rent

Ask the Readers: Would You Rather Rent or Buy a Home?

Ashley Jacobs — Tue, 28 Aug 2018 08:30:09 +0000

Editor's Note: Congratulations to Betty, Amanda, and Jennifer for winning this week's contest!

Conventional wisdom used to say that it makes more financial sense to save up and buy a home than to rent long term, but that isn't necessarily the case anymore. It really depends on the kind of work you do, the kind of lifestyle you want to lead, and (let's face it) your bank balance.

Would you rather rent or buy a home? Why? What home-owning or renting benefit is most appealing to you?

Tell us if you would rather rent or buy a home and we'll enter you in a drawing to win a $20 Amazon Gift Card!

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We're doing three giveaways — here's how you can win:

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Good Luck!

Tell us if you would rather rent or buy a home and we'll enter you in a drawing to win a $20 Amazon Gift Card!

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Monthly Bills That Won't Affect Your Credit Score

Dan Rafter — Tue, 19 Jun 2018 08:00:30 +0000

What's the best way to keep your FICO credit score healthy? Simple: Pay your bills on time and don't rack up too much debt. Some bills, though, are more important to your credit score than others.

In fact, you might be surprised to learn that many of the payments you make every month have no direct impact on your traditional FICO credit score. That's because in order for a payment to boost your score, or a late payment to hurt it, it must be reported to at least one of the three national credit bureaus: Experian, Equifax, and TransUnion. And many of the companies and service providers you pay off each month don't do this.

That's a mixed blessing. Making a payment late to these creditors won't necessarily hurt your score — unless you pay so late that the bill is sent to collections. On the other hand, paying these bills on time won't help your credit score, either. (See also: 5 Money Matters That Won't Affect Your Credit Score)

Which bills are not reported to the credit bureaus?

There are six common monthly bills that have no direct impact on your credit score. They are:

Utilities.
Insurance payments.
Bills from medical providers.
Cellphone payments.
Cable service.
Membership to health clubs or gyms.

If you're a few days late in paying your car insurance bill, don't panic. Your misstep won't hurt your credit score, just as paying your bill on time won't help it.

But that doesn't mean you can just ignore the bill. There are other consequences for late payments. You might face late fees, penalties, or even the cancellation of service. Your auto insurer, for instance, might charge you an extra $25 if you make your payment after a certain date. Your gym might cancel your membership. And both of those scenarios are still not as bad as if your provider sends your account into collections.

That's because, while a biller may not report payments directly to the credit bureaus, if you miss too many payments, they might send a debt collector after you. Once your account falls into the hands of a collections agency, this will be reported to the credit bureaus. Having an account in collections can cause your credit score to tumble by 100 points or more. (See also: Here's What Happens to an Account in Collections — Even When You Pay Up)

What about rent?

Apartment rent is a more complicated issue. In most cases, the rent you pay each month isn't reported to the credit bureaus. Paying your landlord on time every month usually doesn't provide a boost to your credit score.

There is a movement, though, to change this. The theory goes that renters should be rewarded for paying on time, just as homeowners are when they pay their mortgage bill each month.

Some landlords have begun reporting rents to the credit bureaus. And if you want to report your own rent payments, you can sign up for a rent-reporting service such as Rent Reporters or Rental Kharma.

These services are limited. Both Rent Reporters and Rental Kharma, for instance, only report rent payments to one of the credit bureaus, TransUnion. You'll also have to pay for these services. (See also: 7 Ways to Rent An Apartment With Bad Credit)

Some alternative credit scores do include other bills

As lenders try to expand their market reach, some are looking beyond the traditional FICO score to so-called alternative credit scores. Some of these scores include your behavior with the bills listed at the top of this story, or your management of checking and savings accounts. The FICO Score XD, for example, is for people who have such thin credit reports that they're unscorable by traditional methods. It relies on a consumer's utilities, cellphone, and other bills.

The number of lenders who look at alternative credit scores is still in the minority. But if you're applying for credit and have a limited credit record, it never hurts to ask that a lender take into consideration your good payment history on other types of bills. (See also: How Alternative Data Can Help Those With Little or No Credit)

Monthly payments that always impact your credit score

Some of the payments you make each month will always be reported to the credit bureaus. It's important to pay these on time each month if you don't want your credit score to drop. They are:

Credit card bills.
Home equity lines of credit.
Mortgage.
Auto loans.
Student loans.
Personal loans.
Home equity loans.

Note that revolving credit accounts — credit cards and lines of credit — carry more weight in your FICO score than installment loans.

Also, a payment isn't reported as late to the bureaus until you miss it by 30 days or more. Your two-week delay on your credit card payment won't show up in your credit reports.

However, you'll still be charged a late fee for being even one day late. And every day that you delay payment, interest charges mount. So, it still benefits you to make your payments on time, or as soon after the due date as you can. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How New Grads Can Protect Their Credit

Dan Rafter — Wed, 30 May 2018 08:00:24 +0000

The years right after graduating from college can be stressful ones. It's time to find a job. You might be looking for a new place to live. You're starting the transition from college student to adult. It can be easy to get overwhelmed, and it can be just as easy to make serious financial mistakes that damage your credit.

What things can you do to protect your credit after graduating from college? Here are some of the big ones.

Never pay a bill late

It can be easy to miss a bill payment, especially when you're not used to having a lot of bills to pay. Mail can pile up while you're adjusting to a whole new way of life. Prioritize getting organized with your bills. Sign up for autopay or set up reminder alerts. Put your bills in a place where you can see them so they don't get buried under other junk or unread mail. Not only will late payments eat into your new budget with fees, but your credit will take a big hit. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)

Not all late payments are reported to the credit bureaus, and some late payments don't impact your credit score. The big ones, however — credit cards, mortgage, auto loans, personal loans, and student loans — are reported. A single late payment of one of these major bills could cause your score to tumble by 100 points or more. That late payment will also stay in your credit reports for up to seven years. (See also: How Late Payments Affect Your Credit)

You should know the official definition of a late payment. A payment is only reported as late to the credit bureaus if you are 30 days or more past the due date. So even if your payment is two weeks late, you can avoid a hit to your credit by immediately making a payment. (See also: Pay These 6 Bills First When Money Is Tight)

Don't ignore the bills that don't get reported

There's a big caveat to the payments that don't get reported to the credit bureaus. If you're late with a doctor's bill, utility payment, rent payment, or cellphone bill, the three credit bureaus won't know about it unless those payments are sent to a collections agency in effort to get you to pay what you owe. When that happens, your credit score can again plummet by 100 points or more.

It isn't just collections you should be worried about if you fail to make rent payments, either. If your landlord evicts you, that won't show up on your credit reports. But if your landlord sues you for breaking your lease, and that ends in a civil judgment against you, your credit will take another hit. Civil judgments are reported to the credit bureaus and stay on your reports for up to seven years. (See also: 10 Surprising Ways to Negatively Affect Your Credit Score)

Those monthly payments can be overwhelming, but it's important that you pay them, and do so on time. You might have to cut down on your discretionary spending, move back home, or take other steps to make sure that you are keeping current with your bills.

