refinancing http://www.wisebread.com/taxonomy/term/12588/all en-US 8 Valuable Rights You Might Lose When You Refinance Student Loans http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-valuable-rights-you-might-lose-when-you-refinance-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_on_money_stack.jpg" alt="House on money stack" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Fannie Mae, the nation's largest buyer and guarantor of mortgage loans, made news recently when it announced it would sweeten the deal for folks who want to refinance their mortgage to pay off student loan debt. Fannie Mae works with 1,800 lenders nationwide, so their rule change affects many homeowners. At the same time, newer financial companies that target millennials have been pushing student loan refinances as a way to save money and simplify life.</p> <p>Fannie Mae's change will make it more affordable for graduates &mdash; or parents &mdash; to use home equity to pay off student loans by waiving the usual extra charge for taking out cash when you refinance a home. With mortgage interest rates still at historic lows, this could indeed be an opportunity for young adults with high-rate student loans to reduce their monthly payments. But proceed with caution.</p> <p>If you have a private student loan, you probably have nothing to lose by converting it into a mortgage, personal loan, or other consolidation loan. But if you have a federal loan, you should be more cautious about making changes. You may not realize you'd be losing these protections and options when you give up your federal student loan.</p> <h2>1. Deferment</h2> <p>If you lose your job or are unable to find a job after graduation, you may qualify for a <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans" target="_blank">deferment</a>, which halts your loan payments until you're in a better position to pay. With certain federal loans, the government will even pay the interest during deferment.</p> <h2>2. Forbearance</h2> <p>Similar to deferment, <a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway" target="_blank">forbearance</a> stops your payment obligation during a period of hardship. But unlike deferment, interest continues to accumulate.</p> <h2>3. Income-driven repayment plans</h2> <p>The government has rolled out a whole range of <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most" target="_blank">flexible payment options</a> in recent years to help federal loan borrowers handle payments. These plans cap your monthly payment at a certain percentage of income (10 percent for the program known as Pay As You Earn and 15 percent for the Income-Contingent Repayment Plan). Another benefit of income-driven repayment plans that you would lose if you refinance: an end date. With PAYE, any balance you still owe after 20 years is forgiven; with ICE, loans are forgiven after 25 years. (See also: <a href="http://www.wisebread.com/the-definitive-guide-to-pay-as-you-earn-a-great-student-loan-repayment-plan?ref=seealso" target="_blank">The Definitive Guide to Pay As You Earn</a>)</p> <h2>4. A second chance if you default</h2> <p>The Federal Loan Rehabilitation Program is a one-time opportunity to get a default removed from your credit report by making a series of on-time payments. This can save you from wrecking your credit and being unable to buy a home later.</p> <h2>5. A central source for tracking loans</h2> <p>If all your student loans are federal, you'll be able to check up on all of them online through the National Student Loan Data System. If you refinance some but not all of your loans, you may end up having to keep track of them using multiple resources.</p> <h2>6. An unsecured loan</h2> <p>If you default on your student loan, you can lose your good credit, but not much else. If you default on your mortgage, you can lose your house. Let that reality sink in before you jump to refinance a home loan to pay off student loan debt.</p> <h2>7. A fixed interest rate</h2> <p>Of course, you could use a fixed-interest mortgage or a fixed-rate personal loan to pay off your federal student loan. But make sure that's what you're getting. If you use a variable rate loan to consolidate your debt, you could get hit with a big payment increase when rates inevitably go up. Federal loans, on the other hand, are guaranteed to be fixed rate.</p> <h2>8. Prepayment penalties</h2> <p>Federal loans don't charge a fee if you pay more than you owe on any given month, but some private lenders do &mdash; check on that before you commit to a refinance.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application">3 Ways Student Loan Debt Can Affect Your Mortgage Application</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway">What Is Student Loan Forbearance, Anyway?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans">Don&#039;t Ignore These 4 Things Before Refinancing Your Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training Real Estate and Housing debt default deferment fannie mae federal loans forbearance interest rates mortgages refinancing repayment plans student loans Thu, 15 Jun 2017 08:30:16 +0000 Carrie Kirby 1963763 at http://www.wisebread.com Should You Ever Consider a Balloon Mortgage? http://www.wisebread.com/should-you-ever-consider-a-balloon-mortgage <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-ever-consider-a-balloon-mortgage" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-641329694.jpg" alt="Person wondering if they should ever consider a balloon mortgage" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Balloon mortgages have some tempting qualities. They come with lower interest rates and, because of this, smaller monthly payments. This can help borrowers get into a pricier home that they might not have been able to afford otherwise.</p> <p>But balloon mortgages come with one huge risk: At the end of a set period, borrowers must pay off the remaining balance on these loans in full (the &quot;balloon&quot;). And these balances can be quite large.</p> <p>So, how exactly do these mortgages work, and who do they work best for? Let's break it down.</p> <h2>How balloon mortgages work</h2> <p>A balloon mortgage comes with two parts. First, there's the standard repayment portion of the mortgage. For a set period of time, usually five to seven years, homeowners make monthly payments just like they would with a standard 30-year or 15-year fixed-rate mortgage.</p> <p>During this period, homeowners' interest rates remain the same. This is a positive because the interest rates on a balloon mortgage tend to be lower than on standard fixed-rate loans or adjustable-rate mortgages.</p> <p>After this period ends, though, the second part kicks in: You'll have to pay the balance of what you owe (the balloon payment). So if, for example, you still owe $130,000 on your mortgage at the end of your five- or seven-year period, you'll have to pay that entire $130,000.</p> <p>Obviously, that's a lot of money. But most people who take out a balloon loan never make that payment out of their own pocket. Instead, they typically plan to refinance or sell their home before the balloon payment comes due.</p> <p>If they sell the home, they can use the proceeds to pay off the loan in full. The same thing happens in a refinance: Once the refinance closes, borrowers pay off the remainder of the balloon and settle into making monthly payments on their new loan.</p> <p>Sadly, unforeseen problems can ruin this plan.</p> <h2>Problems</h2> <p>What if, during the five or seven years after taking out a balloon loan, your FICO credit score falls? Now, lenders might not approve you for a refinance. The same could happen if your monthly income drops after taking out a balloon mortgage. Lenders might worry that you no longer make enough money to afford your monthly payments, and they won't approve you for a mortgage loan.</p> <p>Then there's the question of home value. If the value of your home drops after you take out a balloon mortgage, you'll again struggle to refinance. Most lenders require that you have at least 20 percent equity in your home before they'll approve your request to refinance. If your home's value has fallen, odds are you won't have the equity you need.</p> <p>Even if you are approved for a refinance, consider that interest rates can rise between the start and end of your balloon loan. If they rise significantly, you could be stuck with a much higher monthly mortgage payment.</p> <p>If you can't refinance, you'll face some dismal options, assuming you can't afford the balloon payment on your own. The main option would be selling your home. That may not be an issue if you were planning on selling anyway, but what if you weren't? And what if you can't find a buyer? If your home has fallen in value since you took out your balloon loan, you might be forced to sell your residence for less than what you owe on your mortgage. If that happens, you still won't have enough money to pay off the balloon.</p> <p>If you can&rsquo;t make that balloon payment, either from your savings, refinancing, or selling, your lender can begin foreclosure proceedings. You could end up losing your home and watching your FICO credit score fall by 150 points or more.</p> <h2>What should you do if you can't pay the balloon?</h2> <p>If you can&rsquo;t afford that balloon payment and you can&rsquo;t refinance or sell, your best bet is to call your mortgage lender immediately. They might be willing to work with you. Maybe your lender will shift your balloon loan to an adjustable-rate or fixed-rate loan, or even extend the term of your balloon loan, giving you more years to either sell, qualify for a refinance, or save up enough to make the payment.</p> <h2>Is it ever a good idea to take out a balloon mortgage?</h2> <p>Given the risks, the short answer is: Maybe.</p> <p>If you absolutely know that you will sell your home before that balloon payment comes due, this kind of mortgage can work. You&rsquo;ll get the benefit of homeownership at a lower interest rate and lower monthly mortgage payment. The lower payments might even give you the opportunity to live in a home that you otherwise wouldn&rsquo;t have been able to afford. Then, you can sell, pay off the balloon, and move on.</p> <p>It's difficult to call a balloon mortgage worthwhile otherwise. There are positives to this type of home loan, but they can easily be outweighed by the risks.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/should-you-ever-consider-a-balloon-mortgage">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-equity-in-your-home">How to Build Equity in Your Home</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-biggest-regrets-of-new-homeowners">8 Biggest Regrets of New Homeowners</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-a-refinance-is-the-wrong-move">3 Times a Refinance Is the Wrong Move</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-times-buying-a-home-with-cash-is-bad-for-your-budget">5 Times Buying a Home With Cash Is Bad for Your Budget</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-questions-to-ask-before-leaving-your-house-to-your-kids">4 Questions to Ask Before Leaving Your House to Your Kids</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing balloon mortgage buying a home homeownership loans payments refinancing Tue, 16 May 2017 08:30:14 +0000 Dan Rafter 1943631 at http://www.wisebread.com 6 Money Moves to Make If Your Net Worth Is Negative http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-money-moves-to-make-if-your-net-worth-is-negative" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-546177782.jpg" alt="Woman making money moves when her net worth is negative" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the most illustrative financial figures to know is your total net worth. This is the value of all of your cash and assets, minus your debts. For many people, that figure is below zero.</p> <p>Building a high net worth should be the ultimate goal of anyone seeking financial freedom. If your net worth is less than zero, consider making these moves ASAP. (See also: <a href="http://www.wisebread.com/10-ways-to-increase-your-net-worth-this-year?ref=seealso" target="_blank">10 Ways to Increase Your Net Worth This Year</a>)</p> <h2>1. Reduce your spending</h2> <p>One of the most direct ways to end up with a negative net worth is to spend more than you earn. Cutting unnecessary expenditures is the first step in having a net positive income each month. This can mean some tough choices, like eliminating cable, eating out, and your annual vacation. It may also require more extreme measures, like getting by without a car.</p> <p>You can help yourself by tracking your spending meticulously in a budget so you know where money is going each month. Even if you think you are already living frugally, there's a chance you can find savings just by taking a closer look.