ready to buy a house?

Questions you need to ask yourself before buying a house

Becoming a homeowner is an important decision and you want to make sure you are ready. Your family situation, your job, and your financial health all dictate when it’s a good time to buy a house.

Are you ready to buy a house?

After answering the following questions, you will have a better understanding of how close you are to reaching the milestone of buying a house.

Part 1: The Idea

The first step is what we call the consideration stage. It’s when you first start figuring out what you want in a house.

  • What house do I want?

If you don’t know what you want, you are not ready to buy a house. The right house does not only depend on the price and location, but on your needs as well. You need to consider yard size, whether or not it has a finished basement, the number of bedrooms and bathrooms, and how much TLC it’s going to need.

  • Am I ready to stick around?

If you are not sure you can commit to staying at your new house for at least the next 5 years, you may want to think twice about purchasing a house.  If you decide to sell the house in less than 3-5 years of purchasing it, it is not worth the investment now. This is because appreciation won’t catch up to the closing costs and you will be losing money.

Part 2: The Means

Here we cover the financial concerns of purchasing a house. If you are not financially prepared yet, these questions should give you the guidelines of what you should be aiming for.

  • Do I have the money?

Of course, you can get a mortgage, but it is best you save up and put down 20% of the selling price upfront to avoid paying private mortgage insurance.

  • Do I have debt?

Your debt-to-income ratio needs to be good in order to qualify for a mortgage. Together with the mortgage your debt can make up to about 36% of your gross income. If it is higher than that, it becomes extremely hard to get a mortgage. Not only that, if you have debt and a mortgage, any sudden reduction in income would make it difficult to keep up with all of your payments and maintain the house properly.

  • How is my credit score?

Credit score is important because it shows the mortgage lender whether you are reliable. More specifically, they will be looking at alternative credit trade lines, which would include rental history, car insurance, utilities, monthly subscription services, and cell phone bills etc. Mortgage lenders are looking for a good score in the last 12 months or more. So, the first step is to make sure you know what your credit score is.

If your credit score is good, you will have lower monthly payments.  In other words, the interest on your mortgage will be lower.

Low or no credit score is not good since lenders are looking for proof that when lend the money you will be responsible and they can trust that you will pay it off.  In this case, you’ll need to put off buying the house and build your credit score first.

  • How are my savings?

Aside from your emergency account, you need to be able to put money in a savings account. If you can put money aside it means you have good income flow as well as spending habits.  In case you cannot put aside anything more than for your mortgage payment, you should postpone the purchase of a house until you have a more secure income or better spending habits.

One thing that you would need is a savings account for the down payment for the house you have chosen.

  • Have I taken into account all the hidden costs?

If the list price seems high wait until you add all the hidden costs. Insurance, property tax, utilities, moving costs, and renovations are just the beginning. The biggest hit perhaps, will come from the maintenance of the house. The larger the house, the bigger these costs will be.

  • Do I have an emergency fund?

You might be the person to plan at least 3 months ahead, but unexpected things happen anywhere, anytime. For example, if you get sick and need to pay medical expenses, which you did not take into account. There are many other things that may require you to veer from your spending plan. These are exactly the situations you need to have an emergency fund for. A good idea is to first build on your emergency fund and then proceed to purchase a house.

Bonus Question!

  • Is now a good time to buy a house?

Check out the market for houses at your desired location. If you are buying the home as an investment you might as well go the extra mile to make sure you are making a good purchase. The idea here is that the value of the property will rise and perhaps in 30 years you will be able to sell it and travel the world? Even if that’s the case, make sure to factor in the cost of interest payments on your mortgage, upgrades to the property and other maintenance.

In brief, buying a house is a process and it does not simply happen overnight. There is a lot to consider. You need to choose the type of the house you want. Depending on the particular house, you need to calculate how much it will cost you to pay for insurance and maintenance. You need to evaluate your current financial situation and see whether you should make it better.

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Protecting your Identity or Personal Information

10 Steps to Protecting Your Identity

Identity theft is something people tend to neglect, no matter how often they hear about it. It always seems as something terrible that only happens to others but never to us. The unpleasant truth is that identity theft can happen to anyone. And even though there is no 100% guaranteed method to protect ourselves against it, there are a number of simple things we can do to make us less likely to become a victim of identity theft.

