Tag: Finance

Auto Loan: New Car vs Old Pros and Cons

There are over 25 million auto loans every year in the United States, with the majority of drivers using finance to pay for new and used vehicles. Car loans are some of the most common secured loans in the country and for many Americans, a car is the second most expensive purchase they will make in their lifetime.

But shopping for a new car and applying for a suitable car loan is a stressful experience filled with uncertainty and difficult decisions. One of the most difficult decisions is whether to opt for a new car or a used one. In this guide, we’ll showcase some of the pros and cons of both options, pointing you in the right direction and helping you to make the right choice.

Reasons to Buy Used

It is satisfying to own something that is brand-new. It’s fresh out of the factory—you’re the first to use it, the first to experience it. 

Consumers are prepared to pay a premium just to be the first owner. iPhones and other tech are great examples of this. You could save 30% on the price of a new phone by opting for a refurbished model. The screen and case will be near-perfect, the hardware and software will be fully functional, and everything will be backed by a warranty. However, you don’t get the satisfaction of peeling back the protective stickers and being the first to open the box.

It’s a similar story with cars. There are no stickers to peel and boxes to open, but you can’t beat the new car smell or the way the steering wheel feels in your palms.

That’s not all, either. There are many other benefits to owning a brand-new car and using your auto loan to acquire one.

New Cars Depreciate Fast

A $200,000 mortgage acquired today might cost you $300,000 or more over the lifetime of the loan. However, in a couple decades, when that mortgage is in the final stretch and you own a sizeable chunk of home equity, you’ll likely have something worth $250,000, $300,000, or more.

If you get an auto loan on a new car, it’s a different story. As your interest increases and your payments exceed the original value, the current value nose-dives. At the end of the term, you could have something that is worth a small fraction of what you paid for it.

As an example, let’s assume that you purchase a $40,000 car with a $10,000 down payment and a $30,000 loan. With an interest rate of 6% and a term of 60 months, you’ll repay just under $35,000 over the lifetime of the loan.

However, as soon as you drive that car out of the lot, the price will plummet. At the end of the first year, it will have lost between 20% and 30% of its value. If we assume a 20% loss, that car is now worth just $32,000. The irony here is that you will have paid just under $7,000 in that year, and as the years progress, you fall into a pattern where the more you pay, the less it’s worth.

In the next 4 years, the car will experience an average deprecation of between 15% and 18%. Again, let’s assume a conservative estimate of 15%. That $40.000 purchase will be worth $27,200 at the end of year 2; $23,120 at the end of year 3; $19,653 in year 4, and $16,705 at the end of the loan.

And don’t forget, that vehicle cost you $45,000 in total.

Unless you’re buying a rare car that will become a collectible, all cars will depreciate, and that depreciation will be pretty rapid. However, used cars don’t suffer such rapid deprecation because they don’t have that inflated sticker price. If you take good care of them and pay a good price, you won’t stand to lose as much money.

Used Cars are Cheaper

As stated above, all cars depreciate, but if the first year suffers the biggest drop then why not buy a car that is just a year or two old?

It’s the same car and offers many of the same benefits, but you’re getting it for up to 30% less on average. For a $40,000 car, that’s a saving of $8,000. Once you add a 20% down payment, your loan only needs to cover $25,600. For a 6% loan, that’s just $495 a month, compared to the $619 you’d pay on a $40,000 new car with the same 20% down payment.

That puts more money in your pocket and less debt on your credit report. That’s a double-whammy well worth sacrificing a new car smell for.

It’s Still Nearly New

If you buy a used car that is just a couple of years old, you can still get something that has been well maintained and is just as impressive as it was the day it rolled off the lot. 

Think about the last time you bought a brand-new car, computer, phone, musical instrument—or anything else that came with a premium price tag. You probably kept it in perfect condition soon after buying. Everyone goes through a period of doing their utmost to keep a new purchase immaculate and the more they pay, the longer than period lasts.

Most consumers will keep a car in perfect condition for at least two or three years, but no matter what they do, they are powerless to the depreciation. This means you can get an almost-new, perfect car that is nearly a third cheaper than it was when it was new.

Reasons to Buy New

Α used car doesn’t provide you with that enjoyable, tactile experience. You can’t enjoy the ubiquitous new car smell and you won’t be the first owner. However, there are numerous benefits to buying used instead of new, not least of which is the amount of money you will save now and in the future.

More Finance Options

You have a few more options at your disposal when it comes to financing a new car. Many dealerships offer low-interest and even no-interest financing to encourage you to sign on the dotted line. 

These deals often have hidden terms, penalties, and other issues, and if you fail to make a payment, they won’t hesitate to take your car from you. However, if you’re struggling to finance elsewhere and have your heart set on a brand-new car, this could be your only option.

Make sure you read the terms and conditions closely and don’t let them bombard you with small print and sales talk. They are there to sell you a car. All they care about is your signature on that contract and if that means glossing over a few of the terms, they won’t hesitate.

More Customization and Better Features

Technology is advancing at a tremendous pace and this can be felt in all industries, including the automotive sector. A lot can happen in a few short years and if you buy a used car as opposed to a new one, you could miss out on a host of electronics, safety features, and more.

Customization is also possible with new cars. You can request colors, fabrics, and other aesthetic changes, as well as additional features relating to the power and performance of the vehicle.

Better Cover

New cars offer bumper-to-bumper warranty cover, which means that you’re covered in the event of an issue. If major repairs are needed, you won’t be out of pocket, and these warranty plans tend to offer roadside assistance as well.

This can be true for used cars as well, with the manufacturer’s warranty being transferred when the car is in the hands of a new owner. However, the warranty is at its longest and most useful when the car is first purchased.

