Tips for Avoiding Scams

Unfortunately, scammers continue to get more creative in their attempts to trick the general public into relinquishing funds and personal information for nefarious purposes. Here are some important best practices from the Better Business Bureau (BBB) to help protect yourself next time you connect with an unknown caller, or come across a suspicious link online: Try to only answer the phone when you know who is calling. Our curiosity is piqued by those unknown phone numbers, and many times, they look just familiar enough, but don’t answer your phone unless you know who it is, says the BBB. Today’s scammers are very convincing once you do pick up, pretending to be anyone from your grandchild to a bill collector from your utility company, but think about this: anyone who genuinely needs to reach you (like a family member or someone to whom you actually owe money!) will leave a message. Don’t provide personal information without asking why. In today’s digital environment, we tend to give away our personal information online with ease. But always question if a site really needs your contact information, credit card information, or Social Security Number. In fact, before entering any information at all, make sure the site has ‘https’ in its URL, which signifies that it is secure. Don’t send payments via wire transfer or prepaid gift cards. The bottom line is, no legitimate business only accepts these payment methods, so when this request is made, you can be pretty confident it’s a scam. Wire transfers and prepaid gift cards are the quickest and most untraceable ways to send money, according to the BBB. If you can’t...

When Can You Negotiate the Price on a Home?

If you’re searching for a home to buy, you probably know by now that a lot goes into that all-important offer you make on the house you’ve finally decided is the one for you. Hopefully, you’ve connected with a professional, informed real estate agent who has great knowledge of the local market and has been able to advise you on the best offer to make, based on a comparative market analysis and other factors. But what about negotiating? Is it possible that sellers will accept less than what they’re looking for? In certain situations, you can negotiate the price of the home. Here are certain factors that make negotiating possible: You can buy the home with cash. If you’re coming to the table with an all-cash deal, that’s a very attractive option for most sellers, which means they’ll probably be willing to come down on the price. You’re not in a hurry. If you don’t have a house that needs to be sold before you buy a new one, or some other pressing situation that makes moving into the house time sensitive, you have the luxury of toying with price a bit. If the deal falls through, you won’t be left homeless. The sellers are under duress. Ask your agent if there are any particular reasons that the sellers might be under pressure to move things along, such as a divorce, a financial emergency or the need to quickly move elsewhere. You’ve been pre-approved for a mortgage. While this is more the rule than the exception in today’s market, if you’re pre-approved for a mortgage, it shows that you’re a credible buyer and,...

Put Your Home Equity to Good Use

With home values enjoying a steady rise over the past several years, most Americans have witnessed a return of home equity, and many are leveraging that equity toward other important financial goals. A recent study by LendingTree, which assessed home equity loan requests since the start of 2018, tracked six uses for home equity loans: home improvement; debt consolidation; retirement income; investment property; emergency funds; and other uses. The research revealed some interesting findings about how homeowners are using their equity: Home improvement is the No. 1 reason for taking a home equity loan. According to the study, 43 percent of respondents reported requesting a home equity loan for home improvement purposes. Real estate investors borrow the largest amount. Borrowers who were looking to invest in another property had the highest property values and requested loan amounts. For property investments, borrowers requested an average of $103,625. For non-property investments, which likely include small businesses, borrowers requested $80,241. Just over 1 percent of requests were to fund retirement. This group had the highest average age of 63, 12 years above the next highest average age. A small share accessed their home equity for emergency expenses. This group had the lowest loan amount requested of $35,747 and kept their (loan to value) LTV low at 51 percent. Debt consolidators push the limits on LTV. Borrowers looking to consolidate debt had the highest LTV of 74 percent. If you’re looking to take advantage of your home equity, talk to a local real estate professional to find out the current value of your home. You may find it’s the right time to put your home on the market...

The ABC’s of FHA Loans

By Barbara Pronin Like all mortgage loans, FHA loans require proof of steady income and employment as well as a minimum down payment. But they are attractive to consumers because they are government-backed, offering more attractive interest rates and less stringent qualification requirements. Beyond that, how much more can you share with your clients about FHA loans? Here are seven fast facts to help you brush up: Credit requirements – With a credit score of 580 or higher, a borrower can qualify for an FHA loan with a down payment as low as 3.5 percent. Those with scores between 500 and 579 need down payments of 10 percent. Under certain circumstances, such as insufficient credit history, exceptions may be made. Check with an FHA specialist. Down payment funds – In addition to using their own savings, borrowers can use a gift from family members and/or an assistance grant from a state or local government to make the down payment. Closing costs –The FHA allows sellers, builders and lenders to pay some of the borrower’s closing costs, such as appraisal, credit report or title expenses, as an incentive for the borrower to buy the home. FHA-approved lenders only – Because the FHA is an insurer rather than a lender, borrowers must get their loan from an FHA-approved lender. Mortgage insurance – Two mortgage insurance premiums are required on all FHA loans. The upfront premium is 1.75 percent of the loan amount, which can be financed as part of the loan amount. The second, called the annual premium, is paid monthly. It varies based on the loan amount, the length of the loan, and the initial...

