A 2017 survey found that more than 44 million Americans have a side hustle. And, chances are, you’ve heard of a friend or family member who has taken the plunge and started a side gig outside of their standard 9-to-5. You too may have thought about starting a side hustle but, for whatever reasons, have […]
The post Benefits of Pursuing A Side Hustle (And 6 Easy Side Hustles You Can Start Today) appeared first on The Work at Home Woman.
If you just can’t shake that craving for donuts and coffee, grab this Groupon for 100% cash back on up to $3. You don’t need to pay anything to claim this deal, and there is no need to print out a voucher. All you need is a Groupon account with a linked debit or credit card.
Simply claim the deal and make a purchase using the debit or credit card linked to your Groupon account and your 100% cash back will be applied to your card.
But what can you get for $3 at Dunkin’? I downloaded the Dunkin’ Donuts app to see what I could find, and there are quite a few options! Here’s what you could get:
You could also go for that s’mores donut and a small hot coffee and pay just 28 cents, or you can try an order of the new donut fries with a small hot coffee and pay just 79 cents.
You can use the same Groupon deal up to five times after that for 10% cash back, up to $3.
P.S. If you’re still craving Dunkin’ after this Groupon deal expires, you can still get some freebies with DD Perks, You’ll get an offer for a free beverage upon sign-up, a free beverage on your birthday and a free beverage for every 200 points you earn, plus exclusive deals and offers.
Jessica Gray is an editorial assistant at The Penny Hoarder. She loves donuts. And coffee. And s’mores. So guess what she’ll be getting with her Dunkin’ Donuts Groupon deal?
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Your options are: “crippling debt,” “poor life choices,” “strong female characters” or “vigilante justice.”If you think you can write better cards for Cards Against Humanity, now is your chance. The “party game for horrible people” is hiring remote contributing writers, paying $40 an hour.
Cards Against Humanity is an adult fill-in-the-blank card game. One person draws a black question card and the other players select their funniest white answer card, typically a risqué or politically incorrect phrase. The person that pulled the black card picks their favorite response, and the winning entry gets the point.
To apply, submit your best 15 white cards and best five black cards. Submissions are due by Aug. 31.
The job post says, “we strongly encourage applicants from historically marginalized communities to apply, particularly people of color, immigrants, and members of the LGBTQ+ community… Also looking for hot single dads.”
You can apply and find out more about how to write quality cards here. Good luck and may the poop jokes be ever in your favor.
Matt Reinstetle is a staff writer at The Penny Hoarder. He had to go through a massive chunk of the Cards Against Humanity starter set to find cards suitable for publication.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Being named one of the 150 annual Coca-Cola Scholars who win $20,000 toward college tuition.
Students are chosen based on achievements and evaluated on a combination of leadership, academics and service.
Only current high school seniors graduating during the 2018-2019 school year can apply for this scholarship.
This includes home-schooled seniors. It is not open to recent graduates.
While you must be a high school senior to apply, you don’t have to be a U.S. citizen. U.S. nationals, permanent residents, refugees, asylees, Cuban-Haitian entrants and humanitarian parolees also are eligible to apply to the Coca-Cola Scholars Program.
Applicants must complete an eligibility quiz before applying. If you’re eligible, an application link will be emailed to you.
Once you’ve passed the eligibility quiz, you’ll need to gather some important information prior to filling out the application.
Helpful items and lists you’ll need on hand to fill out the application are:
None of these items needs to be mailed or attached to your application. They’re purely supplemental material to assist you in filling out your scholarship application.
To get started, sign up for a Coca-Cola Scholars Foundation account. There you can create a profile and access the eligibility quiz and application.
The application works on desktop and mobile devices. Only online applications are accepted.
The application consists of five required forms: biographical and high school information, school activities, community activities, academic information, employment information.
If you’re super excited to apply but don’t have all the necessary information yet, know that you can start on any form, save it and come back later.
Complete all five sections and click the green “submit” button (and cross your fingers) to be considered for the scholarship.
There’s a slew of resources to help you apply, including application instructions, a sample application and scholarship FAQ page.
The deadline to apply is 5 p.m. Eastern Time on October 31, 2018.
This scholarship opportunity occurs every year, so if you’re not a senior yet, you totally have time to beef up your grades and involvement so you shine bright come application time.
Stephanie Bolling is a staff writer at The Penny Hoarder. She can’t think of Coca-Cola without singing one of the ’90s “Always Coca-Cola” jingles.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
This is the purr-fect job for a cat lover.
If you hated that pun, it’s probably best that you move along now.