Seek help for student loans if you can't afford the payment

The average 2017 graduate left college with $39,400 in student loan debt, according to Student Loan Hero. That's a staggering amount of debt for anyone, let alone a young adult who is just getting their footing in the world. When your student loan payment comes due, it's important that it gets paid. Otherwise, you risk defaulting on that loan, which will issue a blow to your credit. (See also: What Really Happens When You Don't Pay Your Student Loans)

If you are struggling to come up with your monthly student loan payment, be proactive in finding ways to alleviate the financial burden. You may have the option to consolidate multiple loans, defer the payments, or speak directly with your lender about how to make your repayment plan work better for you. You will likely have more options with federal student loans than private ones, but you should still do your research. (See also: 8 Surprising Ways to Pay Off Your Student Loans)

Don't run up your credit card debt

It can be easy to rely heavily on credit cards when money is tight. When you're young and your paychecks are small, this can be an even bigger temptation. This, though, can also wreck your credit.

Racking up too much credit card debt will lower your credit score and leave you with a financial burden that's difficult to overcome. The high interest will pile on until you're struggling to keep up with payments. Lenders view consumers with too much credit card debt as a high risk for missed payments, and often deny them other forms of financing. It's a dangerous cycle that many young adults can easily fall into.

Resist the temptation to use your credit card to purchase restaurant meals, movie tickets, electronics, or concert tickets. If you can't afford these goodies in cash, you can't afford them with credit. (See also: The Millennials Guide to Avoiding Credit Card Debt)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Make Your Young Kids Pay "Rent?"

Denise Hill — Tue, 06 Mar 2018 09:30:14 +0000

A young mother named Essence Evans recently posted on Facebook that she charges her five-year-old daughter $1 each for rent, utilities, food, water, and cable out of her weekly $7 allowance. The remaining $2 is the child's money to spend however she wishes. The $5 that Evans takes for "bills" actually goes into a savings account she'll give to her daughter when she turns 18.

The internet went berserk. Some people loved this idea, while others thought it took things too far. Whether you agree or disagree with the method, something has to be said for the initiative Evans is taking to teach her young daughter money management and the value of a dollar.

Should you follow her example and charge your little ones "rent?" Here are five important lessons you'd be teaching them by having them "pay bills."

Financial responsibility

From birth until death, you need and deal with money in some capacity. The earlier you learn how to earn, spend, lend, borrow, and invest, the better off you are. By making your little kids pay for living expenses, you teach them very early how to handle money responsibly. It helps them begin the journey of distinguishing wants from needs and prioritizing taking care of their needs first.

Before your child is allowed to spend any money, they should be required to "pay their bills" and set money aside in savings of some sort. The action of giving money to them and having them give a portion of it back is a powerful lesson in and of itself. It becomes a normal part of having money. You teach them to save and pay their bills first, which is a powerful tool in keeping them out of financial trouble later in life. (See also: 4 Parenting Mistakes to Avoid When Teaching Kids About Money)

How to budget

Making your kids pay bills before allowing them to spend their money on things they want teaches them the power of budgeting. Budgeting is all about setting priorities and planning. Budgeting teaches them that they can have some of the things they want if they plan correctly. It also teaches them that they cannot afford all of their wants. It drives home the point that there are certain bills that they will always have (rent, utilities, groceries) and they should always plan for those recurring expenses.

Teaching them these lessons in a controlled and loving environment is so much more humane than neglecting these lessons and having them learn it the hard way as an adult.

Nothing in life is free

You can't buy love, happiness, peace, or good health. But everything else will cost you. The sooner kids learn this, the better off they will be.

Your kids need to know how the financial system works. You should teach them that in order for you to withdraw money at the ATM, you had to deposit money in the first place. They need to know that every time you use a credit card to buy something, you have to pay it back with interest.

Teaching them that everything costs money — including the bed they sleep in, the food on the table, and the internet they enjoy — is a lasting life lesson that will help guide them into being contentious spenders. It is also important to teach them to always look for the cost in everything. This doesn't mean you should make your kids neurotic, but you do want to ensure that they are aware that everything they ask for costs you something. (See also: 21 Things You Should Make Your Kids Pay For)

The world doesn't owe them anything

Entitlement is one of the leading underlying causes of debt and credit abuse. Teaching your kids that hard work pays off is a valuable lesson. But you also have to teach them that working hard doesn't mean they can have whatever they want. They must learn that they can only have what they can afford.

In life, we don't always get what we deserve — good or bad. Sometimes life is unfair and we have to wait, work harder, or settle for an alternative. The quicker your kids learn this, the more content they will be in the long run. Teaching them to focus on and be grateful for what they do have in lieu of what they don't have or what everyone else has is far more valuable than getting them everything their tiny hearts desire. Helping them develop self-governance and the ability to tell themselves no is more valuable than a giving them a hefty trust fund.

Opportunity cost

Making kids contribute to their living expenses helps teach them about opportunity cost. That lesson is all about being able to pause, weigh all of the options, and make a rational decision. They have to learn that if you have $5 and spend it all on candy, you can't also get a toy. The concept of delayed gratification will slowly be seared into their tiny minds and help them become less impulsive. Even kids who are impulsive by nature will learn (with your guidance) how to stop and consider what else they may want to do with their money.

Teaching your kids about opportunity cost also helps them to become rational decision makers. When you make each transaction more about business and less about emotions, they will learn how to make purchases using logic and practicality. You have to model for them how to talk themselves through paying bills and making purchases. When you ask them questions and help them view money objectively, you will help reduce feelings of buyer's remorse and they will become confident in their financial decision-making.

In the end, you may not agree with Evans' approach, but you must appreciate and applaud her moxie. Your value system may not allow you to charge your kids rent, but it's important to find some system that can ingrain these lessons into your kids.

Fiscal responsibility is one of the greatest things you can teach your children. Failing to teach them how to handle and relate to money will create a type of poverty in them than no amount of money can fix.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Ways to Handle Big City Rents

Aja McClanahan — Thu, 01 Mar 2018 09:30:06 +0000

If you can't resist the lure of big city living, but hate the impact it would have on your pocketbook, you might be wondering if there's any way you can actually afford such a move. In some ways, living in the city can be worth the costs — the convenience, the night life, and plentiful job prospects are just a few perks of living in a bustling metropolis.

While you don't want to overextend yourself, there may be a way to make your big city dreams come true. Here are some tips that can help you handle big city rents.

1. Don't look at apartments outside your budget

This sounds obvious, but it can be easy to get carried away when you see the "perfect" place. Different landlords and management companies will have varying requirements around income and credit, but it's important to avoid busting your budget despite their thresholds. Before you even begin touring apartments, consider the financials first. Figure out a comfortable amount of rent that would fit your budget. Limit your search to places that stay within that dollar amount. (See also: Here's How Much Life in the Big City Will Cost You)

2. Keep it compact

If you really want to save on high rents, you'll probably have to consider a much smaller place than you would living in a suburb. Maybe you really wanted a two or three-bedroom apartment to accommodate your home office and occasional overnight visitors, but it causes the rent to skyrocket. Making some concessions on your "must-haves" could save you a lot of money living in the big city.