Cheaper Maintenance

The warranty won’t cover everything, and you will still be responsible for normal wear and tear. However, because the car is new, it should require less maintenance and may take several years before you need to make significant purchases.

Surveys suggest that new car owners pay anywhere from $0 to $300 for maintenance during the first 12 months, with this fee spanning between $300 and $1,100 once the car is a decade old.

Simpler Process

Used car purchases take time. You need to find the vehicle, inspect it, negotiate with the seller, and then hope you can agree to a price and payment plan. If you want something specific with regards to colors and features, you may have to search many inventories and individual sellers before you find something that fits.

With a new car, you simply agree to a budget and see what’s available. If you need any tweaks or changes, you can request them directly from the dealer.

Summary: New vs Old

There are two ways at looking at this. Firstly, there are more advantages for buying a new car and these include some pretty important ones. However, the advantages for buying used are much bigger and if your bank balance or credit score is low, that could be the deciding factor. 

In any case, it’s important to look closely at the pros and cons, evaluate them based on your personal situation, and don’t rush this decision.

Auto Loan: New Car vs Old Pros and Cons is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

How Long Does It Take To Buy A House?

How long does it take to buy a house? The answer is: it depends. You can buy a house in a matter of weeks or it can take you anywhere from 4 to 6 months. The question is how ready are you? It can take a long time, and that’s just learning about various mortgage options or improving your credit score.

So understanding the various factors involved in buying a house can give you an estimate of how long it will take you to buy the house

Check out now: 5 Signs You Are Not Ready To Buy A House

How long does it take to buy a house? A step-by-step guide.

It can take a homebuyer a few weeks to several months to complete the home buying process. But when determining how long it will take you to buy a house, you first have to find out if you will be pre-approved for a mortgage. There is no sense of shopping for a house to then realize you can’t afford it.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

I. How long does it take to get a pre-approved mortgage letter in order to buy a house?

If you’re serious about buying a house, it’s important to get pre-approved for a mortgage. So when it’s time to make an offer, the seller will know you’re serious. If you don’t have one handy, the seller will likely move to the next buyer.

Getting pre-approved for a mortgage in order to buy a house can take longer. That is because you have to make sure your financial situation is in shape. For example, your income-to-debt ratio, your down payment, and your credit score must be good. That’s exactly what a mortgage lender will look at.

Even when these things are in order, shopping and comparing mortgage rates and fees can take several weeks.

Let’s take a look on how long it will take you to get these things in shape before buying a house.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

A. How good is your credit score?

A low credit score can make buying a house take longer, because it can take months to a year to improve a bad credit score.

A conventional loan will usually require a 640+ credit score.

In fact, your credit score is the number 1 item mortgage lenders look at to decide whether to offer you a mortgage. And if it is not where it’s supposed to be, you might get rejected.

Luckily for you there are other ways to get a loan with much lower credit score: FHA loans.

FHA loans only require a credit score of 580 with 3.5% down payment. You may get qualified with a 500 credit score, but you’ll have to come with a 10% down payment.

So before you get into the fun part of shopping for a mortgage or visiting homes, it’s best to know what your credit score is and take steps to improve it.

You can get a free credit score at Credit Sesame.

B. Fix errors on your credit report.

Fixing errors on your credit report in order to get pre-approved for a loan in order to buy a house can take 30 days.

According to Transunion, “most investigations are completed within 2 weeks, but some may take up 30 days.”

Again, we recommend you get a free credit report at Credit Sesame. A credit report will give you a detail analysis of your credit history, how much debt you owe, and how creditworthy you are, etc. If there are any errors or inaccuracies, fix them immediately so there’s no surprise when you’re actually applying for a mortgage.

The best way to do that is by filing a Transunion dispute or Equifax dispute.

C. Do you have a down payment for the house?

How long it will take you to buy a house will also depend on whether or not you already have money saved up for a down payment.

Unless you’re going to buy the house with outright cash, you’ll need a down payment. And saving for a down payment can take a long time. Depending on your income and expenses, saving for a down payment on a house can take years.

Assuming, for example, you want to buy a house that will cost you $450,000, and you’re using a conventional loan to finance the house. With a 20% down payment, you will need to come up with $90,000.

Let’s say again, because of other monthly expenses, you can only save $1500 a month for the down payment.

You see how long it will take you to save for a down payment to buy the house? 5 years. And that doesn’t even take into account other upfront costs of buying a house, such as closing cost.

While it’s possible to get a mortgage with a down payment as low as 3.5% of the home purchase price, it’s advisable to put at least 20% down. The reason is because you will avoid paying private mortgage insurance (PMI), which protects the lenders in case you default on your mortgage.

Home buyers with a down payment below 20% are usually charged with PMI.

Another reason for a larger down payment is that it reduces the cost of the mortgage, grows equity much faster, and saves you on interest over the life of the loan.

As you can see, it can take you as much as 5 years from the time you’re thinking about buying the house to the time you’re actually ready to start the process.

But once you have taken care the things above, buying a house can go a lot faster.

II. How long does it take to find a real estate agent?

Average time: 1 day to a month

Once you have been pre-approved for a mortgage, the next step is to find an experienced real estate agent. Finding a good real estate agent can take a day to a month. Websites such as Zillow and Redfin list real estate agents you can use.

III. Shopping for a home.

Average time: a few weeks to a few months

With the help of a real estate agent and your own due diligence, finding a home can can go faster or take longer depending on available homes, the season and your desired location.

But experts say on average it can take a minimum of three weeks to a few months.

IV. Making an offer, negotiation, and inspection.

Average time: 1 to 10 days

Once you have found the home of your dream, the next step is to make an offer. You and the seller can go back and forth negotiating the price.