But first, let’s see why we should do it.

What qualifies as identity theft and why you should be careful

Protecting your Identity or Personal Information

We often imagine identity theft as someone walking around, pretending to be us. In reality, unauthorized use of any piece of personal information is considered identity theft. This could include address, email address, previous addresses, mother’s maiden name, the place where you were born, pin number, bank account details, social security number, passwords, and more.

Having your SSN stolen sounds pretty scary – with it, a criminal could do almost everything that the real SSN holder can. Your property would be at risk. Not only that, but a criminal could commit a crime using your SSN and name. Then the police would come looking for you, thinking you’re the one who did it.

But how could a criminal use your mother’s maiden name to do you harm? Indirectly. Many companies keep your personal information these days and questions like “what is your mother’s maiden name” are common before they give you access to your data. Someone could take advantage of this and break into your account. Once they do, they would likely find more sensitive information, which can be directly used for their benefit.

Online Identity Theft Prevention

Identity theft is not something new but modern technologies and lifestyle present new risks. Social media, for example, makes it very easy for thieves to find victims and acquire personal information. You can’t be completely safe. There is no way to hide your email from everyone or even control who sees it. But you can take certain precautions.

  1. Use strong passwords –many sites today ask users to use a password with at least 12 characters, including letters, capital letters, numbers, and symbols. This a safety measure against brute force hacking into your account. Ideally, a password like that is random-generated. However, recent studies suggest that this practice had made overall web security weaker. That’s because people simply cannot remember those passwords and as a result, they write them down somewhere – on a separate text file or on a note on the desk. This makes it easy for others to find and use those passwords. Perhaps the best advice is to use a password you can remember but is hard for others to guess.
  2. Use 2-factor verification for all of your online accounts–upon login, you will be asked to enter not just your username and password, but also something else – like a pin code sent to your phone as an SMS. This drastically improves security and is common practice for banks and financial institutions, but you should use 2-factor verification wherever possible.
  3. Be mindful of your privacy settings on social media–you are able to choose who sees what of the things what you share. An open profile makes it extremely easy for identity thieves to learn an awful lot about you. Take the time and adjust your security settings now.
  4. Don’t be quick to open or download any email attachments – they are often infected with malware which gives hackers access to your computer and any private information you store on it.
  5. Be hesitant to share sensitive information on sites which do not have SSL certificate – check if the web address starts with https. If it does, it means that the site will encrypt the information you are about to submit, making it unreadable to hackers.
  6. Remember that public Wi-Fi connections might be corrupted – do not use them to log in your PayPal account or online banking. Actually, do not use them to access any accounts. Hackers could easily steal your information over non-secure Wi-Fi networks.

Offline Identity Theft Prevention

Compared to the online world, we feel more secure in the real world. It is hard to imagine how someone could trick us into giving them sensitive information. But practice shows this happens a lot and we shouldn’t underestimate the risks.

  1. Be careful with documents that contain private information. Documents such as bank statements and solicitations should be shred or at least torn up. Some people could search through your garbage to find your private information. Don’t throw the ATM receipt in the nearest bin. Carry it in your pocket until you can get rid of it safely.
  2. Do not give away any private information over the phone. Ever. No company would ask you to do that. If someone is trying to collect your information, it is most probably a scam. If it seems urgent, hang up, call the company back, and ask them to confirm that they indeed need this information from you.
  3. Monitor your credit score. You can request a free credit report from the three national credit bureaus – Equifax, Experian, and Trans Union – once a year. This means that every 4 months you can check for anything suspicious going on with your credit. For example, if someone has tried to apply for a loan using your social security number.
  4. Pay extra attention to how you protect your Social Security Number. Do you keep it in a safe place? If it is in your wallet or purse, how likely is it to get stolen? Who has access to it? Whenever someone requests you to give a SSN, ask if it is absolutely mandatory and why. Be familiar with their privacy policy.