3. Look for a sublet

Someone else's inconvenience could be very convenient for you. At times, people need to move before their lease is up and there's not much they can do about it. Rather than break the lease and incur the associated fees, they choose to sublease their place for slightly less than market value.

If you can find someone who needs to unload their rental via subletting, it could easily save you a few hundred bucks a month. There are a few legal nuances that could make this arrangement complicated, so make sure you know your rights and clear the subletting agreement with the landlord before agreeing to anything. (See also: 10 Best Tools for Finding an Apartment on the Cheap)

4. Consider up and coming neighborhoods

You might want to be at the epicenter of the local club scene or famous block of hipster dive bars. The only problem is that these trendy places could cost a fortune in rents. Would you be open to living somewhere that isn't quite yet at the center of all the action?

Think about places that are safe but still on the verge of becoming a preferred neighborhood. Rents in these trendy urban outposts can be surprisingly low. The bonus here is that you could get a great place with lower expenses and beat out neighbors who'll discover the area at higher rent prices later down the line.

5. Get a roommate

If you've found a big-city apartment, but can't seem to make ends meet, it might be time to get a roommate. The good news is this should be pretty easy to do, especially in a city. There are tons of apps, services, and websites where you can start your roommate search full-force. Some popular ones include Craigslist, Facebook, Silvernest (for baby boomers and empty nesters), and Roomster. (See also: Avoid These 7 Things When Living With Roommates)

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This article is from Aja McClanahan of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

You Got an Eviction Notice. Now What?

Kat Tretina — Fri, 16 Feb 2018 09:30:08 +0000

It's a terrible feeling: You come home from a long day of work, wondering what to make for dinner, when you see a large piece of paper taped to your door. Your heart sinks as you read it, realizing it's an eviction notice telling you that you have to leave your home.

If this has happened to you, you're certainly not alone. According to real estate site Redfin, over 2.7 million people faced eviction in 2015. High rents, low wages, and constantly changing market conditions make keeping up with rent payments difficult. (See also: The Simple Way to Decide How Much Rent You Can Really Afford)

If you've received an eviction notice, here's what you should do next.

The eviction process

If you fall behind on your rental payments, or pay only a portion of the amount due, your landlord can evict you. However, the process is more complicated than just telling you that you have to leave. Eviction laws vary by state, so it's a good idea to check out your state housing department's guidelines.

Generally, to evict you legally, your landlord has to follow an eviction procedure.

1. You will receive notice

Your landlord must issue you notice before proceeding with the eviction. This could be a 30-day notice to either vacate or comply, a pay-by date you must meet, or a deadline to rectify whatever violations are grounds for the eviction. In some cases, you may have only a couple of days to come up with funds or fix the problem. If you can't come up with the money or address the issue, the landlord can proceed to the next step.

2. Your landlord will pursue a court order

If you do not pay the balance on your account, or comply with the terms of the eviction notice, your landlord can get a court order against you. Once you receive the order, you can choose to fight the eviction in court. If the court finds you were not complying due to legitimate problems with the apartment, such as a lack of heat or running water, it may sway the ruling in your favor. If the judge does not rule in your favor, the court may offer you an alternative payment plan to help keep you in your home.

3. Moving out

If you lose the fight in court, you could have just a few days to move out. In many cases, the local police will be there to escort you. If you stay in the unit beyond that date, the landlord can ask the police to have you forcefully removed.

Know your rights

If you're going through the eviction process, you still have rights. For example, a landlord cannot lock you out of a property, remove your belongings, or shut off your utility services until the court order is in place and your formal eviction date has passed.

During the eviction proceedings, your landlord is still responsible for maintaining the property. For example, if your apartment heater is broken, your landlord must repair or replace it according to the terms of your lease.

If you feel like your landlord has violated these guidelines, or otherwise is evicting you unfairly, you can find free legal advice and representation from Legal Services Corporation, a nonprofit organization that provides financial support for civil legal aid to low-income Americans.

How to fix an eviction

If you're facing an eviction, you may be able to avoid being forced out with the following options.

1. Work out a payment plan

In many cases, landlords would like to avoid eviction as much as possible. It can be a long and expensive process, and they have to find a replacement tenant afterward. It makes more financial sense for them to keep a current tenant in place if at all possible. If you're behind on your payments, talk to your landlord about a potential payment plan to get back on track. Making weekly payments can help you get back on your feet and stay in your home.

2. Come up with cash (fast)

Although it may sound impossible, you can often end an eviction by paying what you owe in full. Go through your belongings and sell anything you don't absolutely need, such as furniture, clothes, toys, electronics, or even extra kitchen supplies. You can also pick up a side hustle to earn extra money quickly to pay your outstanding bill. (See also: 14 Best Side Jobs For Fast Cash)

3. Seek charitable aid

There are some nonprofit organizations that offer financial assistance to low- and middle-income families facing a crisis. You may be able to receive a grant or low-interest loan to pay your rent so you can stay in your home. To find programs near you, check out Rent Assistance.

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This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How a Single Mother In Debt Over $200K Is Fixing Her Finances

Janet Alvarez — Mon, 16 Oct 2017 16:02:05 +0000

For those of us actively trying to improve our financial situation, it's inspiring to read about others who have succeeded. Dilenia Frias is one such example, embarking upon Wise Bread's Total Financial Transformation Plan, and successfully improving her credit score, better managing her debt, and on the road to higher earnings in just a few, short months.

When we first met Dilenia in August, she shared her financial concerns with us: Over $200,000 in student loan debt, tens of thousands owed on credit cards, personal loans, and a timeshare, a damaged credit score, and relatively low earnings despite graduating law school. To top it off, Dilenia was recently unemployed for two years, and is a single mother residing in New York City, an area with arguably the highest of cost of living in the country. (See also: The Fastest Way to Eliminate Credit Card Debt)

We decided to help Dilenia tackle these challenges one-by-one, by providing methodical advice for stabilizing her debt, raising her credit score, and improving her earnings. Read on to hear Dilenia's story in her own words — and even better, her remarkable progress in the two months since we first talked.

Credit Cards

I have $8,500 in credit card debt, spread over three cards — American Express, Children's Place, and Discover cards. My cards' interest rates are anywhere from 10.99-24%, and most are maxed out or over their credit limit.

Our advice:

Contact your creditors, explain your situation, and request lower interest rates, if possible. Always pay on time — even if it's only your minimum payments.
Try to bring your balances under the credit card's limit — this will have an immediate impact on your credit score. Long-term, your goal should be to keep your balances under 30% of your total available credit. This will significantly boost your credit.
One useful trick for repaying cards is to make two payments per month, instead of just one. For example, if you normally make one monthly payment of $100, try making two payments of $50 each. Since interest is calculated over the entire month, this will reduce your interest owed. Plus, depending on what time of the month your card reports to the credit bureaus, it may also show a lower debt level and boost your score.
Don't close your credit cards — even once you pay them off! This reduces the amount of credit you have available, which lowers your credit score.

Dilenia's credit card situation now

My Equifax credit score went up 48 points to 677!