Once your offer has been accepted, you and the seller sign something called a purchase agreement. Then, the next step is to hire a professional to inspect the home for defects. Depending on your state, a home inspection must be completed within 10 days. And if the inspection finds some defects in the house, that could delay the process.

V. How long does it take to close on a house?

Average time: 30 to 45 days.

Once the inspection is done, your lender will need to officially approve you for the loan. And depending on the lender, it can also affect how long it takes to buy a house. You may need to provide additional documents. But the lender will need to assess the home for its value. And depending on the program (whether it’s conventional loan or FHA loan) it can take anywhere from 30 to 45 days to close on a home.

Bottom line

When asking yourself this question: “how long does it take to buy a house?” The answer is : it depends. If you have your credit score, your down payment, your other finances under control, you can buy your house in two months or less. But if you have to save for a down payment, fix errors on your credit report, raise your credit score, the whole home buying process can take years.

Click here to compare mortgage rates through LendingTree. It’s completely FREE

Still wondering how long it takes to buy a house? Read the following articles:

  • 5 Signs You’re Not Ready To Buy A House
  • 10 First Time Home Buyer Mistakes To Avoid
  • 3 Signs You’re Not Ready to Refinance Your Mortgage
  • The Biggest Mistakes Millennials Make When Buying a House
  • 7 Signs You’re Ready To Buy A House

Work with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). So, find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post How Long Does It Take To Buy A House? appeared first on GrowthRapidly.

Source: growthrapidly.com

How Much Does a Cosigner Help with Getting Auto Loans or Better Loan Terms?

A woman in a bright yellow dress drives a silver car.

Imagine you’re shopping for a new car and finally find a reasonably priced set of wheels that you like. But when the dealer pulls your credit, that seemingly affordable monthly payment is no longer available to you. Instead, you’re offered a subprime car loan at 10% or even 20% interest because your credit isn’t strong enough to get a better rate.

How much does a cosigner help on auto loans when you’re facing this type of situation? Get more information below to help you decide whether seeking a cosigner is the right option for you.

How Does a Cosigner on a Loan Work?

A cosigner is basically someone who backs the loan. They sign agreeing that if you don’t make the payments as promised, they will step in to pay them.

If you don’t have much of a credit history or your credit is bad or poor, lenders are typically hesitant to give you an auto loan. They perceive you as risky. Will you pay as agreed? There’s not enough data or credit history for them to make that call.

However, a cosigner with a long history of good credit is different. The lender is more likely to believe that this person willpay as agreed. So, if you can get a cosigner to back you, you might have a better chance of getting a loan or getting better terms.

How Much Does a Cosigner Help With an Auto Loan?

How much can you save? Imagine you finance $37,851, the average price for a new light vehicle in the United States as of February 2020.

The average interest rate as of the end of 2019 for new car loans was 5.76%. If you’re able to get that interest rate and a loan term of 72 months—that’s 6 years—you would pay a total of $44,742. That’s $6,891 in interest and a monthly payment of around $621.

If you financed at 10% without a cosigner for the same terms, you’d pay a total of $50,488 for the vehicle. That’s $12,637 in interest and around $701 in monthly payments.

This is obviously just an example, but you can see that a cosigner can save you a lot. In this case, it’s $80 a month and more than $5,700 total.

Cosigner Versus Co-Applicant

It’s important to note that having a cosigner for a car loan is not the same thing as having a co-applicant. A co-applicant buys the vehicle with you. Their credit history and income are used alongside yours to determine if you, together, can afford the vehicle. The co-applicant also has an equal share of ownership in the vehicle purchased with the loan.

A cosigner, on the other hand, doesn’t have an ownership share in the vehicle. Their income may also not be a factor in the approval. Typically, they’re along only to provide a boost in the overall credit outlook.

What Are Some Downsides of Having a Cosigner?

Most of the risks or disadvantages are held by the cosigner. If you don’t pay the loan, they could become responsible for it. They could also suffer from a lower credit score if you’re late with car payments because it might get reported to their credit too.

As a borrower, you might experience a few disadvantages in using a cosigner. First, you have to get someone to agree to this, and you typically want it to be someone with good credit. Trusted family members are the most common cosigners, but that could mean that they might want to have a say in what type of vehicle you get.

And if something happens and you can’t pay the vehicle loan for any reason, you run a personal risk. You could damage your relationship with the cosigner if they do end up having to pay off the loan or face damage to their credit.

So, Should You Get a Cosigner for an Auto Loan?

The decision is personal. Before you do anything, check your credit and understand where you are financially. That helps you know what your chances for getting approved for a loan are on your own and how much loan you might be able to afford.

Then, check out some potential auto loans and consider whether you should apply for them on your own. If you know your credit is too poor or you try to apply for a loan and don’t get favorable terms, talk to a potential cosigner. Be honest about your situation and have a plan to pay the loan on time each month so they feel more confident supporting you as you make this purchase.

Apply for an auto loan today!

The post How Much Does a Cosigner Help with Getting Auto Loans or Better Loan Terms? appeared first on Credit.com.

Source: credit.com

Ask the Readers: What Helps You Relax?

Woman relaxing on couch with blanket and mug

The holiday season is usually very busy for many families, but you can relax now, right? Now that it’s over? Unfortunately, there are other sources of stress in our day-to-day lives; it’s important to remember the things that help us relax even when we’re not bustling through the busiest season.

What helps you relax? What do you do to get through especially stressful days? Do you set aside time for self-care?

Tell us what helps you relax and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

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

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
  • Follow @janetonthemoney on Twitter.

Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

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Giveaway Rules:

  • Contest ends Monday, January 20th at 11:59 p.m. Pacific. Winners will be announced after January 20th on the original post. Winners will also be contacted via email.
     
  • This promotion is in no way sponsored, endorsed or administered, or associated with Facebook or Twitter.
     
  • You must be 18 and U.S. resident to enter. Void where prohibited.

Good Luck!

Tell us what helps you relax and we'll enter you in a drawing to win a $20 Amazon Gift Card!


Source: feeds.killeraces.com

How to Start Investing in the Stock Market

Although investing in the stock market can feel intimidating at first, it could be the key to achieving your financial goals. Short of hitting the lottery or building a thriving business that you can sell, buying securities that increase in value over time is usually the easiest path to wealth. 

After all, the average savings account pays out a paltry 0.05% APY according to the Federal Reserve Bank of St. Louis, yet the average stock market return is around 10% per year before accounting for inflation. 

Unless you want your money to languish in a savings account where it’s worth less with each passing year, learning to invest should be at the top of your to-do list.

6 Steps to Start Investing in the Stock Market

But, how do you start down a path that is notoriously complicated and has the potential to leave you with less money than you started? Here are a few top steps you should take to get started.

1. List Your Goals

Ask yourself what you hope to accomplish by investing in the stock market. A few examples of investment goals might include: 

  • Making a quick profit by investing in the short-term, and reselling stocks at a higher price,
  • Creating a source of passive income you can use later on,
  • Growing investment earnings so it can cover your retirement, or
  • Saving money for a specific goal.

As you list out your goals, make sure you have the extra money to invest on a regular basis, while also having cash set aside for emergencies. If you have a lot of credit card debt or other high-interest debt, you might even consider paying it off before you begin investing. After all, the average credit card interest rate is currently over 16% —  and you might not get an investment return anywhere close to that.

2. Start With Retirement Savings Accounts

There are advantages that come with investing in a retirement account. Accounts, like a workplace 401(k), a SEP IRA, or a Solo 401(k) are tax-advantaged, giving you the chance to reduce your taxable income (and thus, pay less in taxes) when you contribute. 

With a 401(k) plan from your job, for example, you can contribute up to $19,500 in 2020 and again in 2021. If you’re age 50 or older, you can also contribute another $6,500 each year which is called, a “catch-up contribution”. The amount you contribute is taken off of your taxable income, so your tax liability is lower.

You might also qualify for an “employer match” on contributions to your employer-sponsored retirement account. Check with your company’s human resource department to learn if your employer offers this benefit. 

Other retirement accounts to consider include a traditional or Roth IRA. You can deduct your full traditional IRA contribution from your taxable income, if you don’t have a retirement plan at work. Another option is funding a Roth IRA which lets you contribute using after-tax dollars instead. This means you won’t get a tax deduction for contributing, but Roth IRA funds grow tax-free and you can take distributions at retirement age without paying any taxes. 

In 2021, contribution limits for IRAs stay the same as 2020. You can contribute up to $6,000 to an IRA, or $7,000 if you’re age 50 and older. 

3. Open a Brokerage Account

In addition to investing for retirement, you can also open a taxable brokerage account. You won’t get any upfront tax advantages for opening a brokerage account, but you get the chance to buy and sell stocks and other securities, or buy and hold them for the long-term.

There are excellent brokerage account options for beginners or experienced investors, many of which let you invest in some capacity without any fees. Some of the top firms to consider include: 

  • Betterment: Best for Beginners
  • Robinhood: Best for No Minimum Balance Requirement
  • M1 Finance: Best for Free Trades

4. Compare Costs and Fees

You might not have a lot of options if you’re investing in your workplace retirement plan at first. If you have the option to select a brokerage firm, you’ll need to compare the fees and costs involved in investing. Fees and costs to watch out for include:

  • Investment management fees. These fees can be nonexistent or as high as 1% of your account balance (or more).
  • Expense ratios. Specific funds, like index funds or mutual funds, might carry this fee.
  • Transaction fees. You might pay transaction fees when buying or selling a stock or another security.
  • Front-end loads. This fee can be charged on some investments upfront.
  • Annual account fees. A charge that’s tacked on just for using your brokerage account.

These are just some of the main fees to watch out for, but there are plenty of others. If you want to figure out how much you’re paying in fees on your investment accounts, the free retirement fee analyzer tool from Personal Capital is a good place to start.

5. Start Off With Simple Investments

You’ve probably heard plenty about the “hot stocks” of the last few years, and how investors who got in early have gotten rich by being in the right place, at the right time. Unfortunately, most “regular” investors don’t hear about hot stocks until it’s too late.

As a beginning investor, it’s usually best to keep your stock market strategy simple by investing in what you understand. Some beginning investments to consider include exchange-traded funds (ETFs), which are made up of various investments that track an index or focus on a specific industry sector. You could even stick to index funds, which are another type of investment that tracks an index and are mostly “hands-off” for the investor.

Target-date funds are another type of simple investment to consider. These funds include a selection of stocks and bonds that adjust for less risk over time. If you purchase a target-date fund that’s meant to last until 2050, for example, your risk would be high at first but slowly taper down as you approached 2050 or whatever “target date” you choose for retirement.

6. Research Before Jumping on Complex Strategies

If you’re curious about more complex investing options, you’ll need to learn more about how and when to invest. Some resources to turn to include investing books, like:

  • The Little Book of Common Sense Investing by John C. Bogle
  • Investing All-In-One for Dummies by Eric Tyson

You could also check out top investing forums like Seeking Alpha or the Bogleheads forum, taking the time to read through questions and answers from investors at the top of their game.