Identity theft is among the fastest growing crimes in America. It may cause you serious trouble and it is typically hard to undo the damage. Protection of your personal information should be a priority. And if you believe you have been a victim of identity theft, contact the authorities immediately. Stay safe!

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Loan for Students

Smart Strategies to manage your Student Loans

Student loan debt can be overwhelming and many people end up paying it off well into their 40-s and 50-s. We have a few strategies to help you manage your loans better.

Understand Your Loans

Many students don’t really understand the terms of their loans and end up overpaying down the road. Know the type of loans you have, the interest rates, balances, and grace periods. You may have Perkins loans, subsidized and unsubsidized Stafford loans or private loans. If you visit your loan servicer’s website, you will be able to see each loan account, balances, interest rates and current repayment plan. Be aware that frequently students have loans managed by 2 or 3 different servicers. Two common servicers are Navient and Great Lakes. If you go to the Department of Education website, you will find help creating a smart repayment plan.

strategies-to-manage-student-loans

Know the Numbers

It is crucial for you to know the precise amount of money you owe if you want to have control over your student loans. Most students end up with multiple loans and sometimes lose track of them before and during repayment. Know how many loans you have, how much you have to pay each month, the interest rates of each loan and the grace periods.

If you are a current student or a recent graduate, ask your financial administrator at School for assistance or visit the National Student Loan Data System website or Clearinghouse Meteor Network website to find out how much you owe. You can also see all of your loans and debt by checking online your credit report at AnnualCreditReport.com.

Accelerate Your Loan Repayment

You can either pay less money for longer time at a high interest rate, or you can pay more money than the minimum for a shorter time with a lower interest rate. Basically, the faster you pay back your loan and the more money you pay each month, the less interest you will have to pay, thus paying less overall and getting out of debt sooner.

Refinancing

A lot of students end up refinancing their federal student loans; however, this means that you will lose your right of using benefits, such as loan forgiveness and income-based repayment plans. If you are interested in refinancing your student loans consider contacting different lenders to compare total repayment amounts and get a complete picture of your options.

SoFi, CommonBond, Citizens Bank and LendKey are decent lenders who offer good interest rates. LaurelRoad has interest rates starting from 2.99% to 6.99%; Earnest has very decent interest rates, too, between 2.57% and 6.39%; CommonBond offers interest rates starting from as little as 2.57% to 7.12%. SoFi and Earnest might even help you get employed if you struggle with finding a job.

Avoid Default

Depending on what school you are attending, your loans may have a grace period of 3 months, 6 months, or more and the same goes for the total repayment period. Despite most students starting a job right after graduation, often times they are stuck under the burden of repaying these student loans.

If you are more than 270 days late with your payments, your loans will go into default, which is going to lead to taking away your social security benefits. Remember that no matter how difficult your financial situation is, you ought to make at least the minimum payments.

Federal Student Loan Consolidation

This gives you the option to merge all of your student loans into one, thus get rid of all the different interest rates, however, bear in mind that you will, indeed, pay one interest rate but it is going to be quite high.

Aim Higher

Firstly, focus on the loans with the highest interest rate because they will add up the most to your overall debt. Afterwards, shift your focus on the second to last debt with the highest interest rate. This may be challenging, but you will save a significant amount of money if you pay off the costlier debts first. Since your interest rate is based on your principal, another smart move would be to pay extra principal because this will lower your interest payment.

Automatic Payments

Once you have started a job and have consistent, reliable income, you can set up your payments to be automatically withdrawn on a monthly basis. This is just a precaution in case your life gets too hectic and busy and you forget to make your payments on time. Another bonus is that you will get a small reduction on your interest rate.

Programs And Forgiveness

Income-based repayment programs allow you to be forgiven from your outstanding loan money after 25 years of regular payment. However, there are certain criteria to be met if you want to use the benefits of IBRP, like the payments you have to make on your federal student loans must exceed 15% of your total earnings above 150% of the poverty level.

Pay As You Earn (PAYE)

This is a good program which will forgive outstanding money on your federal student loan after 20 years of regular payment. To be eligible to use PAYE your payments must exceed 10% of your total income above 150% of the poverty level. There are other criteria which must be met in order to qualify for the program.

Public Service Loan Forgiveness

Certain people can be eligible for PSLF after 10 years of qualifying payments. One of the stipulations is that you must be hired by a non-profit organization, volunteer organization or other public service organization. It is worth doing your own research to see what your chances of benefiting from this program are.

The approximate number of people with student loans in the USA is 40 million with around $1.3 trillion total debt. In 2014 the federal government seized portions from the social security checks of about 135,000 people because their loans went into default. Get educated about your student loan repayment options, pay more than the minimum whenever you can and do whatever is necessary to avoid defaulting on your loans. Don’t worry, you are not alone. There is free student loan counseling available from the Federal Government, from your loan servicer and from most reputable banks. If you feel overwhelmed or fell behind on your payments, contact your servicer as soon as possible. Do not wait. You can get back on track with some timely action.

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How to Check Your Credit Score and Credit Report

Up to 80% of Americans use credit, yet many don’t realize the importance of their credit score and do nothing to increase it. Some people don’t have a high score because they have never taken a loan and usually these are people in their early 20s. Many Millennials use student loans, but their credit score tends to be below average, making it difficult to obtain a loan later in life.

Interestingly, 6 in 10 Americans have no clue what their credit score is and don’t understand the role it plays as an indicator of their financial health. Here’s how you can check your credit score and get a credit report.

Know your credit score

There are four credit score tiers:

How to check Credit Score & Credit Report

  • Poor Score: 400-549
  • Fair Score: 550-649
  • Good Score: 650-700
  • Great Score: 701-850

If you want to find out which of these four grades you fall in, there are three ways to do it:

  • Check it online: If you are curious about your credit score, you can easily check it online for free. You can also obtain your full credit report for free as it is a federal law that you are able to access it annually. An account with CreditKarma.com is free and will give you access to your consumer credit score, allow you to track your score, send you instant updates and notifications when a new account is opened or when you apply for credit. It is a great way to keep an eye on suspicious activity and avoid becoming a victim of identity theft. www.AnnualCreditReport.com allows you to download your credit reports from all 3 credit agencies once a year. AnnualCreditReport.com does not offer you a free credit score – that comes as part of their paid credit monitoring program.
  • Consult the 3 Credit Bureaus: You can get your credit reports directly from Experian, Equifax and TransUnion, but, again, you’ll have to pay for your credit score. You can either get all 3 of your credit reports once a year or request them one by one every four months. Note that these bureaus are completely separate and you will need to pull your reports individually.
  • Ask your bank: Fair Isaac Co can pull your credit report, but keep in mind that it is not free of charge. Make sure you go to your bank and ask them if they can pull your reports for free – most banks started offering this service to their clients. Among these banks are Discover, Barclays, Citi, Chase, Bank of America, Ally, Capital One and Wells Fargo.

Check the accuracy of your credit score and report

Your credit report is the key to accessing credit cards, loans, renting and buying property, getting lower interest rates, receiving job offers, and more. Make sure you review all the information provided in the reports you pulled because data shows that 1 in 20 people have credit report errors which drastically change their credit score.

Take a close look at your name, address, accounts, and payments. Review your reports for errors, like foreign accounts; unauthorized loans; someone else’s collections; late payments which you, indeed, paid on time; and debts that are not yours. These could mean that you were a victim of identity theft and can ruin your credit history.

If you detected errors in your credit report, contact all 3 credit bureaus right away and have them corrected. It is your right to file a dispute and some bureaus offer easy and convenient way for you to get that job done. It can be as easy assending a letter where you thoroughly explain the issue and attach proof of errors.

Your proof can be a document or a letter, payment records, receipts, monthly payment statements and anything else that can show what actually took place. Keep in mind that you must keep all correspondence with bureaus and banks. In addition, you need to have a tracking number for your mail in case it gets lost. File your dispute right after you notice the errors because sometimes a dispute can take up to 45 days to be processed.

Know the difference between credit score and credit report

An important thing to remember is that credit score and credit report are two completely different things. Your credit report is a complete history and record of your use of credit, like credit cards, student loans, car title loans, and credit amounts. Your credit score is a creditworthiness grade you are given based on a calculation by a credit bureau. This calculation is based on how much debt you have, your payment history, accounts in collections, credit card use and more.