But if you have the proper cat-itude, this job posted by God’s Little People Cat Rescue has enough perks to fill nine lives:
Care for 55 cats.
On the Greek island of Syros.
In a secluded nature preserve. (Built-in kitty litter!)
Stay in a rent-free tiny house.
The place includes free water and electricity.
And a direct view to the Aegean Sea.
It’s a part-time job. (More time to see the island!)
You get paid.
Fur real. (OK, I ran out of perks.)
Job requirements include feeding, medicating and keeping tab-bies on the kitty crew, which includes some ferals.
Cat-whispering abilities are a must, according to the job post, which notes that the ideal candidate is 45 years or older. Owning a lot of yarn probably wouldn’t hurt either.
You’ll also need to be able to drive a car with a manual transmission so you can take your feline charges to the vet when they have me-owwies.
The gig starts in November and will last for a minimum of six months. The first two to four weeks of training in October is unpaid, but you still get free accommodations, which you’ll share with some of the cats.
Paws-itively ready to apply? Send an email to joanbowell@yahoo.com that includes your qualifications and a photo — consider this the perfect opportunity to don your Mr. Whiskers sweatshirt.
Owner Richard Bowell, who runs the sanctuary with his wife, Joan, said in an email that they’ve been inundated with applicants after the post went viral earlier this month.
But they’re still accepting applications until the end of August, so there’s no room for pro-cat-stination.
Tiffany Wendeln Connors is a staff writer with The Penny Hoarder. Even though she suspects her coworkers won’t look her directly in the eye after reading this punny post, she’s feline fine.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
As Michael Scott learned in “The Office,” getting rid of debt isn’t as simple as that declaration. Wouldn’t that be nice?
Many people think of filing bankruptcy as an easy way out. These people have never filed bankruptcy.
Individuals can file one of two types of bankruptcy.
Chapter 7 is the most common. It’s for individuals who can prove they don’t have the means to pay off debts. After you file, a trustee could sell some of your assets to repay your creditors, but you’re otherwise discharged from responsibility for your debts.
Sometimes called “straight bankruptcy,” Chapter 7 is a three- to six-month process. It has no debt limits.
Chapter 13 — or “wage-earner bankruptcy” — is for people with reliable income who are able to repay a portion of debt. In this case, a trustee sets up a payment plan so you can repay your debt over three to five years.
Chapter 13 bankruptcy comes with some debt limits. According the Federal Judiciary, you can only have:
You may have also heard of Chapter 11 — that’s usually for businesses.
The Federal Judiciary describes less common types of bankruptcy. Here’s a basic overview:
| Typen | Typically Used bynn | Basic Requirementsn | Debt Limit | Filing Fee*nn |
|---|---|---|---|---|
| Chapter 7 | Individualsnn | Prove you donu2019t have the means to repay debts.nn | none | $335nn |
| Chapter 13nn | Individualsnn | Have reliable income and the ability to repay debts.nn | $394,725 unsecured; $1,184,200 securednn | $310nn |
| Chapter 11nn | Businesses | Be engaged in commercial or business activities.nn | $2,566,050nn | $1,717nn |
| Chapter 9nn | Municipalities, including cities, counties and school districtsnn | Municipality must be insolvent.nn | n/ann | n/ann |
| Chapter 12nn | Family farmers and fishermannn | Individual or married couple whose primary income and debt are related to the farming or fishing operation.nn | $4,153,150 farming; $1,924,550 fishingnn | $275nn |
| Chapter 15nn | Foreign debtorsnn | Case must involve parties outside of the U.S.nn | n/ann | n/ann |
*Fees and requirements are accurate as of July 2018.
Wait, you might have to repay your debt, even after filing for bankruptcy? Then what’s the point?
The point is to get that “fresh start” you hear people talking about.
Bankruptcy should be a last resort for getting rid of debt, but for some people it’s better than having their wages garnished or their homes go into foreclosure.
It gives you a chance to get your debt under control and get creditors and collectors off your back (and out of your bank account).
The process is pretty involved, and you’re probably going to want to consult with a bankruptcy attorney to make decisions for your individual case. Here’s a quick overview of what to expect.
First of all, expect to pay $335 (for Chapter 7) or $310 (for Chapter 13) in administrative and filing fees, according to this most recent schedule of U.S. bankruptcy fees.
You can apply to have Chapter 7 fees waived (with this form) or set up a payment plan for Chapter 13 fees if you can’t afford them upfront, says the Federal Judiciary. To be eligible for a waiver, your household income should be less than 150% of the poverty line (calculated for you here), and you have to be unable to pay the fee in installments.
Additionally, you’ll be responsible for legal fees, which will vary.