Blog posts that can help you get started with some investing basics include: 

  • How to Invest Essentials for Beginners & Intermediates
  • How the Stock Market Works
  • How to Buy Stock Online

The Bottom Line

Investing in the stock market can be nerve-racking, but starting with common-sense investments in place (e.g. employer-sponsored retirement account) and uncomplicated investments (like index funds), lets you ease into the process slowly.

Over time and with more experience, you’ll have a better sense of when — and when not to — shy away from the risks of the stock market.  

The post How to Start Investing in the Stock Market appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

Skipping Renters Insurance? Why That’s a Bigger Risk Than You’d Think

As a finance writer, I am surrounded by people who know a lot about managing money. But even those with the most money know-how can still miss financial must-haves.

For instance, in a recent conversation, a few of my coworkers stated they didn’t have renters insurance. This puts them among the 59% of renters who don’t have renters insurance, according to a poll from the Insurance Information Institute. On the other hand, 95% of homeowners carry homeowners insurance.

Granted, renting comes with fewer property responsibilities than owning. But don’t assume you can skip insurance for your home simply because you’re leasing it. Go without it and you’ll expose yourself to some major risks.

See why opting for a policy is protection you can’t live without, and learn how renters insurance can help smooth over the following five major renting crises.

1. Damaged Belongings

If you’re asking yourself whether you need insurance as a renter, a better question might be, Can you afford not to have it?

If the relatively small cost of a renters insurance premium—typically between $15 and $25 per month—seems too expensive, consider the alternative, suggests John Espenschied, agency principal of Insurance Brokers Group.

“Imagine replacing all your clothes, furniture, electronics, food, personal items, and priceless personal memorabilia,” he says. With renters insurance, the insurer will cover most or part of the value of damaged items. Without this coverage, you’re completely on the hook for all those costs.

Espenschied tells a story of one of his clients, a young woman to whom he recommended rental insurance multiple times. She declined the coverage.

Months later, there was an electrical surge in the building. “It took out everything she owned that was plugged in, including the TV, computer, and several other items,” Espenschied explains. These items were permanently damaged and unusable.

Had she opted for renters insurance, Espenschied could have helped her submit a claim and get the money to replace those belongings. Unfortunately, without the policy there was nothing he could do.

Don’t put yourself in the same position—get a renters insurance policy. On top of that, take steps to document all belongings and valuables so you can prove ownership in a renters insurance claim.

2. The Temporary Loss of a Habitable Home

Some disasters—such as fires, flooding, and electrical issues—can require extensive repairs and render your rental uninhabitable. Your landlord will usually handle these repairs, but if you lose the use of your home, your landlord might only be required to refund a prorated rent for the days you can’t live in your rental.

But if you’re out of a place to live, your daily rent rate might not cover any decent hotels or other temporary housing options.

But there’s good news: “Most renters insurance policies can help you in the event something happens to your apartment or house and you have to live elsewhere while it’s repaired,” says Jennifer Fitzgerald, CEO and cofounder of insurance comparison site PolicyGenius.

Typically, you can find a hotel nearby and your renters insurance will cover the costs of your stay until you can resume habitation of your home.

3. Stolen Belongings

Renters insurance typically includes coverage for theft and burglary too. If your home is broken into or burglarized, you can file a claim with your renters insurance provider to replace any stolen or damaged items.

“It even covers your belongings when they’re not physically in your home,” Fitzgerald says. “So if you take your laptop with you to the local coffee shop or on vacation and it’s stolen, your policy could help cover the costs of getting it repaired or replaced.” Renters insurance will usually be the policy that covers theft of personal items from your car too.

If your home is broken into or your purse is stolen from your car, promptly notifying authorities is an important step—filing a renters insurance loss claim will usually require a police report of the theft.

4. Personal Liability for Legal Damages

The most important protection your renters insurance provides, however, might be personal liability protection.

“If your dog bites someone or a food delivery person slips and falls, you’re covered,” says Stacey A. Giulianti, chief legal officer for Florida Peninsula Insurance. Instead of being held personally responsible for those damages, your insurer will step in and help. “The carrier will even hire and pay for an attorney to defend any resulting lawsuit.”

This can be especially important if you are found responsible for damage to adjacent properties as well, Espenschied says. For example, renters insurance will cover you if your toilet or tub “overflows and leaks into the neighbor’s unit below, causing damage to their personal property and cost to repair the building.” You may also be covered if a kitchen fire in your apartment causes damage to the unit above you.

The damage and loss can easily add up to tens of thousands of dollars. In cases like these, renters insurance can be the difference between smooth recovery and huge financial loss or even bankruptcy.

Make sure you understand your coverage. “Every policy is different, so talk to an agent and read your policy terms,” Giulianti warns.

5. An Eviction for Violating Your Lease Agreement

Many lease agreements include a clause in which the tenant agrees to purchase a renters insurance policy. These common clauses usually clarify that the landlord’s property insurance coverage does not extend to your personal belongings.

If you sign a lease with such a clause, you are agreeing to maintain this insurance coverage throughout your residency there. If you fail to get a policy or allow it to lapse, your landlord is within their rights to serve you with a “comply or quit” notice and possibly begin eviction proceedings.

If you don’t currently have a policy, reconsider getting renters insurance. Alongside a healthy emergency fund, having the right insurance can bring vital financial security to your life. For the cost, renters insurance provides protection and peace of mind.

“Most renters can get a policy for around $20 per month,” Fitzgerald says. “That’s a small price to pay when you think about the fact that if you don’t have renters insurance, you’ll be forced to cover the cost of replacing any and all items damaged.”