I hadn't used my Children's Place credit card in about a year, and the suggestion was to use the card for at least a small amount, so that my account wouldn't get closed for lack of use, so I spent $125 on gift cards in August. I received my bill later in August and paid it on time. I received an email approximately a week ago that my credit limit was increased from $500 to $750.

I also paid my American Express enough so that my statement only showed a $99 balance when the statement printed (so I was using a little under 20% of my credit limit). My Discover card was also a bit over the limit last month, but I brought the balance back down in time for the September statement closing date. I am still using almost 100% of my credit limit, but at least I am no longer above my credit limit.

Personal loan and timeshare

My $7,000 personal loan was unfortunately charged off in 2015, when, after leaving my job in February 2015, was only able to make payments until May 2015. I am currently paying $150 per month to the collection agency handling the account. Based on the amount owed, I would need to make payments until April 2021.

A $9,000 loan for a timeshare is also in collections. I am currently trying to negotiate a limited-use timeshare based on the payments I have already made, but was told that I needed to make a final payment to the collection agency before they would release my account to the timeshare company. If I am able to regain the timeshare, I might be able to sublease it.

Our advice:

Aggressively try to regain use of the timeshare on a more limited-use basis. Request that the collections agency annotate your credit report to show that your are making payments on time.
Once you regain limited use of the timeshare, sublease it using services such as rentmytimesharenow.com. Apply any extra money toward repaying credit cards more quickly, starting with the highest-interest card first.
Attempt to negotiate lower payments or interest rates directly with the personal loan collections agency. Ensure they've annotated your credit report to reflect that your account is being paid on time per your agreement.

Dilenia's personal loan and timeshare situation now

I recently made a payment to the timeshare company, and I am awaiting documents transferring ownership in my previous timeshare to a new timeshare. When the paperwork is finalized, the collection account currently being reported to my credit reports will be removed. That should also increase my score, and also allow me to sublease the unit.

Student loans

I have over $200,000 in federal student loans, most of which are being repaid via the Income Based Repayment program (IBR). However, I have over $16,000 in Perkins loans which are currently on deferment; I'll need to start making payments on these, too, by March 2018. Due to my limited income and two dependents, my current monthly payment is $0.

Our advice:

Consolidate all your student loans — including the Perkins loans, so that they can all be placed on IBR and result in a low payment.
Place your IBR account on autopay — even if your payment is $0, it may result in a slightly lower interest rate.
Contact your law school's employment services office and inquire whether your school offers any debt forgiveness for students in public service or other modestly-paid legal jobs.

Income, employment, and other credit boosts

In order to be admitted to the Bar, lawyers must pass a Character & Fitness (C&F) evaluation, including a credit check. Unfortunately, given Dilenia's credit issues, being denied entry to the Bar (and a higher income as an attorney) was a real possibility.

Thankfully, by bringing all of Dilenia's accounts current and boosting her credit score, C&F should be less of an issue, thus ensuring that Dilenia should be employable as an attorney by late this year. This will likely result in higher income and allow Dilenia to repay debt more aggressively. More importantly, it'll enable her to save — even a modest amount saved every month toward an emergency fund of three-to-six months' expenses will help ensure she doesn't get into this sort of trouble again. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Dilenia's 19-year-old son is also considering seeking employment to help contribute to household expenses, and once Dilenia's timeshare is subleased, the extra income can be applied to debt and emergency fund savings.

Dilenia has made great progress, and she can do more still. Dilenia should request higher credit limits on her cards once she's made twelve on-time monthly payments and dropped her balances. Then, once her cards are paid off, she should open new lines of credit — such as gas cards — and not use them. This will all result in lower credit utilization ratios — and higher credit scores.

Recently Dilenia joined eMoneyPool, since it reports user accounts to credit bureaus like Experian. eMoneyPool is an online version of a savings club in which members make regular contributions and receive "payouts" of their savings on targeted dates. She joined two $500 money-sharing pools in August, and by early September the account was added to her Experian credit report.

Dilenia can also have her rental payments reported to the credit bureaus using services such as RentTrack or RentReporters. Depending on the lender and the type of credit score they use to determine credit worthiness, this could help her with loans or other credit applications down the line.

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This article is from Janet Alvarez of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Things Your Credit Report Does NOT Include

Dan Rafter — Fri, 22 Sep 2017 08:30:11 +0000

Ordering your credit reports every year and studying them carefully is a smart way to get a window into your financial well-being. But while credit reports contain a wealth of information about your history with money, they don't tell you everything about your financial health.

In fact, there is plenty of financial information you won't find in any of your credit reports.

1. Your credit score

Your credit score is a key financial number. It gives lenders a snapshot of how responsible you've been with your finances. If you have thousands of dollars of credit card debt and you routinely pay bills late, your credit score will be low. If you pay your bills on time and you are using a smaller percentage of your available credit, your score will be high.

Unfortunately, your credit report does not contain your credit score. To obtain your score, you'll have to pay one of the three national credit bureaus for it. Your credit card provider might also list a credit score on your monthly statements. This score might not be your official FICO credit score — the one most lenders rely on when deciding whether to lend you money. It can still give you a general idea of where you stand, though, and is worth keeping track of. (See also: FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?)

2. Your payments to utility companies

You pay your gas and electric bills on time every month. You might think that this key indicator of your financial responsibility would be listed on your credit report. Unfortunately, it's not. Utilities don't report payments to the credit bureaus.

This means that your on-time payments to utility providers don't help your credit score. Late payments aren't reported, either. But be careful: If you're far enough behind on your payments that a utility sends your account to collections, that will show up on your credit report. And that black mark will give lenders reason to hesitate when deciding whether you qualify for a loan. An account in collections can also send your credit score plummeting by 100 points or more. (See also: Account in Collections? Here's How to Fix It)

3. Your rent payments

Paying your rent on time probably won't help your credit score, either. That's because most landlords still don't report rent payments to the credit bureaus, meaning that these payments don't show up on your credit report.

There are services today, though, that landlords can use to report rent payments to the bureaus. Most landlords don't use these services yet, but the fact that they are available could be a sign that rent information will become more common on credit reports in the future.

4. Medical bills

The payments you make to doctors, dentists, and other medical professionals don't show up on your credit reports, either. Again, this is because doctors don't report payment information to the credit bureaus.

Paying these bills late, though, could show up on your credit report if your medical providers send your account to a collections agency.

5. Your salary

You'd think the money you earn would be a key indicator of your financial health, and it is. But it's not an indicator of how likely you are to pay your bills on time and manage your credit. Because of this, it doesn't show up on your credit reports.

6. A job loss

Your credit reports do provide some basic employment information, with some listing your past and most recent employers. But if you've just lost your job, that information won't be included in your report. Your reports never mention whether you are still employed, and they don't list how long you've worked with any one company.

7. Your spouse's credit history

Your credit reports list financial information about you and you alone. If you're married, your spouse's history of paying bills and running up debt won't show up.

However, if you and your spouse both have your names on a loan or credit card, that debt will show up on both of your credit reports. So will late payments you made on these accounts, even if paying the bills was your spouse's responsibility and not yours.