Once you file bankruptcy, creditors and collectors have to stop trying to collect the money you owe them while the case is open.
That’s called an “automatic stay.”
If a company continues to try to collect during the stay, it’s violating a court order, says the government. Let it know in writing, and the collections will likely stop. If they don’t, notify the bankruptcy court, which can punish the company for violating a court order.
You’ll spend most of the process working with a trustee, who administers the case.
The trustee helps you file paperwork and oversee your estate (anything you own) during the case. They’re an impartial player who can challenge creditors’ claims or yours, based on conversations with both.
Ultimately, a bankruptcy judge decides whether to discharge your debts. They could deny you for a few reasons:
But in general, if you were able to show your inability to repay debts, you should be granted a discharge.
If they grant in your favor, you’re released from personal responsibility for your debts, and creditors can’t take any more action to collect them.
If you’re free of the debt without repaying… who does cover the cost? The debt doesn’t disappear — you just aren’t responsible for it anymore.
“A creditor may still have options to collect on a discharged debt,” explains HG.org.
A creditor could sue a co-debtor who hasn’t filed bankruptcy or collect any collateral you offered to secure the debt (but the latter is rare).
You’re also free to pay toward the debt as you wish, but there’s not much reason to do that after it’s discharged with bankruptcy.
Debtors typically use bankruptcy to discharge credit card or medical debt. Many types of debt can’t be discharged this way, including:
For auto loans and mortgages, your debt may be discharged, but it could mean the creditor can seize the property you took a loan against, e.g., repossess your car.
You can instead choose to “reaffirm” the debt, or leave it out of the bankruptcy discharge, and you’ll remain responsible for paying it off. And you get to keep your property.
Bankruptcy will most likely be a black mark on your credit history — one that lasts up to 10 years.
But if you’re in over your head with debt, your credit is probably already pretty marred. Some experts say bankruptcy won’t hurt it significantly more than a poor payment history.
Just make sure filing bankruptcy is really your best option — because the aftermath is not fun.
Here’s one woman’s story on what it feels like to declare bankruptcy and how she recovered her credit afterward.
Dana Sitar (dana@thepennyhoarder.com) is a writer and editor at The Penny Hoarder. Say hi and tell her a good joke on Twitter @danasitar.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Unless you have hundreds of thousands of dollars in cash to spare, buying a home probably means taking out a mortgage.
And getting a mortgage may be among the most complex things you’ll ever do at a bank.
Interest rates, down payments, credit scores, pre-approval, closing costs, property appraisals… there’s a lot to consider!
And with so much money at stake, learning as you go isn’t always the best approach.
Borrowers who control the mortgage process can avoid the surprises that make buying a home stressful, or worse, the surprises that derail your application, costing you time and money.
Getting a mortgage can take a while, so you should start preparing before you find your dream home.
Experiences vary for people in different situations, but the traditional path to getting a home loan looks something like this:
I’ve known a few first-time home buyers who found a great home in the perfect neighborhood. The schools were within walking distance and had great online reviews.
The neighbors were super nice and welcoming. They’d already been invited to the next block party.
Everything was lining up perfectly, until… they applied for a mortgage to finance the home and learned they couldn’t qualify for a loan because of their credit score.
Sometimes, even if you do qualify, a lower-than-ideal credit score can raise your interest rate, and as we’ll see later, a high-interest rate can place an otherwise affordable home out of your price range.
A solid credit history makes home buying easier, and it opens opportunities to save tens of thousands of dollars, and sometimes more, over the life of your loan.
If you were loaning someone $188,000, which is the median price of a home in the United States this year, wouldn’t you want to know whether he or she would pay you back?
Lenders feel the same way, and since they don’t know you personally, they have to rely on credit scores to determine your approach to personal finances.
The lower your credit score, the higher your risk of non-payment. Banks do not like taking chances on someone with a low credit score.
For someone with an average credit score, a lender may hedge its bets by increasing your interest rate.
Your credit score helps determine a lot of the conditions of your loan:
That last bullet point is a biggy: An interest rate of 4 percent on a $175,000 loan for 30 years means you’d pay a total of $300,000 if you paid the house off on schedule.
Increase that rate to 6 percent and you’re looking at $377,000 over the next 30 years if you pay on schedule, a difference of $77,000.
An extra $77,000 will add about $2,500 a year to your payment even though you borrowed the same amount.
You’ll need patience and diligence to increase your credit score and pave the way for a more favorable mortgage loan in the future.
The good news?
It’s easier than ever to find your credit score and start working on improving it.
Apps like Credit Sesame and Credit Karma put your credit score at the tip of your finger, and they offer suggestions for improving your score.