Procuring a renters insurance policy is a smart step toward financial security. With the right policy, you can avoid debt in an emergency and protect your possessions and your home. If you’re ready to buy a home, learn more about the ins and outs of home mortgages in Credit.com’s Mortgage Loan Learning Center. And to be financially prepared for anything, it’s also a good idea to build your credit score so you can qualify for loans and other credit when necessary. See where you stand with a free credit score from Credit.com.

Image: istock 

The post Skipping Renters Insurance? Why That’s a Bigger Risk Than You’d Think appeared first on Credit.com.

Source: credit.com

How Much Money Do You Need to Buy a House?

Understanding how much money you need to buy a house can give you an idea of how much you should expect to save.

You’re probably excited about the thought of buying your first home? If so, you have every right to be.

But how much money do you need to buy a house? A calculator can help you determine that. But the average cost of buying a $300,000 is typically around $17,000.

In this article, we’ll go over the main costs of buying a house including the down payment, inspection cost, appraisal cost, closing cost, etc.

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How much money do you need to buy a house?

Out of Pocket Cost of buying a house

The five main out of pocket costs of buying a house are 1) the down payment; 2) inspection cost; 3) the appraisal cost; 4) earnest money and 5) closing costs. These out of pocket costs or upfront costs are money yo need to pay before you become the owner of the property.

In addition, some lenders also require you have some cash reserves to cover 2 to 3 months of the mortgage repayments.

Determining how much cash needed to buy a house depends on the type of loan you’re using.

Let’s suppose you’re buying a $300,000 house with an FHA loan.

An FHA loan requires a 3.5% of the home purchase price as a down payment as long as you have a 580 credit score. So, for the down payment alone, you will need $10,500.

Here’s a quick breakdown for how much cash needed to buy a $300,000 house:

  • Down payment: $10,500
  • Inspection cost: $300
  • Appraisal cost: $300
  • Closing cost: $6000

So, $ 17,100 is how much money you need to buy a house.

Whether you’re buying a house with a 20% down payment or 3.5% down payment, you can certainly find a loan with both the price and features to suit your needs as a first time home buyer. You can compare First Time Home Buyer home loans on the LendingTree website.

The down payment

The biggest cost of buying a house is obviously your down payment. But that depends on the type of loan you are looking for.

For example, a conventional loan requires a 20% down payment. You can pay less than that, but you will have to pay for a private mortgage insurance – which covers the lender in case you default on your loan.

A 20% down payment however can also mean that you’ll get a better interest rate, which also means you’ll save money on interest.

For an FHA loan, you only need 3.5% down payment as long as your credit score is 580.

FHA loans are very popular these days. Not only it’s easier to get qualified (low down payment and low credit score), but also your down payment can come from a friend, a relative or your employer.

Using our example above, you only need $10,500 for a down payment for a $300,000 house.

If you’re using a VA loan then you pay $0 down payment.

Check to see if you’re eligible for an FHA loan or VA loan

How much money do you need to buy a house also depends on other factors, such as whether you are a first time home buyer or not. Your state may have a range of programs that may contribute toward your down payment.

So visit your local government office to find out if you are eligible for any down payment assistance for first time home buyers.

Inspection cost

Another upfront cost of buying a home is the inspection cost.

It is highly recommended to perform inspection for your home for any defects so there are no surprises later on.

Inspections typically cost between $300 to $500, but it depends on the property and your local rates.

Compare home loans for first time home buyers with LendingTree

Appraisal cost

Before a lender can give you a loan to finance a house, they will want to know how much the house is worth. So appraisal means an estimate of the home’s value. A home’s appraisal usually costs between $300 to $500. A home appraisal will also determine what your property tax will likely be.

If you’re pay the home appraisal, it will be deducted from the closing cost. (see below).

Earnest money

Earnest money is a deposit you will have to pay upfront as soon as an offer is accepted, while you working on other aspects such as getting the home inspected, etc…

This deposit is part of the down payment, and it is usually between 1% to 3% of the final sale price. It is held by an escrow firm or attorney until the closing process is completed.

So if the sale is successful, that money is applied to your down payment. If it’s not, you get 100% of your money back.

Closing costs

The closing costs are fees by the lenders. They typically cost 2% to 5% of the final price. The costs include fees for homeowner’s insurance, title insurance, title insurance, property tax, HOA dues, private mortgage insurance.

It’s possible to lower these costs by comparing mortgage options.

Other costs of buying a home:

In addition to upfront costs, there are other recurring costs associated with buying a home. They include moving fees, repair costs, furniture, remodeling, etc. So consider these costs when making your budget to buy a house.

So how much money do you need to buy a house? The answer is it depends on the type of loans you’ re using. But if you’re buying a $300,000 house with an FHA loan, which requires a 3.5% down payment, $ 17,100 is how much money you need.

For more information about upfront costs of buying a house, check out this guide.

Read more cost of buying a house:

  • How Much House Can I Afford?
  • How Long Does It Take to Buy a House?
  • Buying a House for the First Time? Avoid these Mistakes
  • 5 Signs You’re Not Ready to Buy a House

Work with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). So, find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post How Much Money Do You Need to Buy a House? appeared first on GrowthRapidly.

Source: growthrapidly.com

The 5 Best Hyaluronic Acid Serums

Woman using best hyaluronic acid serum

Hyaluronic acid has gained a reputation of being a miracle product for the skin, and for good reason. It relieves dry skin, accelerates the healing of wounds, and reduces the appearance of fine lines and wrinkles. And that’s just to start. It can be a key ingredient in moisturizers and face masks, or it can be concentrated in a serum that you can apply as part of your everyday skincare routine. 