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Ask the Readers: Would You Rather Rent or Own Your Home?

Ashley Jacobs — Tue, 05 Sep 2017 08:30:05 +0000

Editor's Note: Congratulations to Dena, Lynda, and Wendy for winning this week's contest!

Buying a home is a common goal for many people, and it can make a lot of sense — you're not paying rent, the property will likely increase in value, and you can fix it up any way you want. However, homeownership isn't for everyone. The mortgage is a big commitment for most people, and it's harder to leave if you need to move for a job or it turns out you don't like the area. You're also solely responsible for maintenance and repairs.

Would you rather rent or own your home? Why? What do you think is the best part to renting or to homeownership?

Tell us if you would rather rent or own your home and we'll enter you in a drawing to win a $20 Amazon Gift Card!

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Tell us if you would rather rent or own your home and we'll enter you in a drawing to win a $20 Amazon Gift Card!

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

34 Ways to Come Up With the Rent Before the Month Ends

Max Wong — Tue, 18 Apr 2017 09:00:08 +0000

When you are short on rent, $300 might as well be $3,000,000. Finding the money seems impossible. But don't despair! Here's a list of ways to come up with the rent this month and every month.

1. Call in your markers

Do people owe you money? Now is the time to call in those loans.

2. Return your recent purchases

Did a recent shopping spree put you in this rental money crisis? You can even return unused items through your credit card if the store refuses.

3. Ask for overtime at work

Let your employer and your coworkers know that you are looking for additional shifts.

4. Take over a contract

Is your employer paying an outside contractor for work you could do on the side? Offer to do the job for a flat fee (to be paid outside your regular paycheck).

5. Be a great reference

My husband's company pays up to $5,000 per referral to employees who successfully recruit top talent.

6. Cash in on commuter benefits

Some employers allow their workers to make pre-tax payroll deductions to help pay for commuting costs. Other employers offer money saving commuter perks like free parking to carpoolers, free use of company bikes, or paying for public transit costs outright.

7. Get a second job

This might seem like a no-brainer, but you would be shocked by how many people don't look beyond their 9-5 job for extra cash. (See also: 15 Ways to Make Money Outside Your Day Job)

8. Join the gig economy

Drive for Uber, Lyft, or Caviar. Find a job using TaskRabbit or Upwork. Use Fiverr and Mechanical Turk to find micro gigs that you can complete in minutes. (See also: Find a Side Gig at These 4 Best Micro-Jobs Sites)

9. Create your own job

Every job that I have ever loved I have invented. Find something that needs to get done and do it for money. Babysit for your neighbors. Monetize your DJ abilities. Shovel snow. There are all sorts of long- and short-term jobs that require your skill set.

10. Offer day labor on a farm

Farms are always short on labor. It's a physically demanding way to make a buck, but if you like working outside, day laboring on a farm might be a solution to your financial woes.

Also, a side perk of many farm jobs is access to free produce. Reduce your grocery bills and get the rent paid!

11. Tuneup your finances

Are you paying for services that you aren't using? Go through your monthly expenses with a fine-toothed comb. You might be shocked by how much money you are wasting. (See also: How to Escape the Paycheck-to-Paycheck Cycle)

12. Delete duplicate accounts

Are you paying for multiple streaming video services? Can you entertain yourself with just one? Or, can you suspend or delete all of your subscription services until you get a grip on your finances?

13. Audit your accounts

Examine your bank statements closely. Are you paying extra fees for services that you don't use? Call your credit card company. Are you getting the best interest rate that you can get?

14. Clear out costly apps

There are many free apps and programs that provide a premium service for a fee. Are you using each of the pro versions enough to warrant the extra costs?

15. Cash in your credit card reward points

One of my friends tracks all her reward programs on an Excel spreadsheet so she never misses a perk. Are you leaving money on the table? Can you cash out your reward points for gift cards that you can resell or use to offset other line items in your budget?

16. Sell your stuff

The average American home contains over 300,000 items and many of those can be sold off for cold hard cash. Bonus: If you have been trying to downsize, now is the time to purge your home of unwanted items. (See also: Clear Out That Clutter: 15 Places to Sell Your Stuff)

17. Sell your gift cards

In some states, you can get cash for gift cards with a low balance. But there are a number of other ways to convert gift cards into cash.

18. Sell your collections

Collections can be hugely valuable. But before you hock Grandma's jewels, look around your house for hidden treasures. You would be shocked by the value of your old Starbucks mugs, concert T-shirts, and other random housewares. (See also: 10 Old Knick-Knacks You Can Flip for Easy Cash)

19. Sell your nostalgia

My husband just made $960 selling his old Nintendo, Super Nintendo, and Dreamcast games. But even more recent games can have value. Last year, I sold a copy of Kuon, a PlayStation 2 game, for $200.

Vintage analog toys such as board games, Breyer horses, Matchbox cars, Lego sets, action figures, and dolls can all fetch a small fortune on eBay. My friend Steve sold his collection of vintage Blythe dolls for $29,000, enough pay for the down payment on his home!

20. Sell bulky items on Craigslist

Sell bulky and hard-to-ship items like furniture, cast iron pans, and glassware on Craigslist so you don't have to fiddle with shipping.

21. Host a garage sale

My husband and I throw three garage sales a year that net us between $500 and $1,000 annually. Our garage sale inventory consists of random crap we couldn't sell elsewhere for more money. We price our garage sale merchandise to move, typically charging $1 to $5 for just about everything. The way we see it, if people are paying us to declutter our home, they deserve the bargain.

22. Set up a lemonade stand

To augment our garage sale profits, we sell lemonade or brownies for $1 per serving. In cold climates, you can sell hot cocoa or coffee to your shoppers.

23. Trash pick and flip

Are you already a minimalist who sold all her stuff ages ago? Don't worry. You can always sell other people's stuff! Since most rental contracts start at the first of the month, the last week of the month (when people are moving out) is always a great time to scrounge for curbed furniture and other items that renters don't want to pay to move. Sell your found treasures at a garage sale, or use Craigslist or an app like 5miles to advertise your merchandise to local customers.

24. Recycle

Why give the $.05 rebate per can that you paid for to someone else? University campuses and concert venues are a prime place to scrounge for bottles and cans.

25. Sell your books and music

While you will make more money selling your media on sites like Amazon and Half.com, you may not make an online sale in time to help your rent payment. For fast cash, sell your books, movies, and music to brick and mortar stores in your area.

26. Have a plant sale

Do you have a green thumb? Root cuttings from your garden or hook up with a local landscaper for their castoffs.

Or, sell heirloom vegetable seedlings. A package of 25 tomato seeds costs me about $8, or $0.40 per seed. But I can sell my tomato seedlings for $2 each at my neighborhood farmers market.

27. Sell your body, legally

There are numerous legal ways to sell your body for money. You can sell your sperm or eggs for thousands of dollars, but those donations require that your money be escrowed for at least six months and an equally long time commitment. For quick rent money, you can sell blood, platelets, plasma, breast milk, and, if you live in Massachusetts, your poop.

28. Stop driving

Do you have a less convenient, but also less expensive commuting option? Now is the time to learn to love the bus. Save on gas money and car repair costs by walking, biking, carpooling, or taking public transportation to work.