</p> <h2>2. Pay off your high-interest debt</h2> <p>If your net worth is negative, it may be partially due to <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=internal" target="_blank">high interest credit card debt</a> and other loans. Interest can quickly pile up and eventually overwhelm your earnings, putting you in negative net worth territory. Tackling debt starting with the highest interest rate first is called the avalanche method, and this can save you a lot of money on interest payments in the long run. Sometimes, even paying off just one credit card can make a huge difference in your financial situation. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <h2>3. Bring in more income</h2> <p>If you're crumbling under a mountain of debt and you don't have enough income to pay off the debt, you must find a way to bring in more money. Start by searching for higher paying jobs or <a href="http://www.wisebread.com/5-times-you-should-demand-a-raise?ref=internal" target="_blank">asking for a raise</a> from your current employer. Consider starting a side hustle, small business, or taking an additional part-time job. It may also be worth exploring income-producing investments, such as dividend stocks or peer-to-peer lending. If you have a maniacal focus on earning more money, you will help yourself move from negative to positive in the net worth department.</p> <h2>4. Invest</h2> <p>Arguably the most important way to build net worth is through investing. If you are able to put even a small amount of your earnings into stocks or index funds that grow, you'll give your financial picture a boost over time. Obviously, investing in the stock market carries risks. But U.S. stocks have consistently risen in value over time, with long-term growth eventually surpassing losses during market crashes. The more you can invest, the better off you'll be, especially if you stay in the market for many years. You won't get rich overnight, but your overall net worth will eventually rise.</p> <h2>5. Set a financial goal</h2> <p>If you had enough money, what would you ultimately want to do with it? Would you want to buy a home? Start a family? Build a hefty retirement account? To increase your net worth, it helps to have a goal to motivate you to save. Ideally, your financial goal should be geared toward building a high net worth, not a one-time purchase like a car. Whether it's a down payment for a home, a comfortable retirement, or saving for college, your dreams can help keep you accountable.</p> <h2>6. Refinance your mortgage</h2> <p>Homeownership can be a great way to build net worth, but it can also be a drain on your finances if you have the wrong kind of mortgage. If your loan term is very long, or if you have a high-interest or interest-only loan, you may not be paying much toward the principal of the loan (or building any equity) for a while. And that could be a serious problem if you're having trouble making payments.</p> <p>If you find yourself in this situation, you may want to consider refinancing to a shorter term or lower interest rate. There's no sin in borrowing to buy a home, but ideally, homeowners should seek a fixed-rate mortgage with a relatively short loan term: 30 years is standard, but a 15-year mortgage offers you the ability to build equity &mdash; and thus your net worth &mdash; at a faster pace. Just be sure you can comfortably make the monthly payments.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-your-emotions-costing-you-money-take-this-quiz">Are Your Emotions Costing You Money? Take This Quiz</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire">12 Money Moves to Make the Moment You Decide to Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-easy-ways-to-wake-up-richer-tomorrow-than-you-are-today">12 Easy Ways to Wake Up Richer Tomorrow Than You Are Today</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-rules-you-should-be-breaking">15 Personal Finance Rules You Should Be Breaking</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management assets goals investing mortgages net worth refinancing saving spending stocks Wed, 10 May 2017 08:00:08 +0000 Tim Lemke 1941242 at http://www.wisebread.com 4 Smart Ways to Lower Your Monthly Mortgage Payment http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-smart-ways-to-lower-your-monthly-mortgage-payment" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-164113230.jpg" alt="Learning ways to lower your monthly mortgage payment" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you struggle each month to make your mortgage payment, you're not alone. Financial challenges &mdash; such as a job loss, drop in household income, or major medical bills &mdash; could make paying a mortgage that was once affordable a financial burden. The Federal Reserve Board reported that in the fourth quarter of 2016, 4.15 percent of residential mortgages in the United States were delinquent. (See also: <a href="http://www.wisebread.com/8-signs-youre-paying-too-much-for-your-mortgage?ref=seealso" target="_blank">8 Signs You're Paying Too Much for Your Mortgage</a>)</p> <p>There is hope, though, if you are struggling to make your monthly mortgage payment. There are several steps you can take to lower the size of that payment.</p> <h2>Lengthen your loan's term</h2> <p>The more years attached to your mortgage, the lower your monthly payment will be. With a longer term, your loan payments are stretched out over more years, making each monthly payment smaller.</p> <p>Consider this example: If you take out a $200,000 15-year, fixed-rate loan with an interest rate of 3.4 percent, your monthly payment, not including your taxes and homeowners insurance, will be about $1,400 a month. Say you take out that same $200,000 mortgage loan but in the form of a 30-year, fixed-rate loan with an interest rate of 4.2 percent. Your monthly payment, again not including taxes and insurance, will be just $978.</p> <p>If you are struggling to make the monthly payments on a shorter-term loan, contact your lender and ask to have your loan reamortized to one with a longer term. You won't need to go through an official refinance to do this. But lenders will charge you a fee, one that LendingTree says averages about $250.</p> <p>Just remember, when you change your mortgage to one with a longer term, you'll pay significantly more in interest. This extra interest &mdash; which could hit $100,000 or more if you take the full term to pay off your mortgage &mdash; might be an acceptable cost if it helps you avoid falling behind on your mortgage payments and possibly foreclosing.</p> <h2>Refinance to a lower interest rate</h2> <p>The most common way to lower your monthly payment is to refinance your existing loan into one with a lower interest rate.</p> <p>Say you originally took out a 30-year, fixed-rate mortgage of $180,000 at an interest rate of 5 percent. Your monthly payment, not counting taxes or insurance, would be about $966. Now say you owe $160,000 on that loan and you refinance that amount into a 30-year, fixed-rate mortgage loan with an interest rate of 4.2 percent. That payment would now fall to about $782 a month, a savings of about $184 a month.</p> <p>There is one big negative that comes with refinancing: You'll have to pay fees to do it. You can expect to pay about 1.5 percent of the amount you are refinancing in closing costs. For a loan of $180,000, that comes out to $2,700 in closing costs.</p> <h2>Get rid of PMI</h2> <p>No homeowner enjoys paying for <a href="http://www.wisebread.com/what-is-private-mortgage-insurance-anyway?ref=internal" target="_blank">private mortgage insurance</a>. This insurance, better known as PMI, protects the lender if you fail to pay your mortgage. Generally, it costs from 0.5 percent to 1 percent of your loan amount each year. So on a mortgage of $200,000, PMI can cost as much $2,000 a year, or about $166 a month.</p> <p>You only have to pay PMI if you came up with a down payment of less than 20 percent of your home's purchase price when buying it. If you are paying PMI, you might be able to get rid of this expense, which would lower your monthly mortgage payment. You can request that your lender remove PMI once you have built at least 20 percent equity in your home. If you request this, your lender will send an appraiser to your home to determine its current market value. It will then calculate your equity to determine if you've hit that important 20 percent mark.</p> <h2>Reassess your property taxes</h2> <p>If you are like the majority of homeowners, a portion of every payment you send to your lender includes money used to pay off your property taxes. This is known as an escrow arrangement.</p> <p>Under such an arrangement, your lender estimates how much money you'll need each year to pay your property taxes. If your lender estimates that your taxes will be $6,000 this year, it will add $500 to your monthly mortgage payment. It will then deposit that $500 into an escrow account. When your taxes are due, it will dip into this account to pay them on your behalf.</p> <p>You might be able to reduce your monthly mortgage payment by requesting a reassessment with your county tax assessor's office or tax collector's office. If your taxes are reassessed and they drop, your monthly mortgage payment will fall, too.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-really-need-a-20-percent-down-payment-for-a-house">Do You Really Need a 20 Percent Down Payment for a House?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/yes-you-need-home-title-insurance-heres-why">Yes, You Need Home Title Insurance — Here&#039;s Why</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-qualify-for-a-mortgage-with-a-small-downpayment">5 Ways to Qualify for a Mortgage With a Small Downpayment</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-homebuying-questions-youre-embarrassed-to-ask">5 Homebuying Questions You&#039;re Embarrassed to Ask</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing escrow loan terms monthly payments mortgages overpaying paying too much pmi property taxes refinancing Thu, 20 Apr 2017 08:00:07 +0000 Dan Rafter 1928277 at http://www.wisebread.com What to Do If You Have a Tax Lien On Your House http://www.wisebread.com/what-to-do-if-you-have-a-tax-lien-on-your-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-you-have-a-tax-lien-on-your-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-523154492_0.jpg" alt="Woman learning what to do with a tax lien on her house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The government doesn't play around with taxpayers who skip out on what they owe. When you ignore your federal, state, or property tax bills &mdash; and you don't make any attempts to pay the balance &mdash; the government can place a tax lien on your house.</p> <p>A tax lien is a legal claim on property for failure to pay taxes owed. It gives the tax authority (also known as the lienholder) first rights to your property over other creditors.</p> <p>A lien differs from a levy in that the government doesn't seize your house or other property. Keep in mind that a lien can become a levy at some point if you never pay your taxes or never make arrangements to satisfy the debt. The tax authority decides when to impose a levy. You'll receive written notice of the levy at least 30 days before it takes place.</p> <p>A lien is a serious matter because it can negatively affect your credit. Unpaid tax liens can remain on credit reports indefinitely, whereas paid tax liens can remain for up to seven years from the date filed.</p> <p>Of course, the best way to handle a tax lien is to avoid one in the first place. But if the damage is done, here's how to put this ugly mark behind you.</p> <h2>1. Dispute a filing error</h2> <p>It's not uncommon for mistakes to appear on credit reports. In fact, according to recent data from the Consumer Finance Protection Bureau, 76 percent of the 185,700 credit-reporting complaints they've received since 2011 are related to errors &mdash; including state or federal tax liens that mistakenly appeared on credit reports.</p> <p>If you check your credit report and find a lien reported in error, don't ignore this mistake. This can lower your credit score. Contact the IRS or your state tax office to file a dispute. If a review of your account proves that you don't owe the debt, the government withdraws the tax lien (as if it never happened). A withdrawal also removes the lien from your credit report.