If you’re looking to give this versatile product a spin, any of the five below are excellent picks that won’t break your budget. (See also: The 5 Best Stay-At-Home Skincare Essentials)

Top 5 Hyaluronic Acid Serums

Cosmedica Skincare Hyaluronic Acid Serum

The Cosmedica Skincare Hyaluronic Acid Serum is a best-seller on Amazon and can be used on all skin types. This serum is natural and organic, and improves overall skin texture and brightness. You’ll see a noticeable difference in your skin in terms of plumpness, softness, and balance. And it’s cruelty-free, paraben-free, and without dyes or fragrances. 

It’s also backed by over 15,000 five-star reviews on Amazon.

Currently $15.00 at Amazon.com

The Ordinary Hyaluronic Acid + B5 Serum

The Ordinary Hyaluronic Acid + B5 Serum is famous for a reason. This brand creates simple, straightforward skincare products for all skin types. The hyaluronic acid + B5 serum has a concentration of 2% for multi-depth hydration in a water-based formula and the B5 also enhances surface hydration.

This serum is cruelty-free and backed by over 2,000 five-star reviews on Amazon.

Currently $16.95 at Amazon.com

TruSkin Vitamin C Serum With Hyaluronic Acid

TruSkin Vitamin C Serum With Hyaluronic Acid is the perfect blend of ingredients that your skin needs. Vitamin C blends with hyaluronic acid and vitamin E in this advanced formula to target common signs of aging, including dark spots, sun spots, brightness, firmness, wrinkles, and fine lines. And it’s free of synthetic color additives, fragrance, and stabilizers, while dynamic active botanicals like Aloe Vera, MSM, Botanical Hyaluronic Acid, Witch Hazel, and organic Jojoba oil make this serum feel silky smooth on the skin.

It also has over 15,000 five-star reviews on Amazon.

Currently $19.99 at Amazon.com

Yeouth Pure Hyaluronic Acid 

Yeouth’s Pure Hyaluronic Acid can diminish signs of dark circles, age spots, and puffiness when used regularly. This formula is made from naturally-derived ingredients that protect and nourish even the most sensitive skin, including delicate skin around the eyes and lips. It boosts collagen production and holds in moisture. 

It’s also cruelty-free and paraben-free, and backed by over 3,000 five-star reviews on Amazon.

Currently $21.95 at Amazon.com

Tree of Life Hyaluronic Acid Serum

The Tree of Life Hyaluronic Acid Serum also has vitamin C and vitamin E, and this formula is infused with special anti-aging ingredients designed to further enhance and activate hyaluronic acid’s moisturizing properties. Hyaluronic acid is known for helping the skin stay supple and soft and reducing wrinkles and age spots.

It’s backed by outstanding online reviews, including over 3,000 five-star reviews on Amazon. 

Currently $10.95 at Amazon.com

And those are our recommendations for the best stay-at-home kitchen essentials. As always, be sure to check Wise Bread’s Buying Calendar to learn when and how to buy just about anything!


Source: feeds.killeraces.com

The ABCs of Financial Empowerment

A quick Google search of ‘financial literacy’ will yield thousands of results, listing an infinite amount of do’s and don’ts that should (and shouldn’t) be followed to guide you along on your financial journey.

However, when you think of financial empowerment – what comes to mind? As defined by Merriam-Webster, empowerment is “the act or action of empowering someone or something: the granting of the power, right, or authority to perform various acts or duties.” No matter what your current sentiments are related to your finances, we will explore three key areas to not only embrace; but to help you prepare for a strong financial future.

Awareness

Now more than ever, we all have a laser-sharp focus on our money and where it’s being spent. The pandemic has generated a hypersensitivity to how we treat our finances while also determining what essential expenses look like and where they fit into our budget.

Before life as we knew it to be shifted, many of us don’t have to look too far back to remember a time where we didn’t check our accounts as often, our savings plan would fluctuate month-over-month or our emergency fund was used to bail us out of some impulsive spending.

To make sure those days are forever of the past, make it a habit to take inventory and audit all of your accounts. Take at least 15 – 30 minutes to review over any transactions and deposits across all active accounts. Not only does this help improve your self-accountability, but you are also able to make any disputes if anything appears incorrect and resolve quickly.

Another small but impactful tip is to acknowledge your financial health. What top three areas will be your main point of focus? If this is something you don’t know offhand, review your transactions from the last three months and categorize them. How much of your money went to impulsive buys or things that could have been purchased at a later date? Are you seeing an influx in overhead expenses or credit card payments? Are there any spending patterns you can explicitly see? Allow this exercise to serve as an eye-opening experience.

In order to determine where you want to be, you must first truthfully acknowledge where you are. This sets the blueprint and overall expectations with your personal finance journey. Knowing where you are may not feel pleasant but avoidance will lead to bigger consequences.

Betterment

Even though we don’t like to admit it, there’s always room for improvement and our finances are no exception. The first thing that guarantees mastery is actually following the budget that’s created. This serves as a guardrail – it’s used to keep us on track so we can greet our financial destination with open and inviting arms.

Once that’s in motion, explore ways to enhance your financial experience. Begin by automating recurring expenses, such as cellphone service or utility bills. That’s why it’s so important to be as honest and accurate as possible when setting a budget. Nothing should come to you as a surprise outside of any emergencies. When you trust yourself and the financial work you’ve put in, your finances have no choice but to follow suit.

If you haven’t already (or need to get back on track), work to beef up your emergency fund and savings account. Emergency expenses have a tendency to appear out of nowhere, so you want to dedicate a set dollar amount or a percentage every pay period. Setting up an automatic transfer to these accounts establish a routine while putting your mind at ease in the process.