29. Monetize your commute

My friend Duke operates a mobile record store every Friday on his train commute to work. My neighbor knits hats during her daily bus rides. She makes enough money each month with her commuter knitting to pay for her metro card.

30. Advertise with your car

And if you can’t do without your car, make some extra dough by turning it into a rolling billboard. (See also: 7 Ways to Earn Extra Money With Your Car)

31. Rent out part of your house

My brother-in-law rents out his spare bedrooms in his suburban mini mansion to foreign students who are attending the local college. In addition to offsetting his mortgage, his daughter gets free Mandarin lessons. (See also: This Is How You Rent Your Place on Airbnb)

Pro tip: If you can find a housesitting gig at the same time, you can double up your house-renting profit.

32. Become an Airbnb host

Even if you don't have space to rent out, you can still be a host via the Airbnb Experiences program. Airbnb is a great place to advertise your local expertise as a specialty tour guide. For example, a chef could host a two-hour cooking experience or an experienced hiker could host a multiday camping excursion.

33. Leverage your parking space

If you live next to a university, hospital, concert venue, or sports arena, consider renting out your parking space. (See also: The 11 Best Websites for Renting Your Extra Space)

34. Rock the garage

Rent your garage out to your favorite local band as a practice space. Or, if you value your peace and quiet, rent your garage as studio space for photographers, sculptors, and woodworkers.

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This article is from Max Wong of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Pay These 6 Bills First When Money Is Tight

Dan Rafter — Fri, 31 Mar 2017 08:00:16 +0000

Is your money situation a little tight this month? It happens to the best of us. What if you don't have enough money this month to pay every bill by its due date? For the time being, you might need to prioritize your payments.

This isn't the ideal solution. Far from it — paying any bill late could result in a late fee. But thanks to a bit of leeway when it comes to credit reporting, paying bills just a bit late might not hurt your all-important FICO credit score.

This makes it a bit easier to determine which bills you absolutely must pay on time, and which bills you can more easily tackle after their due dates pass.

1. Mortgage

It's important to keep the roof over your head. And not paying your mortgage payment on time can send your credit score plummeting by 100 points or more. Credit scores are important: Lenders rely on them to determine if you qualify for a loan and at what interest rate.

There is some leeway, though, with mortgage payments. First, lenders can't report your payment as late to the credit bureaus until you're at least 30 days past due. This means that paying your bill one, two, or three weeks late won't hurt your credit score.

Second, according to the U.S. Department of Housing and Urban Development, lenders usually won't start the foreclosure process until three to six months after your first missed mortgage payment.

Even though these safeguards are built in, you don't ever want to take the chance of losing your home. Make sure to pay your mortgage as soon as you can.

2. Rent

If you're renting an apartment, do everything you can to pay this bill on time. Your landlord can send you an eviction notice if you're just one day late with your rent payment. Now, actually evicting you will take time, and most landlords probably won't file a notice that quickly. But you don't want to give your landlord any excuse to start this process in motion.

3. Car payment

As with your mortgage, there is a grace period before your late car payment starts to affect your credit score. Your auto lender can't officially report your payment as late to the credit bureaus until that payment is more than 30 days past due.

However, you need to be aware that if you stop making car payments, your vehicle can be repossessed. If this happens, your credit will suffer the consequences — by up to 100 points. Auto lenders can repossess your vehicle quickly, too. In fact, in most states they have the legal right to repossess your car as soon as you miss a single payment. It's unlikely that your lender will move to take your car that quickly, but why take that risk? If you're prioritizing your bills, this is definitely one to move to the top of your list.

4. Utility bills

Typically, you'll receive plenty of advance warning before your utility providers shut off your services. But you will have to pay these bills eventually to keep them on. Put these bills at the top of your priorities list.

If you are struggling to pay these bills, don't ignore them; call the utility company. Utilities will often work with homeowners who are struggling financially. They might lower your bill for a period of time or defer your payments for a few months to allow you to rebuild your finances.

5. Student loans

Student loan debt is a financial burden for many, but you might be able to work out a new repayment plan with your lender if you are struggling. This is usually easier to do with federal student loans. You might qualify for a deferment, depending on your financial situation. But even if you are struggling to pay private student loans, call your lender. The company issuing your loans might be willing to work with you to keep you from falling into default. (See also: 8 Surprising Ways to Pay Off Your Student Loans)

6. Credit cards

Yes, your credit card issuer can hit you with a late fee if you miss a payment. And yes, your card's interest rate might then soar. But credit cards don't need to be at the very top of your priorities list if you are struggling with critical bills like your mortgage.

Your credit card provider can't throw you in jail if you miss payments, and it can't take your house or car. So paying this provider after making your mortgage and car payments is OK in a financial pinch.

It typically isn't a smart move to pay only the monthly minimum on a credit card, because it's often such a small amount. However, if you're really struggling with money, this is another temporary option you can take. This will keep you current on your bill, and you can always boost your payments back up again once you've regained financial footing. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)

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5 Alternative Housing Options You Can Afford

Kat Tretina — Fri, 12 Aug 2016 10:30:14 +0000

Keeping your housing costs low is key to achieving financial freedom. Minimizing your expenses frees up more money for investments, savings, and pursuing your passions. While renting an apartment or a house is still the mainstream approach, there are other alternatives available that are more cost effective. By pursuing one of these nontraditional housing options, you can cut your expenses and break the paycheck-to-paycheck cycle.

1. Co-Living Spaces

Co-living spaces, which often resemble college dorms, are increasingly popular in places with a high cost of living, such as San Francisco. The tech capital is booming, and as a result, it is unaffordable for many; a one-bedroom can cost nearly $3500 a month.

More and more people are turning to co-living spaces as a cost-effective way to get living situations they can afford. In Silicon Valley, co-living spaces can be had for $1,000, less than half what a regular apartment would cost. In these dorm-style spaces, renters usually have a small bedroom of their own, but share the kitchen and common areas with up to a dozen other residents. Besides cost savings, these arrangements also provide people new to the area with great social opportunities and allows them to meet others in their industries.

2. Housing Co-Ops

While housing co-ops are fairly common overseas, they are just starting to gain traction in the United States. In a co-op, residents pool resources to own and manage housing together. The property can be a cluster of homes or an apartment-style building. Dwellers use their joint contributions to purchase the facilities and pay for community amenities like utilities, Wi-Fi, and lawn maintenance. The community approach cuts down costs dramatically, allowing you to save a significant amount of money compared to traditional housing.

The National Association of Housing Cooperatives has comprehensive information on how to locate a co-op, how to start one yourself, and questions to ask before handing over your hard earned money.

3. Work-Trade

Many people find success with work-trade agreements. Most common in rural areas, people can get free or cheap housing in return for a set number of labor hours, such as weeding, yard maintenance, or gardening. However, this approach is also getting more common in suburban and city areas, as even regular apartment complexes are willing to offer rent subsidies for men and women with repair or maintenance skills. You can find work-trade arrangements by searching for "work trade housing" or "rent-free exchange" on community job boards.

