second, run the numbers so you have a realistic understanding of caregiving costs, including how much parents will cover financially and what you can afford to contribute.
17 percent of adult children serve as caregivers for their parents at some point in their lives.
Involve kids in financial discussions
While you’re talking over expectations with your parents, take time to do the same with your kids. Caregiving for your parents may be part of the discussion, but these talks can also be an opportunity for you and your children to talk about your family’s bigger financial picture.
With younger kids, for example, that might involve talking about how an allowance can be earned and used. You could teach kids about money using a savings account and discuss the difference between needs and wants. These lessons can help lay a solid money foundation as they as move into their tween and teen years when discussions might become more complex.
If your teen is on the verge of getting their driver’s license, for example, their expectation might be that you’ll help them buy a car or help with insurance and registration costs. Communicating about who will be contributing to these types of large expenses is a good money strategy for the sandwich generation.
The same goes for college, which can easily be one of the biggest expenses for parents and important when learning how to budget for the sandwich generation. If your budget as a caregiver can’t also accommodate full college tuition, your kids need to know that early on to help with their educational choices.
Talking over expectationsâyours and theirsâcan help you determine which schools are within reach financially, what scholarship or grant options may be available and whether your student is able to contribute to their education costs through work-study or a part-time job.
Consider the impact of caregiving on your income
When thinking about how to budget for the sandwich generation, consider that caring for aging parents can directly affect your earning potential if you have to cut back on the number of hours you work. The impact to your income will be more significant if you are the primary caregiver and not leveraging other care options, such as an in-home nurse, senior care facility or help from another adult child.
Costa says taking time away from work can be difficult if you’re the primary breadwinner or if your family is dual-income dependent. Losing some or all of your income, even temporarily, could make it challenging to meet your everyday expenses.
“Very rarely do I recommend putting caregiving ahead of the client’s own cash reserve and retirement.”
When you’re facing a reduced income, how to budget for the sandwich generation is really about getting clear on needs versus wants. Start with a thorough spending review.
Are there expenses you might be able to reduce or eliminate while you’re providing care? How much do you need to earn each month to maintain your family’s standard of living? Keeping your family’s needs in focus and shaping your budget around them is a money strategy for the sandwich generation that can keep you from overextending yourself financially.
“Protect your capital from poor decisions made from emotions,” financial life planner Kay says. “It’s too easy when you’re stretched beyond reason to make in-the-heat-of-the-moment decisions that ultimately are not in anyone’s best interest.”
Keep saving in sight
One of the most important money strategies for the sandwich generation is continuing to save for short- and long-term financial goals.
“Very rarely do I recommend putting caregiving ahead of the client’s own cash reserve and retirement,” financial planner Costa says. “While the intention to put others before ourselves is noble, you may actually be pulling the next generation backwards due to your lack of self-planning.”
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Making regular contributions to your 401(k), an individual retirement account or an IRA CD should still be a priority. Adding to your emergency savings each monthâeven if you have to reduce the amount you normally save to fit new caregiving expenses into your budgetâcan help prepare you for unexpected expenses or the occasional cash flow shortfall. Contributing to a 529 college savings plan or a Coverdell ESA is a budgeting tip for the sandwich generation that can help you build a cushion for your children once they’re ready for college life.
When you are learning how to budget for the sandwich generation, don’t forget about your children’s savings goals. If there’s something specific they want to save for, help them figure out how much they need to save and a timeline for reaching their goal.
A big part of learning how to budget for the sandwich generation is finding resources you can leverage to help balance your family commitments. In the case of aging parents, there may be state or federal programs that can help with the cost of care.
Remember to also loop in your siblings or other family members when researching budgeting tips for the sandwich generation. If you have siblings or relatives, engage them in an open discussion about what they can contribute, financially or in terms of caregiving assistance, to your parents. Getting them involved and asking them to share some of the load can help you balance caregiving for parents while still making sure that you and your family’s financial outlook remains bright.
The post Budgeting Tips for the Sandwich Generation: How to Care for Kids and Parents appeared first on Discover Bank – Banking Topics Blog.
Mortgage match-ups: “Mortgage rates vs. the stock market.” With all the recent stock market volatility, you may be wondering what effect such events have on mortgage rates. Do mortgage rates go up if stocks go down and vice versa? Or do they move in relative lockstep? Let’s find out! Stocks and Mortgage Rates Follow the [&hellip
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