</p> <p>Thankfully, the number of tax liens reported in error should be dropping. In response to criticisms by the CFPB, the top consumer reporting agencies &mdash; Experian, Equifax, and TransUnion &mdash; issued a new provision. As of July 1, 2017, tax lien and civil judgment data will <a href="http://www.nasdaq.com/article/clearing-misconceptions-about-new-consumer-data-laws-cm772651" target="_blank">only be included on credit reports</a> if they contain three pieces of information: the person's name, address, and Social Security number or date of birth. This information must be current according to court records as of the last 90 days.</p> <p>The association representing the credit bureaus expects half of the consumers with tax liens on their credit reports will see them removed.</p> <h2>2. Pay your tax bill in full</h2> <p>Parting with your hard-earned money isn't easy, but paying your tax bill in full is one of the fastest ways to get the government off your back and move on with your life.</p> <p>Typically, the government releases tax liens within 30 days of full payment of an outstanding debt (including penalties and interest). A release removes the lien from the property.</p> <p>Unfortunately, paid tax liens can still remain on your credit report for up to seven years. However, under the IRS's Fresh Start Program, after paying your balance in full, you can submit a request to have a federal tax lien withdrawn from your credit report before the seven-year mark. Some states also give taxpayers the option of requesting an early withdrawal of a state tax lien from their credit report once they've paid their debt in full.</p> <h2>3. Set up an installment plan</h2> <p>If you can't pay what you owe in full, set up an installment plan with the government. This lets you pay off your tax debt over time. The tax authority releases the lien once you've set up a payment plan.</p> <p>In the case of federal debt, the IRS allows individual taxpayers to set up monthly direct debit payments on debt amounts up to $50,000 for up to six years. Go to IRS.gov and apply for installment payments through the online payment system. If you owe more than $50,000, or require longer repayment terms, request installment payments by completing and mailing Collection Information Statement Form 433-A or Form 433-F.</p> <p>Taxpayers who owe less than $25,000 and who've made at least three consecutive direct debit installment payments also can request to have the lien withdrawn from their credit report. However, defaulting on an installment agreement can trigger a new tax lien.</p> <p>Some states also allow installment plans to repay a tax debt, though the criteria for these plans varies by state.</p> <h2>4. Sell the property</h2> <p>If you don't have money to pay an outstanding tax debt in full, and you can't afford an installment plan, another option is selling the property and satisfying the debt with proceeds from the sale. However, this method only works if the sale price is high enough to pay off the lien and any existing mortgages on the property. If the sale won't generate enough proceeds to pay off attached liens, you can't sell the property. If you're able to sell the home, the company handling your escrow account forwards payment to the lienholder after closing.</p> <p>Keep in mind that you'll need to contact the lienholder before closing to request a lien release. In the case of federal taxes, this involves requesting a Certificate of Discharge from the IRS. If the request is approved, this document releases (or removes) the lien from the asset being sold (though it stays in place in every other way), and allows the property to transfer to the new owner lien-free.</p> <h2>5. Refinance the property</h2> <p>Then again, maybe you don't want to sell your home. There's also the option of refinancing and borrowing cash from your home equity to satisfy a state or federal tax lien on the property. Since refinancing replaces an existing mortgage with a new loan, mortgage lenders will not approve your loan application unless they have first lien position on the title. This puts the lender in priority position to benefit from liquidation if the property goes into default. For this to happen, you'll have to request a lien subordination from the IRS or your state tax office before applying for the loan.</p> <p>Subordination doesn't eliminate a tax lien &mdash; rather, the lien becomes secondary to a lender's lien on the property. And with the lender's security interest first, you're more likely to acquire a new mortgage.</p> <p>Be aware that your ability to refinance depends on how the tax lien impacted your credit. A tax lien will reduce your credit score, and to refinance, you'll have to meet a lender's income and credit score requirements. You need a minimum credit score of 620 for a conventional loan and a minimum credit score between 500 and 580 for an FHA loan.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/what-to-do-if-you-have-a-tax-lien-on-your-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-happens-if-you-dont-pay-your-taxes">Here&#039;s What Happens If You Don&#039;t Pay Your Taxes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Top Three Tax Facts to Know for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easy-way-to-do-your-taxes-without-paying-someone-else">The Easy Way to Do Your Taxes (Without Paying Someone Else)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-money-moves-to-make-the-moment-your-credit-cards-are-paid-off">9 Money Moves to Make the Moment Your Credit Cards Are Paid Off</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-your-money-sooner-by-starting-2016-tax-prep-now">Get Your Money Sooner by Starting 2016 Tax Prep Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Taxes credit report credit score federal filing errors government IRS payment plans property refinancing state tax bills tax liens taxpayers Mon, 17 Apr 2017 08:30:08 +0000 Mikey Rox 1928274 at http://www.wisebread.com Why Your Credit Score Matters in Retirement http://www.wisebread.com/why-your-credit-score-matters-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-your-credit-score-matters-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_car_108348263.jpg" alt="Couple learning why credit score matters in retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've left the working world and are ready to enjoy your retirement years. So, you might be forgiven for thinking that your days of fretting over your FICO credit score are over.</p> <p>Guess what? They're not. Your three-digit credit score matters even in your retirement.</p> <p>Lenders of all kinds, not to mention credit card providers, rely on your FICO credit score to determine how well you've managed your credit in the past. Having a low score can hurt you financially, even after you've left the days of commuting to work behind you.</p> <h2>Why Scores Matter</h2> <p>Your FICO credit score &mdash; you have three, one each maintained by the credit bureaus of Experian, Equifax, and TransUnion &mdash; is a key number throughout your adult life. Lenders rely on these scores to determine if you can qualify for loans. And if your score is low, even if you do qualify, you'll pay higher interest rates.</p> <p>Generally, lenders consider a FICO credit score of 740 or higher to be an excellent one. Scores under 640 are generally considered weak by lenders, and will leave you with higher interest rates on the money you borrow.</p> <p>As you make your way through adulthood, lenders will check your scores as you apply for auto loans, mortgages, or credit cards.</p> <p>When you retire, the odds are high that you will no longer be applying for mortgage loans. However, this doesn't mean that credit scores will no longer play a key role in your financial life.</p> <h2>The Best Credit Cards</h2> <p>If you want to <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit?ref=internal" target="_blank">qualify for the best credit cards</a>, including ones with the <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">most generous rewards programs</a>, you'll need a high FICO score. Financial institutions only pass out their best credit cards to those customers who've proven that they have a history of paying their bills on time.</p> <p>Having a high credit score is how you'll prove to banks that you are financially responsible. And if you want to qualify for the best credit scores during your retirement, you'll take steps to make sure that your credit score is strong in your 60s, 70s, 80s, and beyond.</p> <h2>A New Car</h2> <p>Maybe you plan to buy that dream car after retirement. If you can't pay for it in cash, you'll need an auto loan. And if you want to qualify for an auto loan with the lowest possible interest rate, you'll need a strong FICO credit score.</p> <p>Auto lenders will check your credit score when you apply for financing. So make sure that your score doesn't take a dip after retirement.</p> <h2>Auto Insurance Rates</h2> <p>If you buy a new car, you'll need auto insurance, too. Guess what? Auto insurers rely on a variation of your credit score to help set their rates. Again, you'll want the highest possible credit score if you expect to qualify for the most affordable auto insurance.</p> <p>Auto insurers use something called a credit-based insurance score to set rates. If this score is strong &mdash; and your driving history is good &mdash; you'll usually qualify for lower insurance rates. Your credit-based insurance score doesn't factor in your job or income. But it will rise if you pay bills such as your credit card payments and mortgage on time every month. It will fall if you miss payments, make payments 30 days or more late, have too much debt, or have accounts that have been sent to collections.</p> <h2>Refinancing to a Lower Monthly Payment</h2> <p>The goal is to enter retirement without having a monthly mortgage payment. That doesn't always happen, though. And if you are still paying off a mortgage loan when you enter your after-work years, you might want to someday refinance that home loan to one with a lower interest rate. Lowering your rate will give you a lower monthly payment. That extra cash each month could be important once you're living on a fixed income.</p> <p>To qualify for a refinance, and for the lowest possible interest rate to make such a move financially worthwhile, you'll again need a high credit score. If your FICO credit score is 740 or higher, the odds are good that you'll qualify for an interest rate low enough to make refinancing a smart financial decision.</p> <p>The lesson here is obvious: You can't put worrying about credit scores behind you just because you've entered retirement. The best move is to continue taking the steps that help guarantee a strong credit score &mdash; paying your bills on time and keeping your credit card debt low &mdash; even after you've left the working world.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/why-your-credit-score-matters-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan">4 Reasons Why You&#039;re Too Old — Or Too Young — For a Mortgage Loan</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-often-your-credit-score-gets-calculated">Here&#039;s How Often Your Credit Score Gets Calculated</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement car insurance credit history credit score fico insurance rates mortgages new car refinancing Mon, 30 Jan 2017 10:00:08 +0000 Dan Rafter 1870059 at http://www.wisebread.com My 2016 Budget Challenge: Can a Paint Job Help an Old House Pass a Re-Fi Appraisal? http://www.wisebread.com/my-2016-budget-challenge-can-a-paint-job-help-an-old-house-pass-a-re-fi-appraisal <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/my-2016-budget-challenge-can-a-paint-job-help-an-old-house-pass-a-re-fi-appraisal" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_painting_walls_539825724.jpg" alt="Couple doing paint job on old house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>[<em>Editor's Note: This is the latest episode in Max Wong's journey to find an extra $31,000 in a single year. Read the whole series </em><a href="http://www.wisebread.com/topic/max-wongs-budget-0" target="_blank"><em>here</em></a><em>.</em>]</p> <p>We paid off our home equity line of credit two years early! It was a Festivus miracle.</p> <p>Kind of.</p> <p>Earlier this year, we failed to refinance the mortgage of Dinky Manor not once, but twice. We could not get our ramshackle, 1,000 square foot house to appraise for the whopping $640,000 we needed to get Mr. Spendypants out of his horrifically structured, pre-2007 housing crash home loan.</p> <p>For all of you wondering about that $640,000 for 1,000 square feet&hellip;I guess you don't live in Los Angeles.