In other words, if your credit report looks good your credit score will be good as well and vice versa. Your score can affect your future plans for renting your dream apartment in downtown Long Beach, for example.

A good credit score is crucial especially for those who sooner or later will need to invest in their first apartment or house, a car or a small business. Reaching that high score is important if you want better interest rates for your mortgage, or if you want a car, insurance, credit card offers, and other benefits. If you have a good credit score you will have better loan terms, higher chances for credit approval, and less payments to make.

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Get extra cash for Christmas

Ways to get extra cash for Christmas

Christmas is almost here, and with many Americans spending over a $1000 on Christmas gifts this year, we can’t help but think of ways to save some money this season. If you are in need of some extra cash for the holidays, we have a few ideas for you.

Give people a lift

This is the time of the year when people rush to the malls and grocery stores more frequently than any other time of the year. Not everyone has a car, and if you live in a city, you know that using public transportation with armfuls of gifts can be a nightmare. Not only that, with holiday parties already in full swing, and many people are finding themselves a little too “cheerful” to drive home. You can turn this into a money-making opportunity by offering rides through Lyft or Uber or you can simply spread the word to friends, neighbors or coworkers.

House-Sitting or Pet-Sitting as a way of making money

Get extra cash for Christmas | Title Loans

So many people this season will leave their house to visit family members and friends. This is your chance to earn a little extra cash! Offer your neighbors to house-sit while they are away this Christmas.

You can also pet-sit and plant-sit. Pet-sitting companies are too expensive for most people, and they end up asking a friend or neighbor to look after their pets while they are away from home. This person could be you. You can also go to Care.com to look for pet-sitting opportunities!

Granted, house-sitting or pet-sitting probably won’t make you any money before Christmas, it is a great way to boost cash right after and pay off those credit cards you used to buy gifts or catch up on the bills you were a little short to pay after you did all that shopping!

Teach on VIPkid.com

It takes some experience, indeed, to be a teacher, however, it is a fun activity and a year-round way to get extra cash. Some parents whose children have fallen behind with their studies need a private teacher even during the Christmas break. Offer your services to your neighbors or teach children overseas from the comfort of your own home with VIPKid.com. This is a win-win for both you and the parents.

Photography

The family portraits with Santa Clause might be a bit cheesy but they are part of the Christmas spirit and people like to send them as Christmas cards to family and friends. If you love photography and have invested money in a good quality camera you can offer your services as a family photographer. This is yet another win – win for you and your clients. You will charge a lot less than a professional studio (that’s probably booked a month ahead already)

Rent out a second property

If you happen to have second property somewhere, consider putting it up for a rent because there are so many travelers out there who need a place to call home away from home. Young couples like to travel on Christmas and they especially prefer cosy houses over cheap hotel rooms. Take nice photos of your second property, register on Airbnb.com, and you will get to choose who you want to let in your house and at what price. Enjoy the Christmas break from your house while your second property adds money to your account.

DIY is cheaper

This year you can make Christmas presents more meaningful by DIYing. In the world of overconsumption, smaller and cheaper can be better. It doesn’t make you money, but it sure saves you some. If you make a few extra things, you can try selling them through Facebook Buy-Sell groups, too.You can use your own hands and imagination to create mindful, unique and special gifts for the people you love. Make handmade jewelry or cards, knit Christmas socks or a sweater, make a mason jar with homemade cinnamon and chocolate cookies in it, make pottery and color it, bake peppermint and chocolate cookies, put together a photo album or create a painting. Try these Pinterest board for some inspiration.

https://www.pinterest.com/bhg/diy-gifts/

https://www.pinterest.com/studentrate/diy-gifts/

https://www.pinterest.com/dawnchats/diy-gifts/

Save money and make a special present for those who are important to you.

Get a loan

You can always use a loan. It’s Christmas, after all. It is understandable if you want to treat yourself, put some tasty meals on the table, get the best presents for the ones that you love. A car title loan will be just enough to give your budget the boost that it needs. You can get approved within 15 minutes, no credit check is required, you get the money in cash and you keep your car to drive.

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