4. Tiny Homes

While tiny homes are increasingly popular for those looking for a cheap alternative to homeownership, these micro living spaces can also be a great avenue for renters. Many tiny home communities offer select units for rent. This approach can be a great option to cut down your costs while you save up a down payment for a home of your own, or to test out if small living is for you. Housing can cost as little as $300 a month.

5. House-Sitting

Another option is to act as a serial housesitter. When people are selling their homes, the structures often go vacant for months, leaving them vulnerable to thieves and squatters. Many sellers hire housesitters to live in the home rent-free to keep the home occupied and safe while it's on the market. This idea is a great strategy to get free housing without requiring a lot of work or time. You can often find housesitting opportunities on Craigslist, Trusted Housesitters, community classifieds, or by connecting with local realtors.

With the national rent average increasing for yet another year, many people are feeling pressure regarding their budgets. Housing eats up a huge part of their income, making it difficult to meet their other obligations or pursue their goals. Alternative housing solutions offer cost effective ways to keep a roof over your head while minimizing your expenses.

Have you considered these — or other — alternative housing arrangements?

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This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Smart and Fun Things You Could Do if You Paid Less Rent

Mikey Rox — Mon, 25 Jan 2016 16:00:03 +0000

Paying rent is one of life's necessary evils. And you have to toil away to cover the cost of your too-small dwelling that seems to always need the Super to fix something. But let's think happy thoughts. What would you do, in a perfect world, if you paid less rent? Here are eight smart and fun things to do with all that extra cash in your pocket at the end of the month.

1. Take Classes to Learn a New Skill

A few years ago, my husband spent an incredible amount of money on helicopter lessons, because learning how to fly an aircraft has been a pursuit of his since his Navy days. Okay, I get it, people have dreams and all, but I also think that if you're not rich, like we aren't, those lessons should somehow pay for themselves or earn income down the road. But they didn't, and still haven't.

Thus, let my disdain be a lesson in and of itself: If you want to use your leftover rent money to take a class, I highly recommend it, but you should have a purpose, an endgame. For instance, if you'd like to take a pottery class, that's all well and good, but are you doing it so you can make everybody ashtrays and vases for Christmas, or are you visualizing the potential of becoming proficient enough to sell the items or market yourself as a potter? The choice certainly is yours, but you'd be doing yourself a solid by trying to monetize your new skill, whatever it may be.

2. Upgrade Your Vehicle to Something You Want

There are upsides and downsides to buying a car brand new or used, which should be considered when deciding on a vehicle. But many times we get so lost in the details that we don't end up with the vehicle we actually want. If you're in this situation — driving a car or truck that gets you from A to B without much joie de vivre — maybe it's time to upgrade. It'd be a real possibility if you paid less rent.

3. Enhance Your Work Wardrobe

No matter where you work, somebody is judging you on your professional attire. And whether or not you want to believe it, the way you look plays a part in your income potential. It's not fair, no, because dressing "well" is a relative concept, but it behooves you to be on the trendier, more fitted side of the spectrum. If you're not feeling as confident as you'd like when you walk into the office, use your rent surplus to upgrade and enhance your wardrobe. Just a few key pieces — a fitted suit and shinier shoes — can do the trick.

4. Pursue a Healthier Lifestyle

It's true that nobody really needs to pay for exercise. You can do that on your own, without a trainer or even a gym. However, having the ability to work out by your own motivation and wanting to do it are two different things. I'm a self-motivator in all other aspects of my life, but when it comes to exercise, I need help. Which is why I don't feel bad paying for my gym membership or my personal trainer because I'm using these services to their full potential and seeing results (which is necessary for these expenditures to make sense).

If you're like me, there's no harm in using what you would have paid in rent to better your health and your body by getting help along the way.

5. Save for That Always-Out-of-Reach Vacation

If you find yourself with the good fortune of paying less rent, you probably won't be able to pack your bags and jet off on your dream vacation right away. With about a half a year of saving — depending on how much you were able to shave off your rent — that always out-of-reach vacation will be much easier to grasp.

6. Establish a New Side Gig or Small Business

With the sharing economy in full effect — thanks to services like Airbnb, DogVacay, and Uber — you can start earning income with little to no investment. But not all side gigs or small businesses are that easy. If you have an idea in mind that requires start-up capital, use your rent surplus to fund this endeavor.

In fact, I would say that this opportunity trumps everything else on this list so far. Adding another source of income can help you get to those other things faster, but establishing a new revenue generator should always be a priority. (See also: 10 Money Moves You Need to Make Before You Take a Side Job)

7. Funnel Cash Into Your Home-Buying Fund

Nobody will ever convince me that renting is better than owning your own home — not even the Wall Street Journal. Because why pay someone else to live in their house when you can pay yourself to live in your own house? Get out of that rental prison quicker by establishing a down-payment savings account and sending your rental savings there every month. Stick to it, and you'll have enough for a down payment before you know it.

8. Invest in Yourself

Go back to school, pursue a higher paying job, learn a new language — do something that will make you a better person and a more attractive employee. The best investment you can make is in yourself. Unless, of course, you have a hot tip on stocks; then I'll stand corrected.

What are some of the smart and fun things you would do if you paid less rent? Let me know in the comments below.

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6 Important Things You Need to Know About the Housing Market in 2016

Damian Davila — Thu, 21 Jan 2016 14:00:03 +0000

Buying a home is still part of the American dream.

According to a survey from Trulia, 75% of Americans dream of owning a home, up 1% from 2015. This dream is even more pressing among Millennials because 80% of those surveyed would like to buy a home — and 31% would like to do so by 2018.

Whether you're looking to buy a home this year or already own one, there are important factors that will affect your investment. Here are the six important things you need to know about the housing market in 2016.

1. Mortgage Rates Are Staying Low (For Now!)

The Fed's December 2015 interest rate hike had many consumers worried that rock-bottom mortgage rates would finally come to an end. However, the economic events of the first two weeks of 2016 show that low mortgage rates will stick around for a bit longer.

Given the lackluster performance of the stock market, many investors are buying bonds and driving down the yields of these investment vehicles. This is great news for those looking for a home loan, because the interest rates on 30-year mortgage loans are highly correlated with the yield of the U.S. Treasury 10-year bond. According to data from the Federal Reserve Bank of St. Louis, the average 30-year fixed rate mortgage average in the U.S. was 3.97% on January 7, 2016, down from 4.1% in December 31, 2015.

2. HARP Refinance Deadline Receives Extension

Many experts expect mortgage interest rates to increase further down the road. Those mortgage holders that haven't been able to refinance to a lower rate yet should think about doing so this year — especially homeowners that are underwater on their mortgages.

As of January 2015, about 700,000 borrowers who owed more than their homes were worth were still eligible to refinance their loans through the HARP program from the Federal Housing Finance Agency (FHFA). HARP was originally set to expire at the end of 2015, but it was extended for an additional year, until the end of 2016.