</p> <p>On Thanksgiving Eve, our friends Mary Ellen and Bob invited us out to dinner with Betsy and Murray (Mary Ellen's sister and brother-in-law). As Mary Ellen and Bob are both Wise Bread readers, they immediately started quizzing us about the 2016 Budget Challenge. They wanted to know all the sordid details &mdash; like how Mr. Spendypants puts up with my ever-increasing level of crazy. We were in the middle of whining about <a href="http://www.wisebread.com/my-2016-budget-challenge-reduce-debt-or-save-for-an-emergency" target="_blank">our underemployment</a> and our ever more <a href="http://www.wisebread.com/my-2016-budget-challenge-how-to-decide-when-to-sell-your-house" target="_blank">complicated real estate situation</a> when Murray reached across the table and handed me his business card.</p> <p>Murray is a mortgage banker.</p> <p>We followed up with Murray at his office the following week. He had already looked at a ton of real estate data for our area and couldn't understand why the house hadn't appraised for over $600,000. He started crunching the numbers. He thinks he can figure out how to refinance Dinky Manor's mortgage.</p> <p>However, Murray had two immediate demands. First, Dinky Manor needs an exterior paint job, stat. The fact that our house is the dumpiest on the block isn't helping our cause. Alas, we don't have the $17,000 it would cost to hire professionals to paint the house, so Mr. Spendypants and I will spend a relaxing winter holiday scraping and sanding 80 years of bad paint jobs off the outside of our home. Luckily, one of my best friends is a retired painting contractor. He has agreed to come out of retirement to help us rehab the house for the appraisal before the mortgage rates jump any higher.</p> <p>Could we pay down the home equity line of credit? This was Murray's second ask. Although our debt-to-loan ratio is better than average, if we zap our HELOC down to zero, it would make us look much less risky as borrowers.</p> <p>Conceptually, paying off the debt is a no-brainer. What the bank wants dovetails nicely with my goal of paying off the loan (that is due in 2018) by the end of this year. It's the actual execution of this goal that sucks. After a <a href="http://www.wisebread.com/my-2016-budget-challenge-everything-breaks" target="_blank">solid start in January</a>, finding extra cash this year has been more difficult than we anticipated. Could we juggle the finances to pay off our loan at this later date without completely cannibalizing our emergency fund? Short answer: sort of. We took a $6,000 chomp out of our emergency fund. Since there is a small but real chance of us both being underemployed come March, and a somewhat larger chance that this mortgage refinance will fall through, this move makes us financially vulnerable.</p> <p>Worst case scenario: We have to take out a new line of credit in March as a precaution. While this would not be the end of the world, that situation would not be ideal. I would like to avoid being that loser personal finance writer who can't kick her debt habit.</p> <p>Best case scenario: The re-Fi goes through and we both find decent employment in March. If this happens we will be able to put the money we were using to pay down the HELOC each month toward replenishing our emergency fund and paying down the new, less expensive mortgage at a faster pace.</p> <p>Fingers crossed.</p> <h2>Progress So Far</h2> <p>Although we did pay off a $15,000 loan with money we had socked away, I am not adding the $6,000 we pulled out of our emergency fund to the plus column of my 2016 budget challenge because we are going to have to pay our emergency fund back, as fast as humanly possible.</p> <p>Panic is a really good motivator. If only we'd had that kind of &quot;inspiration&quot; all year long. We earned a combined $3,258.98 in the first two weeks of December. Here's how we did it.</p> <p>Mr. Spendypants and I DJ'ed a corporate Christmas party. Although we did not win one of the flat screen televisions that were raffled off as door prizes, we did make $1,500 for five hours of work. Also, we ate at least $800 in foie gras cotton candy, spearified olives, and wagyu beef, so that was a great job perk.</p> <p>To take advantage of the holiday shopping fever, I had planned to spend the first two weeks of December selling every single thing that is not nailed down in the house on eBay and Etsy. Alas, this did not happen, so my house is still filled with crap we don't need. Mr. Spendypants and I deemed it more prudent that I use every available second of daylight doing yard work and prepping to paint the house in advance of the looming mortgage appraisal appointment. We will save a lot more money if we can refinance the mortgage than I could ever make selling our stuff online.</p> <p>Even with my new, yucky manual labor schedule, I managed to earn $1,758.98 on the side. In a previous incarnation, I was a jewelry designer. Mary Ellen and Betsy were nice enough to buy $243 in old stock from me for holiday gifts. I made $41 selling books to a second hand bookshop. I have been <a href="http://www.wisebread.com/5-easy-to-make-deluxe-gifts-for-under-15" target="_blank">propagating succulent cuttings</a> from my garden all year long. I made $124 selling little potted plants off my front porch to passers-by. I made $10.73 selling an old dress (that I had gotten for free) to a consignment store. One of my neighbors paid me $25 to run an errand for her, and another neighbor paid me $100 for pet sitting. I made $100 from writing jobs. I sold $707 in jam, honey, and handmade lip balm. Although I barely have any merchandise for sale on Etsy, I received a last minute order that netted me $363.25.</p> <p>Phew.</p> <p>Because I source holiday gifts year round, we actually managed to spend $0 on holiday gifts for friends and family this year. Just about everyone got <a href="http://www.wisebread.com/start-now-you-can-make-these-23-delicious-holiday-gifts" target="_blank">homemade goodies</a> that I had made in advance or gifts paid for through barter. This was a total win. Unfortunately, we did not get to wallow in our thrifty genius for long. We have spent $495 on painting supplies for the house so far&hellip;</p> <p><strong>Goal:</strong> $31,000.00</p> <p><strong>Amount Raised:</strong> $33,126.40</p> <p><strong>Amount Spent:</strong> $14,093.66</p> <p><strong>Amount Left to Go:</strong> $11,967.26</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/max-wong">Max Wong</a> of <a href="http://www.wisebread.com/my-2016-budget-challenge-can-a-paint-job-help-an-old-house-pass-a-re-fi-appraisal">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-2016-budget-challenge-how-to-decide-when-to-sell-your-house">My 2016 Budget Challenge: How to Decide When to Sell Your House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/quicken-loans-review-competitive-rates-and-good-customer-service">Quicken Loans Review: Competitive Rates and Good Customer Service</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-really-need-a-20-percent-down-payment-for-a-house">Do You Really Need a 20 Percent Down Payment for a House?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing appraisal budget challenge HELOC home equity line of credit home loans max wongs budget mortgages re-fi refinancing Fri, 13 Jan 2017 10:30:36 +0000 Max Wong 1870057 at http://www.wisebread.com My 2016 Budget Challenge: How to Decide When to Sell Your House http://www.wisebread.com/my-2016-budget-challenge-how-to-decide-when-to-sell-your-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/my-2016-budget-challenge-how-to-decide-when-to-sell-your-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_jenga_house_57875522.jpg" alt="Deciding when to sell your house " title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p><em>[Editor's Note: This is the latest episode in Max Wong's journey to find an extra $31,000 this year. Read the whole series </em><a href="http://www.wisebread.com/topic/max-wongs-budget-0" target="_blank"><em>here</em></a><em>.]</em></p> <p>Mr. Spendypants and I have been struggling to improve our finances by reorganizing our debt, specifically the loans on our two houses. Because banks use a stricter set of guidelines for assessing risk for rental properties, it has proved impossible for me to restructure the mortgage on my rental property that I own in my own name. So, at the beginning of the summer, we set our sights on refinancing our primary residence that is in Mr. Spendypants' name.</p> <h2>We've Been Underwater on Our Mortgage for Almost a Decade</h2> <p>Here's the back story: Mr. Spendypants bought Dinky Manor for $585,000 in 2007, literally the week before the housing market tanked. He hadn't even moved in when he discovered that the property was now underwater. We have been patiently waiting for the market to recover for nine years.</p> <p>The real estate market in our neighborhood is now crazy. People are buying 400 square foot homes for $400,000 in cash, sight unseen. So, we thought, now is the time to jump at getting a better loan. Zillow appraises our house for over $740,000.</p> <h2>Those Two Times We Missed the Days of Sub-Prime Lending</h2> <p>In order to refinance, Dinky Manor has to appraise for $640,000. Alas, Zillow's appraisal of our house is wildly optimistic. Our mortgage broker had two separate appraisals done and both came in at $600,000. Although Dinky Manor measures in at just a smidgen over 1,000 square feet, we're not even the smallest house on the block. Also, our yard is large and gorgeous and has been featured in garden books and on the Sunset Magazine blog. How, in L.A.'s stupid expensive real estate market, are we missing the mark?</p> <h2>Some of My Best Ideas Are Really Dumb</h2> <p>In trying to figure out another way to lower our mortgage costs, I had a harebrained idea: I could sell my rental property, that has at least $600,000 in equity, and use the profit to buy Dinky Manor from Mr. Spendypants. We'd lose my future income generating property, but we'd end up owning Dinky Manor free and clear. Without a mortgage payment on either house, we could really start socking away the cash for early retirement.</p> <p>I called <a href="http://www.wisebread.com/14-reasons-why-an-accountant-is-worth-the-money" target="_blank">my accountant/therapist</a> to get her blessing. &quot;That is a harebrained idea for a couple of reasons,&quot; she stated, flatly. &quot;You guys should come into my office for a financial tuneup.&quot;</p> <p>When we arrived at my accountant's office she delivered the bad news: If I sell my rental house, I will have to pay between $200,000 to $300,000 in capital gains taxes. Also, even though my name is not on Dinky Manor's deed, I would not be able to buy it from my husband since we file our taxes as a married couple, so in the eyes of the IRS it's my house too.</p> <p>This is why I will never be successful as a master criminal. All the good financial loopholes have already been taken.</p> <h2>When Faced With a Financial Decision, Do the Math</h2> <p>My accountant had another scenario to pitch us: Sell Dinky Manor and move into my rental property as our primary residence. Even if we take a financial hit on the sale of Dinky Manor, the loan on my rental is half that of Dinky Manor. If we continue to live frugally like we've been living this year for <a href="http://www.wisebread.com/topic/max-wongs-budget-0" target="_blank">My 2016 Budget Challenge</a>, we could pay off my house in six years.</p> <p>Another bonus of this plan: If I sell my rental property, I have to pay capital gains taxes. But in California, when you sell your primary residence, you don't have to pay capital gains on the first $500,000. So, if I move back into my rental house and use it as my primary residence for 24 months, I could then sell it and walk away with a $500,000+ profit.</p> <p>Mr. Spendypants was shocked by this idea. He had hoped that we could wait out the housing market and flip Dinky Manor for a profit. But when my accountant did the math for him, he realized that we could be debt free and own a house outright in as little as six years, an impossible goal if we keep both houses. While the prospect of financial sustainability in six years is thrilling, the disappointment of only breaking even or even losing money on the sale of Dinky Manor hurt his brain.</p> <h2>How Do We Add Value to Our House?</h2> <p>I called my friend Andrew, a real estate agent who specializes in our neighborhood, and explained our situation. He agreed with our accountant's plan to sell Dinky Manor. Even if we lost money on the Dinky Manor sale, the amount we'd save by paying down the mortgage on my house early would more than offset that. Although we probably won't be able to buy another house, ever again, in L.A.'s inflated market, if we wanted another rental property down the road, we could use the equity in my house to buy property in another area.</p> <p>I asked Andrew if I could hire him to come over and do his own audit of Dinky Manor. Zillow values Dinky Manor at over $740,000. Why did our appraisals come up so short? If we couldn't get our house value up enough for a re-Fi, how would we ever get the value up enough to get the $60,000 down payment back if we sell it?</p> <p>Andrew spent over two hours looking at our house and yard. He also brought over some comps of similar homes that had sold in a one-mile radius of our house. His assessment: Dinky Manor is a dump. (Yes. Only in Los Angeles can a 1,000 square foot dump appraise for only $600,000). The appraisers had negatively compared our 1937 bungalow as a fixer-upper to new homes with Ikea kitchen cabinets and freshly installed privacy fencing. He gave me an extensive To Do list of home projects that would improve the house's value. If we fixed everything on his list, he would be able to put the house on the market with a starting price of $699,000.</p> <p>In order to get to this $699,000 price, we are going to have to repaint the house, build a deck, and do a complete redo of the kitchen, bathroom, and roof. This will cost between $40,000 and $60,000 depending on how lucky we get with sourcing the building materials. The renovation will be much more efficient and less stressful if we are not living in a house without a working kitchen and bathroom. If we empty out Dinky Manor before construction, we could possibly finish all the projects on the To Do list in one month (but I'm scheduling for two months).</p> <p>It's only October, and already I have My 2017 Budget Challenge in place. If we want to be mortgage free ASAP then here's our agenda for the next year:</p> <ol> <li>Save up at least six months of living expenses, because we will have to carry the mortgage of both homes during this process.<br /> &nbsp;</li> <li>Give my amazing renters, who have lovingly cared for my house for the past five years, 90 days notice so they have ample time to find a new pad.<br /> &nbsp;</li> <li>Move into my house the second the renters move out.<br /> &nbsp;</li> <li>Because we don't have the savings to pay for the renovations and pay two mortgages simultaneously, we will have to take out a $60,000 Home Equity Line of Credit on my house (based on its insane amount of equity).<br /> &nbsp;</li> <li>Renovate Dinky Manor.<br /> &nbsp;</li> <li>Put Dinky Manor on the Market.<br /> &nbsp;</li> <li>Sell Dinky Manor. If there is any profit at all (fingers crossed) from the sale, it will be used to pay down the Home Equity Line of Credit.<br /> &nbsp;</li> <li>Refinance my house (now our primary residence) to get a better interest rate.<br /> &nbsp;</li> <li>Aggressively work toward paying down the Home Equity Line of Credit and the mortgage of our one house.</li> </ol> <p>Looking at this list of things to accomplish is heart attack inducing. And, if it were up to only me, I'd probably have Andrew sell Dinky Manor as-is and eat the cost of the down payment just to avoid a year's worth of hassle and stress. But, Dinky Manor is Mr. Spendypants' asset, so he ultimately gets to call the shots on this one. This is financially risky. Worst-case scenario, we could lose $120,000 and a year of our life to this project. Best-case scenario, we could make $200,000 and lose a year of our life to this project. Either way, we will no longer have a $585,000 loan to pay down. We might lose a real estate battle, but could still win the war.</p> <p>A few days after giving me his advice (for free), Andrew called me with a job offer. He just started his own boutique real estate brokerage. Would I be interested in working a few hours a week, helping him set up his new company? Of course I said yes. Now I am getting paid to learn about real estate so I can be that much more prepared when it comes time to sell Dinky Manor.</p> <h2>Progress So Far</h2> <p>My mechanic just called me. &quot;I have good news and bad news to tell you,&quot; he said in that Swedish accent that sounds like lingonberry jam smells. &quot;The good news is that you passed your smog test. The bad news is that you can drive your car for another two years.&quot;</p> <p>Ha ha.</p> <p>Even though Mr. Spendypants earned an extra $800 this month DJing a party, <a href="http://www.wisebread.com/my-2016-budget-challenge-everything-breaks">the car repairs</a> involved in getting my car to pass the smog test cost $700. So at the end of the month, he only came out $100 ahead on additional earnings. Boo.</p> <p>I made $375 this month working for Andrew, $450 for writing, and $630 selling jam and honey at a local craft and food fair for a total of $1,455 extra.</p> <p>Even with the additional earnings, as of today we have only have $10,741.51 in our savings account out of the $31,000 that we want to have by the end of the year.</p> <p>Will we make our goal?</p> <p><strong>Goal:</strong>&nbsp;$31,000</p> <p><strong>Amount Raised</strong>:&nbsp;$23,595.17</p> <p><strong>Amount Spent:</strong>&nbsp;$12,853.66</p> <p><strong>Amount Left to Go:</strong>&nbsp;$20,258.49</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/max-wong">Max Wong</a> of <a href="http://www.wisebread.com/my-2016-budget-challenge-how-to-decide-when-to-sell-your-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-2016-budget-challenge-can-a-paint-job-help-an-old-house-pass-a-re-fi-appraisal">My 2016 Budget Challenge: Can a Paint Job Help an Old House Pass a Re-Fi Appraisal?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-selling-your-house">6 Questions to Ask Before Selling Your House</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment">4 Smart Ways to Lower Your Monthly Mortgage Payment</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-times-you-shouldnt-refinance-your-mortgage">5 Times You Shouldn&#039;t Refinance Your Mortgage</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living Real Estate and Housing downsizing lending market crash max wongs budget mortgages refinancing rental property selling house underwater mortgage Fri, 14 Oct 2016 10:00:06 +0000 Max Wong 1812051 at http://www.wisebread.com 5 Times You Shouldn't Refinance Your Mortgage http://www.wisebread.com/5-times-you-shouldnt-refinance-your-mortgage <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-times-you-shouldnt-refinance-your-mortgage" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_stressed_bills_85513247.jpg" alt="Couple learning times they shouldn&#039;t refinance their mortgage" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Refinancing your mortgage can drastically lower your monthly payments, especially since rates are still very low. The decision to refinance should be an easy one, right? Not so quick.</p> <p>Refinancing isn't for everyone or every financial situation. Here are five times you should hold off on refinancing your mortgage. (See also: <a href="http://www.wisebread.com/refi-shy-how-to-determine-if-now-is-the-time-to-refinance?ref=seealso">ReFi Shy? How to Determine if Now Is the Time to Refinance</a>)</p> <h2>1. You Don't Plan on Staying in the House</h2> <p>If you plan on selling your home in the next five years, then hold off on refinancing it. The move will likely only waste your time and money. Selling too soon after refinancing means you won't live in your home long enough to capture the savings benefits of lower rates. Plus, you'll still owe any fees associated with the new loan.</p> <p>We made the mistake of refinancing our other home from a 30-year mortgage to a 15-year mortgage. Our broker had talked us into it, saying it was a smart option. It wasn't. At the time of the refinance, I was pregnant with my second child, and truly planned to live in our first home for many more years. However, two kids under three plus one room equals a lot of sleepless nights.</p> <p>The decision to refinance ended up costing us more initially and monthly, especially since we sold our home just nine months later.</p> <h2>2. The Savings Don't Add Up</h2> <p>The reason why many individuals choose to refinance their mortgage is because they want to get a lower interest rate. Before you jump on the refinance wagon, do a little bit of calculating. Find out how much the refinance will cost you compared to how much it will save.</p> <p>Also realize that a refinance can add years to your loan. Don't automatically believe that you are benefiting from lower monthly payments if your loan has been extended an additional five years.</p> <h2>3. You Are Trying to Pay Off Your Loan Sooner</h2> <p>As I mentioned before, we refinanced our home to a 15-year loan because we wanted to pay off our mortgage faster. On paper, the numbers made sense, and the change was only going to cost us an extra $300 a month, which seemed doable. However, it would have been better for us to keep the 30-year loan and make the extra payments on our own terms. This would have given us more wiggle room in our budget for unexpected costs.</p> <h2>4. You Are Switching to an adjustable-rate mortgage</h2> <p>Adjustable rate mortgage (ARM) rates are tempting to jump on, especially since they guarantee a low rate for a certain amount of time. However, interest rates eventually will go up. It's just the ebb and flow of the economy.</p> <p>With an ARM, you will pay more of the principal faster, which is nice, but you better be prepared to pay higher payments when the rates go up.</p> <h2>5. You Aren't in the Right Position to Finance</h2> <p>If for some reason your home has dropped in value, refinancing your home can tack on extra costs, such as private mortgage insurance. Borrowers with small down payments &mdash; or refinances with little equity &mdash; have to pay PMI until their equity reaches 20% of the home's value. For example, if you bought your house for $250,000, paid off $30,000 of it, but the value of your house dropped to $225,000, you would have very little equity in the home and in most cases have to pay for PMI.</p> <p>Another thing to consider before you refinance is your credit score and job history. If your score has dropped even just a little, you could miss out on qualifying for the lowest rates, which would make the whole refinance process not worth it. Also, if you recently switched career fields, i.e. going from a teacher to a computer system administrator, your pay might be higher, but your duration of employment might make you ineligible for a refinance. (See also: <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement?ref=seealso">Is it Safe to Re-Finance Your Home Close to Retirement?</a>)</p> <p>Refinancing is a good choice if it means you can ditch annoying PMI fees and score a lower interest rate. However, a refinance is not for everyone, so be sure to crunch the numbers first.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/5-times-you-shouldnt-refinance-your-mortgage">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-to-finance-a-tiny-house">3 Ways to Finance a Tiny House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-why-2015-is-the-year-to-buy-a-house">5 Reasons Why 2015 is the Year to Buy a House</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment">4 Smart Ways to Lower Your Monthly Mortgage Payment</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing adjustable rate mortgages ARMS mortgages moving refinancing savings Tue, 27 Sep 2016 10:00:08 +0000 Ashley Eneriz 1799077 at http://www.wisebread.com Refinance These 4 Common Debts Before Year Ends http://www.wisebread.com/refinance-these-4-common-debts-before-year-ends <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/refinance-these-4-common-debts-before-year-ends" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/calculator_pencil_math_82097885.jpg" alt="You should refinance 4 common debts before year end" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The year is almost over, which gets many people thinking about New Year's resolutions. Perhaps you are recalling the resolutions you made at the beginning of this year and getting down on yourself for not saving more money and paying off more debt. &quot;Next year,&quot; you promise yourself.</p> <p>But if you refinance these four loans, you can get a head start on your financial goals and even sail into the New Year with a little less financial burden on your shoulders. Here are the top loans you should refinance, as well as a few tips to decrease your debt burden altogether.</p> <h2>Credit Cards</h2> <p>Does your credit card debt seem like it never goes down, even when you throw extra money at it each month? It's the interest rate. There are two ways that you can refinance your credit card balance and save money each month. The first is to <a href="http://www.wisebread.com/best-lenders-for-personal-loans">refinance your debt</a> with a low interest personal loan, like one through&nbsp;<a href="https://sofi.com/wisebreadpl">SoFi</a> or<a href="http://prosper.evyy.net/c/27771/27132/994"> Prosper</a>.</p> <p>This works well for individuals that have <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt">high interest credit card debt</a>. A low-interest personal loan will allow you to pay off your credit card debt faster, but be aware that your monthly payments will be higher. This is because credit cards only require a minimum payment each month, which can be very low, depending on the debt. Keep in mind, however, that those low monthly minimum payments are what keep you in debt for so long. Therefore, when you switch the debt to a three- or five-year personal loan, you will be required to pay more each month.</p> <p>Another popular way to refinance credit card debt is to transfer it to a promotional <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">0% balance transfer card</a>. This will allow you to transfer your debt to a card that does not charge interest for the promotional period. To use this transfer to your advantage, divide the amount of debt you have by the number of promotional interest free months offered. For example, if you are transferring <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">$10,000 of debt</a> on a card that offers 15 months of 0% interest, then be prepared to pay about $667 each month to avoid interest charges at the end of the promotion. Do not use this card to accumulate new debt.</p> <p>(See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt">When Should You Transfer a Balance to Pay Off Debt</a>)</p> <h2>Mortgages</h2> <p>Mortgage rates remain historically low, but recent news shows that <a href="http://www.marketwatch.com/story/us-mortgage-rates-climb-to-post-brexit-high-2016-09-15">rates are slowly rising</a>. If you are still battling with a mortgage rate higher than 5% or are paying PMI, now is the time to refinance.</p> <p>Refinancing your mortgage can extend the life of your home loan, but it can also save you dramatically each year, especially if you are paying&nbsp;<a href="http://www.wisebread.com/what-is-private-mortgage-insurance-anyway">pesky PMI fees</a>. Research the cost to benefit ratio, knowing how much money you will save each month. Also research to know if a 15-year mortgage makes financial sense. In many cases, switching to a 15-year loan is riskier for your budget, but other times it can be a small monthly increase that will pay off big time in reduced interest payments.</p> <h2>Car Loans</h2> <p>Americans owe a lot on their car loans. USA Today reports, &quot;The total balance of all outstanding auto loans <a href="http://www.usatoday.com/story/money/cars/2016/09/06/car-loans-now-top-1-trillion-delinquency-rates-rise/89911210/">reached $1.027 trillion</a> between April 1 and June 30.&quot; If you secured your auto loan through a dealer, there is a good chance you are overpaying for your car loan. Contact your local credit union for rates, and don't forget to research online for the best rates.</p> <p>I have used two credit unions in the past to successfully secure an auto loan for less than 2.50%, and those credit unions did not have an actual building within 100 miles of me.</p> <h2>Student Loans</h2> <p>The burden of student loan debt is crippling millions of Americans. You don't need to live with your student loan forever. As long as you have good credit and are not in default with your loans, you have options. If you have federal student loans, then I strongly recommend looking into the <a href="http://www.wisebread.com/5-careers-that-offer-student-loan-forgiveness">forgiveness programs</a> available. It might mean taking a less than desirable job for a few years, but if that job forgives a large portion of your student debt, then it could be worth more to you than a higher paying job. Other options include income-sensitive repayment programs, such as <a href="http://www.wisebread.com/the-definitive-guide-to-pay-as-you-earn-a-great-student-loan-repayment-plan">PAYE and IBR</a>, which peg your monthly payments to your income level. Thus, if you're struggling to make a standard monthly payment, these programs set your monthly outlays at a more affordable level.</p> <p>If you are not eligible (or a fan) of the forgiveness programs, <a href="http://www.wisebread.com/should-you-refinance-your-student-loan">refinancing your student loans</a> is your next best option. Note that if you refinance your loans, you will be switching them over to a private lender. This means that if you have federal student loans, you will no longer be protected for federal loan repayment programs if you suddenly lose your job or face financial hardships.</p> <p>(See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">5 Ways to Pay Off Your Student Loans Faster</a>)</p> <p><a href="http://sofi.com/wisebread">SoFi</a> is one company that offers student loan refinancing and also offers unemployment protection for borrowers that lose their job at no fault of their own. The company says, &quot;In fact, members who refinance with us save an average of $316 a month &mdash; and $17,208 total.&quot; Other notable companies to consider include:</p> <ul> <li><a href="https://www.earnest.com/">Earnest</a></li> <li><a href="https://commonbond.co/choose-your-loan?referrer=b75172e7076c5472bed5baec5e28309c&amp;referred">CommonBond</a></li> <li><a href="http://lendkey.7eer.net/c/27771/187810/3276">LendKey</a></li> </ul> <p>Refinancing these common debts can help you pay less each month, as well as less overall. Use these refinancing strategies to get out of debt faster and take control of your finances.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/refinance-these-4-common-debts-before-year-ends">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-calculators-everyone-should-use">15 Personal Finance Calculators Everyone Should Use</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans">Don&#039;t Ignore These 4 Things Before Refinancing Your Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management car loans interest rates lenders loans mortgages new year's resolutions personal loans refinancing repayment programs student loans Mon, 26 Sep 2016 10:30:07 +0000 Ashley Eneriz 1798863 at http://www.wisebread.com 6 Ways to Travel When You Have Student Loans http://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-travel-when-you-have-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_backpack_travel_87628739.jpg" alt="Woman finding ways to travel while paying student loans" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans are a reality for millions of recent graduates and even some of us who have been out of school for a while. Americans alone have <a href="https://commonbond.co/blog/average-student-loan-debt-and-student-loan-refinancing/">1.36 trillion dollars</a> of student loan debt. That's second only to U.S. mortgage debt.</p> <p>Don't worry! There are plenty of ways to manage your student debt and continue doing what you love. With these tips, you can get out and spend your time traveling while making all of your payments on time!</p> <h2>1. Take a Look at Your Loans Before You Go</h2> <p>Getting ready for a big trip is actually a very good time to re-evaluate your student loans (and the rest of your finances), especially because it has the potential to save you a lot of money. By <a href="http://www.wisebread.com/should-you-refinance-your-student-loan">refinancing your student loans</a> you could save thousands. That's because you may be able to get a better APR, and you can also change the terms of your loan so that your monthly payment feels more manageable.</p> <p>Even a small difference in the interest rate can make a big difference over the time that you're paying off your loan. With <a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans">online lenders like CommonBond</a>, you can get an APR starting as low as 2.14%. It only takes minutes to fill out the application, and you're under no obligation to change your loan once you get your free quote.</p> <p>That cash you're saving can easily go into your travel fund!</p> <h2>2. Consider Consolidating Your Loans</h2> <p>This second tip is closely linked to the first, since in the process of refinancing your loans, you may also want to <a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation">consolidate your loans</a>. This means that if you have multiple student loans, instead of paying, let's say, three separate bills every month, you can combine all of your existing loans into one.</p> <p>Consolidating your loans will help to simplify the payment process for you and reduce the time you spend every month administering and worrying about your loan payments.</p> <p>This is an especially important point for people planning to travel, since you're already going to have a lot of logistics to keep straight. The simpler you can keep your loan payments, the better.</p> <h2>3. Put Things in Perspective &mdash; And Into Your Budget!</h2> <p>It can be paralyzing to think about the total amount of money that you owe, especially if you know you're going to be spending the next 20 years of your life paying it off.</p> <p>It's more helpful to put things in perspective, so once you've refinanced your loans and you have a manageable monthly payment, treat that like you would any other monthly bill that you have to pay.</p> <p>Take it on a month-to-month basis and you won't feel as limited by the amount of money that you owe. When you're making your travel budget, simply factor in the monthly payment that you'll be making into your overall budget for the time you'll be traveling, and set aside that money before you go. That way, you won't feel like you have to scramble for funds at the last minute.</p> <h2>4. Start a Travel Fund</h2> <p>Figure out how much money you can commit to setting aside for travel every month. Then you can set up an automatic transfer into a special bank account that is dedicated just to travel expenses. Even if you're only putting in a few hundred dollars a month, you'll be surprised at how fast these funds can add up over time.</p> <p>See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=travel">Best Credit Cards for College Students</a></p> <h2>5. Create a Realistic Budget</h2> <p>You should think about how you like to travel and be honest with yourself. Frugal travel is not for everyone, so you should consider what your priorities are; maybe you will be just as satisfied going on a shorter trip and putting more emphasis on higher-end accommodations and fancy restaurant meals.</p> <p>If these types of comforts or luxuries don't matter to you, you can probably get by with a smaller budget, but on a longer trip. (See also: <a href="http://www.wisebread.com/savor-your-trip-and-save-big-with-these-5-slow-travel-tips">Save Big With These Slow Travel Tips</a>)</p> <p>Budgeting is all about striking a balance that works best for you while being realistic about how much you can afford to spend on your trip. By weighing these decisions before you leave, you'll eliminate a lot of money-related stress so that you can just enjoy your trip, knowing that you've already budgeted in the funds to cover your student loans.</p> <h2>6. Earn Extra Money for Travel</h2> <p>You're probably already getting excited to go, so if you want to speed up the process you can always consider earning a little extra money to cover your travel expenses.</p> <p>It's up to you what skills you have and what kind of work you enjoy, but maybe you want to consider getting a second part-time job and putting the money you earn right into your travel account!</p> <p>Depending on your professional skill set, you can also consider taking on some <a href="http://www.wisebread.com/22-websites-that-will-pay-you-to-write-for-them">freelance gigs</a>, since they can be very flexible and add a little something extra to your normal paycheck. While you'll have less free time, this also means less time to be out spending money which can be a big help when you're trying to save money. There are also ways to <a href="http://www.wisebread.com/15-ways-to-make-money-while-you-travel">make money while you&rsquo;re traveling</a>.</p> <h2>Don't Let Debt Stop You</h2> <p>There's no reason to let student debt paralyze you, and there are simple steps you can take if you're passionate about traveling. It will take a bit of good strategy, combined with some hard work and a proper execution of your plan, but if you're willing to put in the time you can really reap the rewards on your next trip (and even at home).</p> <h2 style="text-align: center;">Like this post? Pin it!