Know What Goes Into Your Credit Score

You’re probably well aware of how important your credit score is. A good score grants you access to loans and favorable interest rates, and opens up many different possibilities for a healthy financial future. But do you know how your credit score is determined? Be aware of the factors used in credit-scoring models so you can work towards achieving a higher credit score. Here are some of the top factors, according to Credit Karma: On-Time Payment Percentage This is the percentage of payments you’ve made on time during your credit history. This plays a big role in determining your creditworthiness, so just a couple of late payments could significantly impact your score for the worse. An easy way to avoid late payments? Set up automatic bill pay or create calendar reminders for bill due dates. Credit Card Utilization This is a percentage that is calculated by taking the total of your credit card balances and dividing that number by your total credit card limits. This will show creditors how much of your total available credit you are already using. The lower your credit card utilization, the higher your credit score. Average Age of Open Credit Lines The longer your credit history and the older your accounts the better. That’s why it’s a good idea to keep older cards open and active, and to start applying for credit at a young age. Total Accounts Consumers with more accounts (or more lines of credit) often have higher credit scores because it indicates that more lenders are willing to give them credit. Having a good mix of different types of credit is...

Should I Dip Into Equity and Renovate?

Many homeowners will be taking advantage of winter savings on supplies and the off-season availability of contractors to use a home equity line of credit (HELOC) to finance home renovations. According to recent research from TD Bank, more than three quarters (80 percent) of responding homeowners with existing HELOCs who said they were planning home renovations for winter also said they would consider dipping into their home equity for funding. With an average HELOC size of more than $84,000, half (51 percent) of those surveyed stated they plan to spend at least $50,000 on renovations as winter approaches. Using a HELOC to make renovations during the winter is smart and cost effective, says Mike Kinane, head of Consumer Lending for TD Bank, as homeowners can often take advantage of reduced materials prices during annual sales and choose from a larger pool of contractors who usually have more accessibility during the off-season. The most popular uses for HELOC funds, according to survey respondents were: home renovations (32 percent); emergency funds (14 percent); and education expenses (12 percent). Realtor.com offers these six tips when considering a HELOC: Shop around. Comparison shop to get the best rate. Ask about the margin. If you’re offered a rate that’s lower than the competition, it’s probably just an introductory rate, so ask about the lender’s margin. For example, if the introductory rate is 3.5 percent and your lender’s margin is 2 percent, your final interest rate will be 5.5 percent. Consider a conversion clause. Some HELOCs allow you to convert a variable interest rate to a fixed rate, usually during the draw period (5-10 years). Watch out for...

America’s Favorite Investment? Real Estate

Looking for the best way to invest your money long-term? Most Americans say real estate is the way to go. According to a recent report from Bankrate.com, when asked the best way to invest money not needed for more than 10 years, 28 percent of U.S. adults replied real estate, followed by cash investments (23 percent), the stock market (17 percent), gold/other precious metals (15 percent) and bonds (4 percent). The Bankrate.com survey has been conducted five years in a row and this is the third straight time real estate has grabbed the number one slot. Interestingly, the stock market has never placed higher than third, which is particularly surprising since the S&P 500 is up more than 50 percent since the question was first asked in July 2013. Republicans and households with annual incomes of $75,000 or more were the only demographic groups to select stocks as their preferred long-term investments. Baby Boomers and members of the Silent Generation were more likely to choose stocks than millennials and Gen Xers. The Bankrate.com Financial Security Index dipped slightly recently, but is still at its third-best reading since the Index debuted in Dec. 2010. Four of the five components have improved from 12 months ago: job security, comfort level with debt, net worth and overall financial situation. However, Americans are feeling slightly worse about their savings relative to last year. Feel free to contact me if you’d like more information about investing in real estate. Source: Bankrate.com Reprinted with permission from RISMedia. ©2017. All rights...

Learning the ABCs of FICO

By Barbara Pronin Most people don’t think too much about their FICO scores until they want to get a loan. No matter the type of loan you want—mortgage, new car—the higher your FICO score, the more likely you’ll be approved. Understanding the five factors that make up your scores can be the first step toward improving them. Financial experts at the Motley Fool break down where your scores come from and suggest a few ways to improve them. Know Where Your FICO Score Comes From Payment History – Thirty-five percent of your score is determined by whether you pay your bills on time every month. Credit Utilization Ratio – Thirty percent reflects your credit utilization ratio—the percentage of available credit you’re using. Using less than 30 percent of your available credit can help your credit score. Length of Credit History – Fifteen percent reflects the length of your credit history. Paying bills consistently over time can definitely work in your favor. New Accounts – Ten percent of your score is based on the number of accounts you open. Opening too many new accounts simultaneously suggests you’re highly reliant on borrowing to keep up with your expenses. Credit Mix – Ten percent reflects the types of accounts you have. Credit bureaus make a distinction between your credit card accounts versus student loans, car loans, and mortgages. Three Ways to Improve Your FICO Pay off a chunk of your balance. If you carry a balance, pay off as much as you can, even if it means you must work a second job or sell off stuff you no longer need or use. Ask for a raise in...

How Much Do You Know About Your Credit Score?

By Barbara Pronin While your credit score affects everything from your ability to buy a car or a home to how much interest you will pay on the loan, many people don’t know how these scores are calculated or what impacts them positively or negatively. Moreover, says the Credit Federation of America (CFA), more than 25 percent of respondents in a recent survey did not know that a low credit score could increase the cost of a car loan by $5,000. More than half didn’t realize that utility companies, cellphone companies, and even insurers sometimes check credit scores before issuing services – or that multiple inquiries in a short time, as when you are shopping for a loan, are treated as one inquiry in order to minimize the impact on your score. The CFA provides more about credit scores that every consumer should know: All your credit scores are not the same – Most people assume their credit score is a single three-digit number, but each of the three major credit bureaus (Experian, Equifax, and TransUnion) scores you differently, since they don’t necessarily have the exact same data in their files. Closing old accounts will not necessarily boost your scores – Closing old or inactive accounts may inadvertently lower your credit score because now your credit history appears shorter.  If you want to simplify, close newer credit accounts first or put the cards away so you don’t use them but your credit history stays intact. Paying off a bad debt will not erase it from your score – Once a debt goes to collection, or you’ve established a history of late payments,...

Closing Cost Primer: Know Your Terms

Buying a home is undoubtedly one of the most expensive ventures of your lifetime. But it’s important to understand that much more goes into budgeting for a new home than the price of the house itself—like closing costs. Closing costs are fees charged by the lender at the closing of your real estate transaction, and usually amount to thousands of dollars. Your real estate agent can explain and estimate what all of your particular closing costs will be, as they vary by state, but here is a handy list of terms and definitions from Bankrate.com to help bring you up to speed. Real estate lingo can be confusing, so becoming familiar with these terms in advance will help demystify the closing process. Origination, broker, lender or originator: A fee charged to create a home loan. It’s often a set percentage of the mortgage amount. Discount points: A fee in the form of mortgage interest paid upfront. In exchange for this fee, the lender reduces the interest rate. One point is equal to 1 percent of the loan amount. Appraisal: A fee that is passed on to a company that renders an opinion about the real value of the home, independent of its listing or negotiated price. That value is then compared against what the borrower has agreed to pay. Credit report: A fee charged to order a history of your financial life. It includes details about your behavior as a bill payer, the amount of debt you owe, your available credit and any inquiries that companies make to obtain this information, such as your mortgage lender. A good credit...

7 Considerations for Surviving the Holidays

The holidays can be a stressful time of year for many different reasons.  Here are seven considerations that could alleviate the pressure. 1. If money is tight, set a realistic budget. If you know in your gut that you can’t afford a gift, don’t buy it!  Take steps to manage expectations in advance.  Let people know if you prefer not to exchange gifts with every co-worker, relative, and person you know. Now is a great time to have that “let’s not exchange gifts” conversation. 2. Don’t entertain in a way that is more work than fun. Overdoing a hosted event can turn the fun into work. Don’t be afraid to ask people to bring a side dish or dessert — or even a main course. And as for the clean-up, learn to say “yes” when your guests offer to help. 3. Don’t have inflated family expectations. Someone else will ask if you’ve put on some weight or want to know why you are still in “that job.” Take deep breaths and remember most of them mean well. 4. Don’t say “yes” to everyone. This is the season when people tend to throw more parties, arrange more events, make more demands on your time. Not every “group” in your life — carpool moms, soccer team moms, bridge club, book club, golfing buds — needs to have a special holiday party. If you see half these people on a regular basis, consider just saying “happy holidays” at your next gathering and skip the additional holiday obligations. 5. Put dates in your calendar as far in advance as possible. Beginning in October,...

Top 10 Most Expensive Mistakes You’re Making on Your Home

By Cary Teller Homes cost a lot of money to maintain. Are you spending extra money unnecessarily on the upkeep of your home? Here are 10 of the most expensive mistakes you could be making. 1. Using Traditional Light bulbs If you still have incandescent light bulbs in your home, you could be throwing a lot of money away every month on inflated electric bills. Over its lifespan, an incandescent bulb can use $180 worth of electricity. A CFL will only use $41 worth of electricity over the same time period. Even better is the LED bulb, which only uses $30 per bulb. Think what replacing every light bulb in your home could do to your home’s bottom line. 2. Ignoring a Leaky Faucet A leaky faucet that drips one drop per second can waste more than 3,000 gallons per year, which is enough water to take more than 180 showers. Some of us live in areas where water is plentiful, but for those of us in areas plagued with drought, this could be costing you a fortune. Fix or replace your leaky faucet and save a ton on your water bill. 3. Using the Wrong Air Filter Size We all sometimes forget to change out the air filters for our HVAC systems, or accidentally buy the wrong size. Using the wrong filter or a dirty filter can increase your power bill and cause expensive problems for your furnace down the road. Use the correct filters for your system, and set a reminder to change them after the recommended amount of time. You won’t regret it. 4. Not Customizing Temperature Invest in a...

7 Tips for Securing Your Information Online

The internet provides us with access to seemingly limitless information, often with the risk of compromising the security of our personal information. Here are seven practical ways to protect your personal data from a cyberspace attack. 1. Be Safe on Social Media Be vigilant about what you post on social media.  Posting information, like your birthday or address, can be used by criminals for more dangerous applications. Personalize the security settings in your social network accounts if you share a post with personally identifiable information (PII), and make sure to only select trusted individuals who can see it. 2. Protect Your Credit Cards When making purchases online, always be sure that the website you enter your credit card information into is secure. The URL should begin with “HTTPS,” not simply “HTTP.” Don’t make purchases on an unsecured network and remember to logout of your customer account when using public devices. To be extra careful, load a prepaid credit card with limited funds for online purchases. 3. Use the Cloud for Back-Ups Backing up your important files is essential in case your devices are ever stolen. Common examples are iCloud®, Dropbox®, and Google Drive®, where you can upload the files and access them from anywhere in the world with a working internet connection. These programs can secure files with user-based or group-based permissions. 4. Factory Reset and Drive Wiping Simply “deleting” something from your computer or mobile device will not permanently remove the information from the machine. Before you sell or throw away your old machine, make sure that the drives are fully wiped and that the machine is given...

Buying a New Home? 4 Reasons Why Location Is Essential

By Kara Masterson Buyers are so hyper-focused on the home that they often cast aside surroundings. “Surroundings” do not equal trees, fences or landscape. The home’s surroundings are the houses around the home and the residents occupying them. Surroundings also include the neighborhood, the passersby and the city. Surroundings are the home’s location and it bears equal importance. Here’s why location is essential to any future real estate decision. Safety Is the perfect home near a busy driving area consisting of drug houses, screaming kids and problematic neighbors? If so, stop reading; plenty of communities exist for you. For the rest of us, this isn’t an ideal neighborhood. Pay extra for a safer neighborhood. They’re packed with stores, shops, restaurants, and banks nearby; a rarely noisy community is surely waiting for you. Along with research, visit the location at night for accurate answers. Distance The distance from point A to point B is so important. A long commute burns more gas and wastes more time than necessary. Therefore, learn the miles and minutes it takes to travel from the home to the following: work, school, store, hospitals and favorite hangouts. Buyers without cars must live in communities with public transportation access. A community containing local amenities close by is valuable to buyers. Besides, no one will travel great distances for any destination. The Best Schools Distance isn’t the only factor in the best school search. The reputation, the quality and the district are additional factors in finding a good school. Homes surrounding good schools are in high demand. Determine good schools by searching online reviews of schools and reading two or...

Airbnb Hosts Hit a Refi Hitch

By Suzanne De Vita Call it a bump in the refinance road. Homeowners renting rooms through home-sharing platforms have encountered difficulty obtaining refinancing , subjected to higher interest rates and limited loan offerings, The Wall Street Journal reports. The issue lies with hosts who rent rooms for a considerable amount of time in a given year—enough time for lenders to classify them as investors, despite maintaining the listing as their primary residence. Loans on investment properties are generally considered riskier, with terms to match. Complications arise when the host believes the additional income earned from renting will prove favorable when applying to refinance, only to experience the opposite: one homeowner in the WSJ report, who earned $30,000 last year renting the cottage in his backyard, was denied a refi on a home equity line of credit because the bank he applied with prohibits them for “properties in which the homeowner is operating a business.” Another homeowner in the report, who is permitted by his municipality to rent his primary residence for an unrestricted amount of time, was instructed to apply for a refi as if it were an investment property—and received a higher interest rate as a result. The concern for lenders is two-fold: defaults on investment property loans are more common than defaults on those for primary residences, and higher default rates could prompt repurchase requests. The refinance hitch is the latest in ongoing scrutiny of home-sharing platforms, especially Airbnb, one of the most well-known and used. (Airbnb maintains the scenarios in the WSJ report are “incredibly rare.”) Critics have called on the Federal Trade Commission to investigate the “commercial” listing phenomenon....