Nearly 3.3 million Americans have benefited from a HARP refinance to lower their monthly payments on their mortgages. The five basic requirements to qualify for a HARP refinance are:

Loan was originated on or before May 31, 2009.
Property is a primary residence, one-unit second home, or one- to four-unit investment property.
Loan is owned by Freddie Mac or Fannie Mae.
Current loan-to-value ratio must be greater than 80%.
Borrower is current on the mortgage, with no over-30-day late payments in the last six months and no more than one in the past 12 months.

There are still close to 430,000 HARP-eligible loans out there and you can check the eligibility of loans by zip code.

3. Home Prices Are Rising Less Than in Previous Years

One of the necessities that will be cheaper in 2016 is the single-family home. In 2016, the national average price for a single-family home is expected to be 3% higher than last year, a much slower rate of growth than 2015's 5% increase.

However, some markets will experience bigger price bumps, such as Sacramento, California with an expected 15% increase, and other markets will experience smaller price bumps, such as Houston, Texas with an expected 1.1% increase.

4. Rent Prices Are Increasing Faster

On the other hand, rent prices are expected to increase sharply. In the third quarter of 2015, U.S. home buyers were spending 15% of their monthly income on the mortgage payment of a typical home, while U.S. renters were spending 30% of their monthly income on the rent payment of a median-valued property.

Higher rent prices will continue to be norm in 2016. According to a survey of more than 500 large U.S. property managers, rental inventory is at the lowest level in over 20 years.

A smaller inventory of available units for rent enables landlords to demand higher prices from renters. Of the surveyed property managers, 55% reported to be "less likely to offer concessions or lower rents to fill vacancies" and 68% of them expected to continue raising their rental rates in 2016 by an average of 8%.

5. New FHA Loan Limits Take Effect

On December 9, 2015, the Federal Housing Administration (FHA) announced its new schedule of loan limits for 2016. FHA home loans allow homebuyers to access financing with a minimum 3.5% down payment of the market value of the property, among other requirements.

Given the changes to median house prices in certain metropolitan areas, in 2016 the maximum FHA loan limit is higher in 188 counties. However, the maximum nationwide FHA loan limit remains at $625,500 (here is a list of areas that are at the ceiling or that are considered "high cost.")

On the other hand, in 2016 the minimum FHA loan limit doesn't decrease for any areas in the country.

6. Fannie Mae Loosens Some Requirements

The Federal National Mortgage Association (FNMA), better known as Fannie Mae, is giving Americans a break in 2016. Through its new HomeReady mortgage program, Fannie Mae aims to broaden access to home financing to credit-worthy low-to-moderate income borrowers.

Some of the loosened requirements from Fannie Mae include:

Borrower isn't required to be a first-time homebuyer;
Down payment can be as low as 3% of property's market value;
Gifts, grants, and cash-on-hand are acceptable funds to cover downpayment and closing costs;
Nontraditional credit is allowed;
Income from non-borrower household members can be counted as part of the debt-to-income ratio of the borrower; and
Underwriting process includes additional flexibilities.

To learn more details about the HomeReady program, call 1-800-7FANNIE (1-800-732-6643) or visit FannieMae.com.

Do you expect 2016 to be better for the housing market — and your plans of owning a home?

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Move to a New City to Reduce Lifestyle Costs?

Carrie Smith — Thu, 21 Jan 2016 12:01:03 +0000

Moving to a big or popular city is often associated with higher housing costs. But even so, it may be worth it when you're able to change your lifestyle for the better — while reducing overall costs elsewhere.

This is the exact decision that my husband and I faced a few months ago when we decided to move across the country to be closer to family.

If you're considering whether or not you should move to pursue a better career or lifestyle, here's why you may want to move to a new city even if rent or housing costs more. (See also: The 5 Best Mid-Sized Cities for Millennials)

Why I Chose to Pay Double the Cost of Rent

Compared to our previous apartment near Dallas, TX our Boulder, CO rent is nearly double the price. Basically, the average price per square foot to buy an apartment in Texas is $100, while Colorado is as much as $383 per square foot.

Our one bedroom rented apartment in Texas only cost $900, whereas here in Boulder it's $1,660 — not including utilities. But we looked at our budget and took all our lifestyle costs into account before deciding that moving was the best option. Here are four reasons we decided to move to a new city despite the higher housing costs.

1. Lower Utility Charges

One of the biggest factors to your budget, aside from rent and housing costs, are your utility costs. This can include your water, electricity, gas, Internet, TV, and other small things like trash and sewer maintenance.

Depending on whether you live inside or outside the city limits, these costs could be quite high. Added together, my husband and I used to pay close to $400 per month towards our utility bills. But now that we live in a more cost efficient city, we're able to save nearly half of that each month.

Check your utility costs against those of your potential new city by making a list of your current bills. Compare those utility costs to your potential new place. (You can compare the costs online via the utility company's website, or calling the local phone number.) Be sure to check:

Internet
Phone
TV/Cable
Electricity
Gas
Water/Sewer
Trash/Recycling

Even though we may pay a lot more in rent, the amount we save every month by having low-flow faucets and more cost effective heating/cooling is definitely worth the move to us.

2. Food Costs and Waste

Groceries are a non-fixed expense that can eat into your budget if you're not careful. In our previous city, we had limited options of grocery stores to choose from, which left us little choice of saving money on food. We could either spend a fortune at a small boutique grocery store, or sacrifice the quality by going to a big chain store. We chose to spend a bit more for organic food and had a grocery bill upwards of $800+ per month — just for the two of us!

Since moving to Colorado, we have access to 10 different grocery stores (seriously, we counted!) and can find what we need at a much lower price. In the past several months we've knocked an average of $230 off our grocery bill, and it keeps declining.

Better quality organic food at one-fourth the cost has been well worth the move to a new city. In addition, we're able to buy less food and avoid so much going to waste. Having more options has allowed us to save money while still getting the organic and healthy food we want.

3. Environmental Impact

One of the main reasons my husband and I wanted to move from Texas to Colorado was to be more environmentally aware of the impact we were making. This city has a built-in recycling program so we no longer have to take weekend trips to the recycling center.

And because of the climate, there's no air conditioning unit in our apartment. During the cold months, we simply use a gas-powered furnace. When you compare the cost of a electric heater versus a gas furnace, prices for gas typically cost much less to operate than electric ones.

According to the EPA, the fuel from a gas furnace comes from natural gas production, which burns much cleaner and poses less of an environmental threat. It's important to evaluate your impact on the environment, as well as your overall lifestyle costs. Consider how this change could save you money and help better the local community.

4. Transportation Costs

Since settling into our life here in Boulder, my husband and I have only filled up the car with gas twice in the past three months. Our gas and car maintenance budget used to be $250 per month, but now it's down to around $40–$50 for all our transportation costs.

Because this new city has several different transportation choices, including a bus system, carpooling, and car sharing options, we've stopped using our car as much. We now bike or walk to work or while running errands.

This allows us to save over $200 a month on gas and maintenance costs for our car. In addition it allows us to put less emissions into the environment.

All-in-all, we increased our housing costs by $760 but are currently saving $610+ in lower utility, transportation, and food costs. For us, this was definitely worth it.

Are you thinking of moving to reduce lifestyle costs? What are some other things that impact your decision?

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This article is from Carrie Smith of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: