Thursday, April 6, 2017

The lowdown on low down payment mortgage

(BPT) - You would like to buy, but you can't manage that 20 percent down payment. Does this sound familiar?
The down payment is the biggest impediment to buying a home according to surveys, but in reality many individuals can qualify for a mortgage with as little as 3 percent down.
It is important to compare loans and do the math. Consider your closing costs (the cash you need in-hand), the monthly mortgage payment, and if that payment will go down or up in a few years. Paying a few more dollars each month in the beginning can sometimes save borrowers money in the long term.
For this exercise, we compare a $234,900 home purchase (the national median home price as of December 2016), with a 5 percent down payment and a 720 FICO score. And because calculators and loan terms vary, consider these costs as examples only. A mortgage professional can provide you with specific estimates.
Conventional loan with PMI
A conventional loan is a traditional mortgage from a lender that is not insured by a government agency. With a 5 percent down payment, the borrower finances the remaining 95 percent over 30 years with a 4 percent interest rate. Private mortgage insurance (PMI) is required because of the low down payment and is $78 of the monthly bill, making the total monthly mortgage payment $1,143.
Pros: A borrower can get a conventional loan with PMI with as little as 3 percent down. PMI can be cancelled once 20 percent equity in the home value is reached, which means your monthly bill decreases.
Cons: For some borrowers, a 5 percent versus 3 percent down payment may be a better deal as costs may be lower. However, for many prospective homebuyers looking to lock in low interest rates, build equity and home appreciation faster, an option to get into a home with the lower down payment may be better.
A combo loan (aka piggyback mortgage)
A piggyback involves two separate loans simultaneously. In this scenario, the first "primary" mortgage covers 80 percent of the loan with a 30-year fixed interest rate of 4 percent; the second loan is for 15 percent with 10-year fixed interest rate of 5 percent; and the remaining 5 percent is the down payment. The total monthly mortgage payment would be $1,271.
Pros: The borrower will not pay PMI.
Cons: It may be a more expensive as the borrower will pay closing costs on two loans. And unlike PMI, the piggyback loan doesn't cancel, but will be paid off over the term of the mortgage. The second loan often comes with higher interest rates too.
FHA loans
FHA loans are mortgages insured by the government through the Federal Housing Administration. The limits for FHA loans typically are lower than conventional mortgages. However, FHA mortgage insurance cannot be cancelled and must be paid for the life of the loan. FHA has other specific requirements, like the condition of the home. In this scenario, the mortgage is set at 95 percent of the home's value with a 30 year fixed interest rate of 3.75 percent. The total monthly mortgage payment would be $1,199.08.
Pros: A borrower can get a FHA loan with as little as 3.5 percent down and a FICO score as low as 600 may qualify.
Cons: FHA mortgage insurance cannot be canceled, so your monthly bill won't be reduced the way it is with a conventional loan with PMI. Also, FHA loans are subject to an upfront fee of 1.75 percent that is financed over the life of the loan.
No matter what you choose, do the math and compare so you can make an informed decision. If the conventional option sounds appealing, provides more information.

6 tips for decoding college financial aid award letters

Cut through the chaos with expert tips for understanding college financial aid letters

(BPT) - Whether you're a high school senior or an adult looking to change careers, a college degree can be the key to a bright future. As acceptance letters arrive in the mail, another important document is not far behind: financial aid letters.
"College is a major investment, and many people require financial assistance to pay for it," says Harlan Cohen, New York Times best-selling author and creator of the Naked Financial Minute. "It's vital to understand financial aid so you can make informed choices and avoid surprises in the future."
The average cost of tuition and fees for the 2016-2017 school year is $33,480 at private colleges, $9,650 for state residents at public colleges, and $24,930 for out-of-state residents attending public universities, according to the College Board.
In order to find out what aid you qualify for, you should start by filing your Free Application for Federal Student Aid (FAFSA). After your information is processed, and you've applied to the colleges of your choice, you'll receive financial aid award letters in the mail with the results from each school where you were accepted.
Not all financial aid letters are the same, so deciphering and comparing them can be confusing. To help get you started, the experts at College Ave Student Loans share tips and tricks for how to easily understand your financial aid letter.
Look carefully at symbols and terms: College award letters may use different wording and abbreviations. For instance, rather than spelling out the word "loan" you could see "L" or "LN". You might also see "net price" and "net cost." Look carefully at how each school calculates these amounts. Some schools will subtract loan amounts from these figures. Just remember that loans need to be paid back, usually with interest; loans can help you spread the cost of college over time, but they don't eliminate the expense.
Know the difference between gift aid and loans: Gift aid is money that is awarded to qualifying students that isn't expected to be paid back. Gift aid includes things like scholarships, grants, and housing or tuition waivers. Not all applicants will qualify for gift aid, but most will be eligible for federal loans. As a general rule, you should expect that you'll need to pay loans back, usually with interest.
Be aware of the impact of outside scholarships: If a student is awarded a private scholarship, the financial aid letter may list its effect on the amount of money offered by the school or in federal aid because the student's financial need has already been partially covered. This could impact gift aid, loan amounts, or both.
Keep an eye out for work-study offers: If you indicated an interest during the FAFSA application, your financial aid letter may list approval for a work-study job that provides money toward your studies and fits with your class schedule. The money you earn is typically applied directly to your school expenses.
Understand your expected family contribution (EFC): Depending on your personal circumstances, there may be a line item for expected family contribution. This is the amount of money your family is expected to contribute toward your college education based on their tax and savings information. This will impact your overall award package.
Think about additional costs: Your financial aid letter may not include all of the costs associated with going to school. Think beyond tuition and make sure you have an idea of what you'll be spending on housing, food, transportation, books, supplies, additional fees, and other living expenses.
If you find the amount of financial aid provided isn't enough (including the amount offered in federal loans), families may want to research and explore private student loans as an option to cover the additional expenses. Look for competitive interest rates and flexible repayment options that match your budget. College Ave Student Loans also offers a calculator that showcases how much families can save with various loan options at
Finally, if you're still unclear about the terms and conditions of any college award letter, it's important to reach out to the school to ask for clarification or discuss your options. You don't want to leave any money on the table.

Sunday, February 5, 2017

Security in an insecure world

(BPT) - The year 2016 was devastating for some safe deposit box holders. In New York, thieves cut holes in the roofs of three banks and brazenly emptied hundreds of safe deposit boxes, leaving the victims' pillaged boxes on the roof and strewn around the vault.
A stealthier thief in Florida picked safe deposit boxes in several banks, emptying the contents without damaging the box or leaving any visible sign of the theft.
These are not isolated incidents. On average, there are between 15-18 robberies or burglaries involving bank vaults every year according to the FBI. Millions of dollars of jewelry, cash, gold and family heirlooms are stolen, leaving devastated box holders dealing with unrecoverable losses.
Still the safest
Despite these occurrences, law enforcement agencies, FEMA, the American Red Cross and AARP all recommend safe deposit boxes to store valuable items, heirlooms and documents. A safe deposit box in a vault is superior to home storage even with a safe. Why? Because a residence is almost 20 times more likely to be robbed than a safe deposit box in a bank. And with rental costs starting at around $30 a year, safe deposit boxes remain one of the best values offered by a financial institution.
Required step
Today, most people who rent a safe deposit box assume the bank or a federal agency insures the contents. This is not true, and unfortunately, too many people learn this the hard way.
A standard homeowners policy provides limited coverage for some items in a box, but excludes losses from flood and other risks. They may also have a high deductible.
Specialty insurance designed to cover and protect everything inside of a safe deposit box - including cash, gold and important papers such as wills, titles, deeds, photos and digital backups, is now available. There is no deductible, and risks such as terrorist attacks, hurricanes and earthquakes are covered.
And because you do not need to identify what is stored inside the box to obtain coverage, you can maintain your privacy.
Protect yourself
Clearly, there are events that no vault or safe deposit box can protect against. However, there are steps you should take. Safe Deposit Box Insurance, LLC (SDBIC), the leader in protecting valuable assets in secure boxes, has developed a secure storage quiz on secure storage options.
So, despite there being some high-profile break-ins, a safe deposit box is still the best place to store your documents, family heirlooms and other valuables. But because nothing is 100 percent foolproof, it's important to do your research, select the right bank and insure the contents of your box through SDBIC.

What you should know about rising interest rates

(BPT) - Homeowners planning to refinance and buyers searching for a home may have an idea of what’s in store for them with regards to interest rates, but they never really know until they lock in a rate. This is in part because rates can change direction fast, and when they rise—as they have been recently—it can cost borrowers a great deal of money and time.
The effect of rising interest rates on your home purchase
Today, the median existing home price in the United States is around $235,000, and the average mortgage interest rate is near 4 percent. If you were to buy a home at that price, an interest rate increase of half a percent would cost you an additional $70 per month on your loan payment. And that assumes you’ll put the standard 20 percent down in advance. A more dramatic rate increase—say from 4 percent to 6 percent, even over time, would increase your monthly payment by almost $300.
Home price gains
For homebuyers, it’s not just rising interest rates that can increase your payment, but so can home price appreciation. In fact, in most markets, housing prices have increased past highs previously set before the financial crisis in 2007/2008. For example, in citing this recovery, the Federal Housing Finance Agency recently increased the maximum loan amount for mortgages that meet Fannie Mae and Freddie Mac guidelines for the first time in more than a decade.
The new conforming loan limits increased only slightly, to $424,100 in most parts of the country. This will enable home buyers in higher-cost areas to access larger home loan amounts and more affordable loan products, in line with local housing prices.
The home buying season may start early this year
Spring/summer is traditionally the busiest home buying time of the year as many sellers wait to list their homes after the cold winter weather is over and to coincide with the summer school break. However, with both home prices and interest rates on the rise, more buyers are expected to enter the home buying market earlier this year, making for a more competitive home buying season. Potential buyers will need to be aggressive to find the home they want at a rate they can afford.
Starting your loan search today
If you're in the market but haven't found the home of your dreams yet, there are tools available to guard against increasing mortgage rates. Lenders like loanDepot help customers save by giving them the opportunity to lock a quoted rate and hold (lock in) that rate for 45 to 60 days, protecting them from potential fluctuations in the market. And with rates rising, now is a great time to lock your loan at a more favorable interest rate.
If you do choose to lock your loan, you'll need to provide an appraisal deposit which can range from $450 to $750. This is not a fee, and is returned when working with loanDepot if there is no appraisal performed on a home.
Navigating your options can seem confusing at first, but a loanDepot licensed lending officer can help. You can learn more by visiting or by calling (888) 983-3240 today for more information.

Tuesday, November 22, 2016

5 ways to find extra money during the holidays

(BPT) - The holidays are here again. It's that time of year when you get together with family and friends, take some time away from work and live out the definition of "it's better to give than receive." And, if you're like many Americans, this is also the season when you give a little too much and find yourself over budget on your holiday spending.
Research from MagnifyMoney shows Americans incur $986 in additional debt throughout the holiday season, money they are then forced to pay off during the new year. If you've had problems with holiday-induced debt in the past and you've tried - and failed - to stem your holiday spending, take a different route this year and see if you can generate extra money to cover those increased holiday expenses. You can do it in a short period of time, so here are a few tips to get you started.
Clean house. As you're picking up your house and getting ready for guests to come over, take a good look under the couch cushions for spare change, and don't forget all those things you're moving to the basement. Add up that spare change to put toward your holiday budget. And, could you move some of your possessions out the door instead? Craigslist, eBay and Facebook all make selling your old possessions easier than ever. And don't forgo the traditional garage sale - one successful Saturday could give you the money you need to enjoy the holidays without debt concerns.
More money than you think. The money beneath your couch cushions may be worth more than you think. Research from Coinstar shows Americans, on average, believe they have $41 in spare change on hand. However, Coinstar's own nationwide kiosk data indicates the amount of spare change consumers have on hand is even more than that. Bring your spare coins to a Coinstar kiosk today and trade them for cash or no-fee eGift cards to retailers such as Amazon, Nike and Best Buy. On average, people cash in $68 when they convert their coins to no-fee eGift cards. Whether you keep the cards for yourself or give them as gifts is up to you.
Take a seasonal job. If you want a little extra money and a short time commitment, seasonal employment during the holidays is a great idea. Retailers across the country are looking to bolster their staff for the holiday season and you can enter this environment with minimal training and hit the ground running - especially if you have prior retail experience. Choose a product you're passionate about and it's a win-win, just make sure you don't spend all of your earnings before you leave the store.
Cash in those unwanted gift cards. Nearly three in four consumers have unwanted gift cards lying around because they are for stores that are too far away, or places they've never shopped before. If you're one of them, turn those cards into cash you can use. Coinstar Exchange allows you to exchange those unwanted gift cards for cash so you can tackle that holiday shopping list without debt concerns.
Cash in your credit card points. When you're shopping for a new credit card, reward points are a big deal in your consideration. But how often do you use them? Research shows that Americans rake in $48 billion worth of credit card points each year, yet only $32 billion are redeemed. The holidays are the perfect time to redeem those points, so don't forget to use them and find that extra cash you've been missing.
The holiday season is a wonderful time of year and it's more enjoyable if it doesn't leave you with lingering debt. So start preparing your extra revenue streams today and give yourself the gift of a happy, debt-free holiday. To learn more about how Coinstar can provide you the extra income you need this holiday season, visit