</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-to-travel-when-you-have-student-loans&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans.jpg&amp;description=6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans.jpg" width="250" height="374" alt="" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-gokee">Amanda Gokee</a> of <a href="http://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">5 Ways to Pay Off Your Student Debt Faster</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-unexpected-benefits-of-solo-travel">6 Unexpected Benefits of Solo Travel</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-trumps-presidency-might-change-student-loans">How Trump&#039;s Presidency Might Change Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-students-can-travel-abroad-for-less">7 Ways Students Can Travel Abroad for Less</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Travel APR budgeting consolidation debt refinancing strategy student loans travel funds trips Mon, 22 Aug 2016 10:00:13 +0000 Amanda Gokee 1775891 at http://www.wisebread.com Don't Ignore These 4 Things Before Refinancing Your Student Loans http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-ignore-these-4-things-before-refinancing-your-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/beautiful_woman_thinking_74303951.jpg" alt="Woman not ignoring things before refinancing student loans" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The average American with student loans has approximately $30,000 in debt, and makes a monthly payment of&nbsp;<a href="http://www.brookings.edu/research/papers/2014/06/19-typical-student-loan-debt-akers">nearly $250</a>. With interest rates sometimes reaching as high as 8%, many people struggle to bring down the balance. One popular solution is to&nbsp;<a href="http://www.wisebread.com/should-you-refinance-your-student-loan">refinance your loans</a>, getting a lower interest rate or lower monthly payment with a different repayment term. For some people, this can be an excellent way to make progress on eliminating their debt. For others, it can be a short-term option that ends up causing more problems later on.</p> <h2>What Is Refinancing?</h2> <p>If you have federal or private student loan debt at a high interest rate, you can refinance your debt by taking out a new loan from a&nbsp;<a href="http://www.wisebread.com/6-things-every-college-student-must-know-about-private-student-loans">private lender</a> to cover your entire current balance. You use that money to pay off your current debt, then make payments at a lower rate or different repayment term on the new loan.</p> <p>If you have high-interest debt, refinancing can be a way to save you thousands over the course of your loans. When you are researching your options, it is important to look at offers from multiple lenders to ensure you are getting the most competitive interest rate and terms. <a href="https://lendedu.com/">LendEDU</a> is a site that allows you to compare multiple offers in one place to get the most attractive loan that meets your needs.</p> <h2>4&nbsp;Factors to Consider Before Refinancing</h2> <p>While refinancing student loans is a good decision for many people, there are factors you need to consider before you sign any agreement.</p> <h3>1. Interest Rates</h3> <p>When refinancing your debt, you will have the option of choosing a variable or fixed interest rate. Variable rates as low as 2% are available. However, they can change every year and can go as high as 8% to 10%. While fixed rates are often slightly higher than the initial variable interest rate, (usually they are about 3%), that interest rate is guaranteed not to increase over the course of your debt. If you have a small amount you can pay off quickly, a variable rate can make sense. However, if you need five to 10 years to pay off your loans, a fixed rate is more secure.</p> <h3>2. Deferment Options</h3> <p>If you have federal student loans, you have the ability to defer your debt if you run into economic hardship, such as if you lose your job. When you refinance with a private lender, you may end up losing that benefit since some companies do not offer deferment options. Make sure you understand their policies regarding economic hardships to ensure you're prepared for the worst-case scenario.</p> <h3>3. Loan Terms</h3> <p>When you refinance, your monthly payment can be cut in half. While that looks great on paper and it frees up money in your budget, you actually will end up paying much more over the length of your loan. To get the payment so low, your repayment term is extended from the standard 10 years to 20 or more. Over the duration of your loan, you can end up paying thousands more in interest. If you opt for an extended repayment term, assess your budget every year. As you move up the corporate ladder and get a better salary, you can increase your monthly payments and pay the debt off more quickly, saving yourself money.</p> <h3>4. Prepayment Penalties</h3> <p>Some private lenders have prepayment penalties, meaning you will owe a fee if you pay off your new loan early. In some cases, the fee may be small, but for some companies, the cost might be prohibitive. Make sure you check if there are any prepayment penalties ahead of time.</p> <p>For some, refinancing student loans can be a great way to save money and pay down the debt faster. It can be a good strategy to get a lower interest rate or to get a more affordable monthly cost. By considering these four factors, you can ensure you are informed and empowered to make the best decision for you.</p> <p><em>Have you refinanced student loans? Has it worked out for you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans">3 Private Lenders That Can Really Save You Money on Your Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cancel-student-loans-to-save-and-receive-an-interest-free-120-day-loan">Cancel Student Loans to Save — and Receive an Interest-Free 120-Day Loan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/refinance-these-4-common-debts-before-year-ends">Refinance These 4 Common Debts Before Year Ends</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-times-student-loan-refinancing-can-save-you-big">4 Times Student Loan Refinancing Can Save You Big</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Education & Training deferment interest rates penalties private lenders refinancing repayment student loans terms Thu, 18 Aug 2016 10:00:16 +0000 Kat Tretina 1774333 at http://www.wisebread.com 9 Money Moves to Make the Moment Your Credit Cards Are Paid Off http://www.wisebread.com/9-money-moves-to-make-the-moment-your-credit-cards-are-paid-off <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-money-moves-to-make-the-moment-your-credit-cards-are-paid-off" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_credit_card_000089299163.jpg" alt="Woman making money moves after credit cards are paid off" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It may have taken years. It may have required an unprecedented level of discipline and patience. But you finally have your credit cards paid off.</p> <p>Congratulations! Now, what do you do?</p> <p>With a good chunk of your high-interest debt no longer weighing you down, you can truly start to work your way toward financial freedom. Here are some key financial moves you can make immediately.</p> <h2>1. Tackle Any Other High-Interest Debt</h2> <p>Okay, so you crushed the credit card debt. What else do you owe? Take a look at things like auto loans, student loans, and your mortgage, and begin chipping away at that debt, as well. Go after the debt with the highest interest rate first. It's one thing to free of credit card debt, but to be totally, 100% debt free? That's an amazing feeling.</p> <h2>2. Assess Your Emergency Fund</h2> <p>When you're in debt, there's a good chance you don't have a lot of liquid savings. But now that those credit cards are paid off, you can start building up funds in case of a major unexpected expense or loss of income. By maintaining an account with at least three months of income, you can handle any financial crisis and know that you won't go back into debt.</p> <h2>3. Open a Retirement Account</h2> <p>It's impossible to think about retirement when you're huddled under a mountain of debt. But now that you've shed that high interest debt, you can start thinking about your long-term financial goals, including your retirement. If your employer offers a 401K plan, begin contributing now and seek to maximize the company match. (Usually, this is somewhere in the neighborhood of 5% of your income, though you can always contribute more.) Also consider opening an individual retirement account, or IRA. Opening a Roth IRA, which allows your money to grow tax free, is perfect for people who are self-employed, but is also a great complement to a 401K.</p> <h2>4. Find a Good Online Budgeting Tool</h2> <p>If you haven't already done so, consider using a service such as Mint or <a href="http://track.flexlinks.com/a.ashx?foid=1029882.216060&amp;fot=9999&amp;foc=1&amp;foc2=582907">Personal Capital</a>, which allows you to view all of your account information in one place and track your spending &mdash; even set up budgets and goals. Using one of these services will allow you to see exactly where your money is going, so you can adjust your spending, if needed.</p> <h2>5. Stop Using Your Cards for a While (But Don't Close Them)</h2> <p>Credit cards got you into trouble, so it might be good to just put them on ice for a while. But don't start canceling all your cards. If you close credit cards, you may actually hurt your credit score. You'll no longer have accounts with a long history, and your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">credit utilization ratio</a> will go up because you'll have less available credit. If you feel the need to get rid of cards, shed the one with the lowest credit limit. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Best 0% Balance Transfer Credit Cards</a>)</p> <h2>6. Develop a New Charging Philosophy</h2> <p>If you successfully transitioned from carrying a credit card balance to being debt-free, you probably made an adjustment to how you use your cards. Now it's time to evaluate again how you use credit to ensure you stay out of the red. Do some research to find credit cards with favorable interest rates (and maybe even some good <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">cash back rewards</a>). Set up automatic transfers to pay off balances in full each month, and come up with rules to guide which purchases will be made with credit and which will be made with cash. It takes discipline to get out of debt, but it's just as much work to stay out. So set up a plan and do your best to stick to it.</p> <h2>7. Begin Saving for Big, Important Things</h2> <p>You may be out of debt, but you know that it could come right back if you don't save responsibly for the big ticket items. Whether it's a new house, car, or home appliance, it's best to try and pay for these things without taking on a lot of new debt. Consider taking whatever you were paying in credit card interest and setting it aside into a savings account, or even an index fund. Being able to pay cash for the pricey purchases will keep you from falling into the abyss of debt again.</p> <h2>8. Review Your Credit Reports</h2> <p>Looking at your credit report can be depressing when you're in debt. Who needs another reminder of how much they owe? But now that the debt is gone, it might be a good time to examine your credit reports to see if there are any errors, or even old debts you may have forgotten about. Your goal now is to improve your FICO credit score, and cleaning up your reports can play a big role in that. Each of the three major credit bureaus (TransUnion, Experian, Equifax) provide a copy of your credit report once a year at no charge.</p> <h2>9. If You Have a Mortgage, Think About Refinancing</h2> <p>Your credit score may not improve right away after paying off your credit card debt, but if you keep yourself debt-free, it will rise over time. And that means that you'll be in a better position to negotiate with lenders for a better interest rate on your home loan. Mortgage rates are still historically low, so you might save thousands of dollars over the long-term by reducing your rate even slightly. And you could have enormous savings by reducing your loan term, as well.</p> <p><em>Have you paid off your credit card debt? What money moves did you make?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-money-moves-to-make-the-moment-your-credit-cards-are-paid-off">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-critical-money-mistakes-people-make-in-their-40s">7 Critical Money Mistakes People Make in Their 40s</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-a-goodwill-letter-can-save-your-credit-score">How a Goodwill Letter Can Save Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-better-less-debt-or-more-savings">What&#039;s Better: Less Debt or More Savings?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-outdated-money-advice-endanger-your-money">Don&#039;t Let Outdated Money Advice Endanger Your Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance credit report credit score emergency fund high interest debt refinancing retirement saving money Wed, 11 May 2016 10:30:05 +0000 Tim Lemke 1705411 at http://www.wisebread.com Is it Safe to Re-Finance Your Home Close to Retirement? http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-it-safe-to-re-finance-your-home-close-to-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_payments_money_000007934078.jpg" alt="Learning if it&#039;s safe to refinance your home close to retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Lower mortgage rates can save you hundreds of dollars on your monthly payments. Refinancing your mortgage to a new one with a lower rate would then seem to make sense.</p> <p>But what if you're approaching retirement? Is refinancing a smart move when you're planning to leave the workforce in five years or less?</p> <p>Not surprisingly, the answer depends on your unique financial situation and your goal from a refinance. (See also: <a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">4 Mortgage Secrets Only Your Broker Knows</a>)</p> <h2>Consider the Time Factor</h2> <p>If your main goal is to reduce your monthly costs, refinancing might make sense. But if you plan on moving from your home shortly &mdash; in, say, less than five years &mdash; then a refinance might not be the best option. That's because refinancing a home loan isn't free. The typical refinance costs thousands of dollars &mdash; money that you'll usually roll into your new loan amount and pay off over time when you make your regular monthly payments.</p> <p>It might take you several years to save enough money each month to recover the closing costs. If you're moving too soon (and retirees often move from their homes sooner than they originally planned), you might not generate enough monthly savings to even pay back those initial closing costs.</p> <p>Then there's the time factor. A refinance, unless you are reducing the term of your loan at the same time, means that you'll be paying off your mortgage for a longer number of years. As a retiree, you might instead prefer to pay off your current mortgage in a shorter amount of time.</p> <p>&quot;One consideration is the length of the term on the new loan,&quot; said Arvin Sahakian, co-founder and vice president of BeSmartee, a start-up designed to help consumers search for mortgage loans online. &quot;When people refinance their mortgage, they are re-setting the loan term and essentially starting over again.&quot;</p> <p>As an example, if you are paying off a 30-year fixed-rate mortgage that you have been making payments on for 15 years, you'll have an additional 15 years left to pay off that loan. If you refinance that loan to a new 30-year one, you've just increased the lifespan of your mortgage by another 15 years. Do you want that monthly payment hovering over you for another 15 years, even if refinancing will result in immediate monthly savings?</p> <p>That's not an easy question to answer, especially when you consider how much of your payments on a new mortgage loan, even one with a lower interest rate, will go toward interest instead of principal.</p> <p>&quot;The first few years of mortgage payments on a new loan are designed to go toward the interest, and less towards the principal,&quot; Sahakian said. &quot;As the years go by, more of the monthly payments go toward the principal, and less toward the interest, so this is another important consideration.&quot;</p> <h2>What the Numbers Say</h2> <p>It's important for every homeowner to crunch some numbers before deciding to refinance. But it's <em>especially</em> important for those nearing retirement who might need to recover their refinancing closing costs in as few months as possible.</p> <p>Say you owe $150,000 on a 30-year fixed-rate mortgage with an interest rate of 5%. Your monthly payment, not including insurance and taxes, will be about $805. If you refinance that same amount to a 30-year fixed-rate loan with an interest rate of 3.95%, your monthly payment will drop to about $711 a month &mdash; a savings of about $94 a month, or $1,128 a year.</p> <p>That sounds good, right? But remember, refinancing can be expensive. Say refinancing that $150,000 costs $4,500 in closing fees. It will take you almost four years to save enough from your refinance to pay back these closings costs. Is that worth it? If you stay in your home for eight years or more, it might be. If you end up moving in five years, it might not be.</p> <p>But say you owe $200,000 on a 30-year fixed-rate loan with an interest rate of 5%. Then your monthly payment, again not counting taxes and insurance, would be about $1,073. If you refinance that $200,000 to a new 30-year fixed-rate loan but at an interest rate of 3.95%, your monthly payment would fall to about $949 a month. That's a savings of $124 a month, or $1,488 a year. If your loan closing cost that same $4,500, it would take you just a bit more than three years to generate enough savings to pay for your closing costs. That shorter time frame might make it more worthwhile for homeowners nearing retirement.</p> <p>There is another factor to consider, though. If you'll absolutely need to reduce your monthly living expenses after you retire, then refinancing might make sense, even if it will take you longer to recover the costs of closing.</p> <p>&quot;Many Americans who retire typically see their retirement income fall to nearly half of what they earned while they worked full time,&quot; Sahakian said. &quot;This is one of the considerations borrowers should account for when making a decision about refinancing. Will they be able to afford the monthly payments associated with the mortgage, insurance, and property taxes on their retirement income?&quot;</p> <p><em>Are you considering a home refinance?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-should-consider-an-adjustable-rate-mortgage">Why You Should Consider an Adjustable-Rate Mortgage</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">4 Mortgage Secrets Only Your Broker Knows</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-2016-budget-challenge-can-a-paint-job-help-an-old-house-pass-a-re-fi-appraisal">My 2016 Budget Challenge: Can a Paint Job Help an Old House Pass a Re-Fi Appraisal?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Retirement closing costs home loans interest rates mortgages refinancing Mon, 08 Feb 2016 14:00:06 +0000 Dan Rafter 1649872 at http://www.wisebread.com 4 Mortgage Secrets Only Your Broker Knows http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-mortgage-secrets-only-your-broker-knows" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/buying_new_home_000073682313.jpg" alt="Learning mortgage secrets only your broker knows" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Taking out a mortgage loan to buy a home is a huge investment &mdash; probably the biggest you'll ever make. That's why it's important to cut as many costs of applying for a mortgage loan as possible. Who knows best how to reduce these costs? Mortgage lenders, of course.</p> <p>Here are four secrets that your lender should be sharing with you. Knowing these tips can save you big money.</p> <h2>1. Close Your Loan at the End of the Month</h2> <p>It doesn't matter whether you close your mortgage loan on the fifth day of the month or the 28th, right? Wrong.</p> <p>Rakesh Gupta, director of ARG Finance, says that borrowers who close near the end of the month will reduce the amount of prepaid interest they need to pay with their first mortgage payment. This one simple strategy could save you hundreds of dollars.</p> <p>&quot;There is complete liberty from the lender's end in letting you choose the day of the month on which you wish to close,&quot; Gupta said. &quot;But does he tell you that? He doesn't. He asserts you to close as soon as possible.&quot;</p> <p>Here's an example: If you close on November 5 and your first mortgage payment is due after January 1, your first payment will, of course, include the interest that accrued in December. But it will also include the interest accrued in November. If you close November 5, that's 26 days of interest.</p> <p>But if you close on November 27, you will only pay three days of interest for that month. If your interest comes out to $25 a day, closing on November 5 will cost you $650 in November interest on your first payment. If you close on November 27, it will cost you just $75.</p> <h2>2. No One Really Knows Where Interest Rates Are Heading</h2> <p>Your mortgage lender should be studying the market, and should have a rough idea of whether mortgage interest rates will be going up or down in the near future. But even the savviest lender can't tell you exactly what interest rates will do in the next week or month. No one can.</p> <p>That's why Nicholas Kensington with Scottsdale Real Estate says that if your lender quotes you a rate that you think is a good one, you should pay to lock it in place.</p> <p>&quot;Rates will end up fluctuating constantly,&quot; Kensington said. &quot;If you're out there getting quotes, that doesn't mean you're out there getting locked-in rates until you ask them to lock that rate. Don't make the assumption that anything is locked in until it's in writing.&quot;</p> <p>If you lock your interest rate, it will remain in place even if rates rise &mdash; or, on the downside, if they fall &mdash; after your lock. Make sure you know how long your lender is locking in your rate. It might be for 30 days, or it might be for 60. Make sure to get the specifics in writing.</p> <h2>3. No-Cost, No-Point Loans Don't Really Exist</h2> <p>You might hear lenders advertise no-cost, no-point mortgage loans. But Casey Fleming, author of <a href="http://www.amazon.com/gp/product/0615980708/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0615980708&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=2O6XPT6EBQZGARI3">The Loan Guide: How to Get the Best Possible Mortgage</a>, says that there really is no such thing as a no-cost mortgage loan. Instead, most lenders who advertise such loans will roll the costs of originating their mortgages into your interest rate. They'll charge you a higher rate for the &quot;no-cost&quot; loan, Fleming said.</p> <p>To avoid falling for this trick, make sure you know how much you are paying for your loan, even if lenders advertise it as a no-cost one.</p> <p>&quot;Ask for the total cost of financing over the holding period of your loan for several options, including rolling the costs into the interest rate versus no points versus paying points, and choose the lowest cost,&quot; Fleming said.</p> <h2>4. Refinancing Doesn't Always Make Sense &mdash; Even If Your Payment Falls</h2> <p>Fleming says that too many homeowners automatically decide to refinance if the drop in their monthly mortgage payment allows them to pay back the costs of their refinance in a short period of time, say three years or less.</p> <p>This is not always a sound financial strategy, and too many lenders ignore this fact, Fleming said.</p> <p>If you save $225 a month on your mortgage payment after refinancing, it might take you just two-and-a-half years to pay back the closing costs. But this payback analysis ignores the increase in your loan's term and the restarting of the amortization cycle, Fleming said.</p> <p>Say you've paid off 14 years on your 30-year fixed-rate loan. If you refinance to another 30-year loan, even one with a far lower interest rate, you might pay more over time because you are, essentially, replacing a mortgage that has 16 years to pay off with one that would require 30.</p> <p>At the same time, the amortization process starts over. When you first start paying off a home loan, the majority of your payment goes toward paying off interest. By the time you're on year 14 of your 30-year loan, more of your payment will go toward paying down your mortgage's principal balance, instead. If you refinance that 30-year loan, most of your payments again will go toward interest.</p> <p>&quot;Look at the total cost of financing over your anticipated holding period for both your existing loan and the proposed loan, including costs, and choose the lower,&quot; Fleming said.</p> <p><em>Have you taken advantage of any of these mortgage tricks?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-the-right-mortgage-loan-15-or-30-years">Choosing the Right Mortgage Loan: 15 or 30 Years?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-a-refinance-is-the-wrong-move">3 Times a Refinance Is the Wrong Move</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing closing costs interest rates lenders mortgage loan refinancing Secrets Mon, 14 Dec 2015 14:01:05 +0000 Dan Rafter 1619297 at http://www.wisebread.com