Is there a hobby or skill you’d like to put to use and monetize? No matter how grandiose or small, this can definitely expedite achieving your financial goals. The money earned from a passion project can go toward savings, paying off debt or simply getting back to a place of comfort financially. Vacation funds or prepping for large purchases such as a car or home can also fall within this category. If you want to seek the assistance of a professional, search for financial advisors or coaches that could help you with reaching your goals. Preparation is key and your future depends on it!

Confidence

The foundation has been laid and you’ve been committed to crushing your financial goals. The budget and savings goals are in motion; so what’s next? It’s time to celebrate! Walk into your financial future with your best foot forward. When times seem bleak, remind yourself of your goals early and often.

Reinforcement such as daily reminders on your phone, having goals posted somewhere in your home you can see daily or reciting positive financial affirmations will serve as a second wind when you want to throw in the towel. Be sure to celebrate wins along the way such as debt payoff, reduction or hitting a new savings goal. Never been able to invest before and now you have the additional income to get in the game? Celebrate that!

The best way to generate excitement is to rally your family and get them involved. Create family challenges to get your children excited about saving funds and reallocating money. Come up with creative ways you all can commemorate knocking out a goal by ordering from your favorite restaurant or saving for a family staycation.

In order to walk in confidence, you have to build up the courage to begin no matter where you are or how many times you’ve had to start over. Each step counts – each successful budget, savings goal and consistent reduction of overall expenses. Be sure to keep in mind, financial freedom looks different for everyone and has the ability to pivot over time. While some may want to vacation throughout the year, save for their children’s college fund or wipe debt out completely, all are significant and take sacrifice. What is the key to achieving such a pinnacle level of confidence? Time.

 

Be kind to yourself and understand mistakes should never be equated to failures. Your commitment to this financial journey will always be rewarded.

The post The ABCs of Financial Empowerment appeared first on MintLife Blog.

Source: mint.intuit.com

Mint Money Audit: Affording Life After Grad School

With a brand new PhD under her belt, our latest Mint audit recruit, Renee, is ready to take on the real world with gusto. The 34-year-old is eager to buy a home and ramp up her retirement savings. She currently lives in San Francisco and has just started a full-time earning $87,000 a year (before taxes).

Renee also received a sizeable inheritance, totaling about $200,000 of which she used $30,000 to pay off her student loans.

So, why does Renee want an audit, exactly? Her finances seem perfectly in order, it seems.

As Renee explains, she wants advice around the best ways to plan for big goals like home ownership and retirement. “I’m especially eager to buy my own apartment, but it is extremely daunting (and expensive) in the Bay area,” she says. As a result, she’s leaning to move to New York City (Brooklyn, specifically, where she thinks may offer more bang for her buck in some neighborhoods.)

She wants to know how much of a down payment she can reasonably afford and how to budget for monthly housing costs.

First, though, I wanted to learn more about Renee’s finances. Here’s what the quick audit revealed:

  • Retirement savings: $40,000 in a 403(b) and Roth IRA. She allocates $200 month from her paycheck to the 403(b).
  • Rent: $1,850 per month
  • Groceries: $400 per month
  • Where is all that savings parked? $100,000 in index and mutual funds, another $50,000 in an 11-month CD earning 1.5%, and remaining $20,000 in checking.

My Advice…

Play Retirement Catch-Up

For a 35-year-old worker, one rule of thumb is that you should have an amount equal to your salary in retirement savings. For Renee, who is nearing age 35, that means $80,000 to $90,000. She’s only about halfway there, so my recommendation is to play some retirement catch up. While it’s not realistic to think that she can invest another $40,000 this year, she can do better.

For starters, what about taking advantage of her company’s 403(b) match? She believes her company offers one, but wasn’t sure about the details. I suggested she learn the specifics and try to capitalize on that offer by contributing at least enough to earn the full match. Allocating closer to 10% of her salary would be ideal. (And PS. that contribution is tax deductible!)

Worried that this would stretch her paycheck too thin, I reminded Renee that she can always adjust her retirement contributions each month, but urged her to give it a try. (My bet is that it won’t be as painful as she suspects.)

Pad the Rainy Day Account?

I wasn’t sure how far her $20,000 in checking would last her. She said it would be about a 6-month reserve, which I feel is adequate. No need to make adjustments there. One thought: She may want to move that $20,000 to a savings account that’s a little less accessible (like an online account without a debit card), so that she isn’t tempted to cash it out on a whim.

Protect Your Down Payment

Renee has $100,000 in a brokerage account, which she plans to use towards a down payment in the near future. But here’s something to consider: What if the market plunges six months before you want to make a bid for a home? And you suddenly lose 15 or 20% of your investments? It would take time to recover, more time than you want.

I would personally never risk money in the stock market if I anticipated needing that money in the next five years. And according to Renee, she hopes to buy a home in the next two years. My advice: Protect the down payment from market fluctuations by moving 50% of that money over to a short-term CD and with the other $50,000 she’s got saved in an 11-month CD, use all that savings towards a future down payment.

Know How Much House You Can Really Afford

To buy in NYC or San Francisco, a 20% down payment is standard. With $100,000 to put down, that means that she’s looking at homes valued at around $500,000. With today’s current mortgage rates nearing 4% for a 30-year fixed-rate mortgage, she’s looking at close to $2,000 a month in payments. But we’ve yet to get to taxes, maintenance and home insurance.

Instead, consider a starter apartment, a studio or junior one-bedroom closer to $400,000. A 20% down payment would be $80,000, leaving her with another $20,000 for closing costs. Her monthly payments would come to around $1,500 per month, close to 30% of her take-home pay, which is a smart cap for housing payments.

 

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

The post Mint Money Audit: Affording Life After Grad School appeared first on MintLife Blog.

Source: mint.intuit.com