5 affordable ways to connect with family without breaking the bank

(BPT) - Ready or not, the holidays are fast approaching. While it’s a season known for celebrating family and friends, the stress of gift-giving and holiday planning can make people lose sight of what’s really important.
Here are five ways you can easily connect with your family without breaking the bank.
Take a family "staycation"
Making time for your family during the holidays doesn’t have to mean splurging on a trip across the world. Instead, opt for a cheaper alternative and spend time in your area. Take time to explore neighborhoods or attractions nearby. You never know — you might find a new favorite place right in your own hometown.
Simplify communication
Not everyone can celebrate with family in-person over the holidays. Not to worry: a simple and affordable way to stay in touch with loved ones is just what you need. TracFone has you covered with amazing Black Friday deals like the Samsung Galaxy J1 smartphone available for just $49.99, to help you connect for moments that matter this season. TracFone now offers a 30-day smartphone-only plan with talk, text and data for just $15 on America’s largest and most dependable networks with 4G LTE nationwide coverage — so you can easily share photos, videos and more. For more great deals and information on affordable, no-contract plans, visit
Repurpose a recipe
The holiday season means lots of meals and entertaining — and one of the best parts of this time of year is also leftovers! Rather than simply re-heating, look up some recipes you and your family can make to spice up extras from your holiday meal. This way, you can not only spend time in the kitchen together, but enjoy the meal you made around the table.
DIY decorate
This year, instead of buying generic (and expensive) decorations, get creative by making your own! Get the entire family involved and create decorations that will forever have a special meaning in your home. You can also get help thinking outside the box by turning to Pinterest, craft bloggers or YouTube tutorials for inspiration.
Give back
It can be easy to forget that the holidays are a time to remember to give to those in need. Take some time with your family to volunteer for an organization you feel strongly about. Volunteering is a great way to not only remind your family of what the holidays are all about, but a way for you to bond over an unforgettable experience.

College and credit cards: How parents can play professor

(BPT) - Last year, college campuses across the country had 2.1 million recent high school graduates walk through their doors — a number that will likely be matched in 2016. But a freshly printed campus ID isn’t the only plastic eager students will carry this fall. A recent survey commissioned by USAA found that as parents send their children to college, most make sure their kids pack at least one credit card in their wallets.
Parents cite a number of reasons why their child has a credit card. Most overwhelmingly, the primary reasons are the ability to build credit history and convenience.
However, one-third of parents surveyed say their children will not have a credit card in college. JJ Montanaro, a certified financial planner with USAA, encourages parents to reconsider if they feel credit cards might be unnecessary.
“College is a place to learn — whether it’s academics or life lessons,” he says. “Building a credit history and understanding of how to manage credit should be a part of the overall college experience.”
Montanaro offers parents this syllabus for helping their college students make the grade in Credit Cards 101:
Communicate expectations.
Surprisingly, parents say they are just as likely to discuss budget management as they are academic priorities with their college-bound child (both 82 percent). This is great news, but Montanaro encourages parents to lay a good financial foundation well before their kids are headed off for higher education. Before college, parents should teach their children the basics of setting a budget and following it.
Select the right card.
Since the 2009 CARD Act, it is more challenging for students to get a credit card without mom and dad’s help. Parents report that nearly 50 percent of college credit card holders are authorized users on their account or using a card they have co-signed for.
“It’s a great idea for the student to have a card to which the parent has access and visibility,” says Montanaro. “Keeping a clear line of sight into how the card is used and paid each month allows parents to help young adults learn from their mistakes and create successful money and credit management habits.”
For students who still need training wheels, a secured credit card can be a good option. When they apply for one of USAA’s secured cards, they’ll also open a USAA Bank two-year variable rate Certificate of Deposit (CD), which allows them to earn interest while helping to build a positive credit history.
Master the fundamentals.
While there are many benefits of having a credit card in college, irresponsible use can have lasting consequences. Montanaro suggests using a credit card for recurring charges, like cell phone or internet service, as a safe way for students to build credit. Once they are ready to charge a wider array of expenses, both parents and children must abide by the most important rule: Pay off the card in full each month.
Learning to responsibly use credit cards while in college can have many benefits. In the short term, it allows students to build a positive credit history in order to purchase a car or rent an apartment once out of school. Longer term, they can carry positive credit management habits with them throughout their lifetimes. Montanaro sums it all up, “Allowing your kids to dip their toes into the world of credit cards while you’re able to closely monitor the situation provides an opportunity to learn and the freedom to fail without big stakes."