Generally speaking, paying your bills on time and paying down excessive debt, especially credit card debt, puts you on the right track.
Steer your finances in the right direction, then be patient.
It can take months or sometimes years to start seeing your score increase.
Stay on top of it, though. Sometimes a credit reporting error can lower your score. When you’re paying attention, you can identify and fix these kinds of problems right away.
Because it takes a while to repair credit problems, and because your score impacts your mortgage so much, we’ve put “Getting Your Credit Score Under Control” first on this list of how to get a mortgage.
Even if you expect it’ll be a few years until you’re ready to buy a house, you can be super prepared by getting on the road to better credit right now.
With this approach, you’ll be in great shape, credit-wise, when it’s time to apply for that mortgage loan.
Most of us know how much money we can spend this month on groceries or whether we could afford to move into a bigger apartment next year.
We may not know exactly how much house we can afford.
Real estate prices vary throughout the country. If you’re buying in Manhattan or San Francisco, the $188,000 median home price may buy you a storage closet. (Shop around enough and you may find one with the light bulb included!)
In other markets, $188,000 may get you 2,500 square feet of house on a couple acres.
What matters, though, is this:
Could you afford a $188,000 mortgage?
If not, what is your price range?
Everybody faces different financial challenges and has different demands on their monthly budgets. Only you can know for sure about your situation.
However, many financial advisors recommend spending no more than 25 to 28 percent of your annual income on housing.
Let’s take this idea for a spin: We’ll say you earn $96,000 a year.
25 percent of $96,000 = $24,000 a year for housing
$24,000 a year divided by 12 months = $2,000 a month for housing.
Most people like to include homeowners insurance premiums and local property taxes into their housing budget. Let’s go with $200 a month for insurance and $200 a month for property taxes for a total of $400 a month.
$2,000 a month housing budget – $400 for insurance and taxes = $1,600 a month for a mortgage.
You can buy a lot of house in many markets for $1,600 a month.
Remember, though: This 25 percent rule may not work for you if you have significant demands on your monthly budget.
If you borrowed $100,000 to get an advanced degree from an elite university, or if you already have heavy debt from other property purchases, adjust your estimates accordingly.
Your ultimate goal will be to find out how much house payment you can afford, reliably, every month for up to 30 years. Your number may be only 15 percent of your income; it may be 35 percent.
I say “up to” 30 years because you can get mortgages with a variety of terms, and these terms have tremendous influence over how far your house money will go.
We’ll go into these details next.
Mortgages vary widely. This can be good or bad for you, the consumer.
It’s good when you have learned about the market and you find a product to fit your exact needs. It’s not so good, though, if you wind up with a mortgage that doesn’t match your needs.
In fact, getting the wrong mortgage can be devastating to your personal finances.
If, for example, your interest rate increases after the first couple years because you got a variable rate, your house payment could suddenly become unaffordable.
Interest rates aren’t the only variables you should know about:
You may hear the word “term” when you’re investing, getting a mortgage, or even getting a new life insurance policy. It usually refers to a specific amount of time.
In the case of your mortgage, your term is the length of time during which you’ll owe money on your house, assuming you pay it off on schedule.
A 10-year mortgage spreads your debt across 10 years. If you take the same debt and spread it across 30 years, you’ll have a lower monthly payment.
But by hanging onto the debt longer, you’ll pay more in interest.
How much more?
Let’s take a look at a $175,000 mortgage, which is a little below the median mortgage size this year:
As you can see, a shorter term costs more in the short run but saves tremendously over time. The difference between a 10-year and a 30-year mortgage in our example above is about $87,400.
Which is why finding the right term matters so much. If you can afford the payments on a 10-year loan, by all means, take advantage of those long-term savings.
If you can afford only a 30-year loan, that’s OK too.
Yes, you’re paying more, but at least you’re getting a foot in the door of a more stable financial future without blowing up your monthly spending plan.
Later on, you could refinance with more favorable terms.
We’ll get more into that idea later in this post.
So far we’ve discussed only loans with fixed interest rates. With a fixed rate loan, your interest rate — and, as a result, your monthly payment — remains the same throughout the life of the loan, even if it’s 30 years or longer.
Not all mortgages have fixed rates, though. You can also get a loan with an adjustable interest rate. As your interest rate changes, usually in, response to a specific rate index, your payment will rise or fall accordingly.
This sounds scary, and it can be, but an adjustable rate mortgage (ARM) is not a total free for all. With most ARMs, the rate stays the same for a specified amount of time, then begins to change each year.
A 3/1 ARM, for example, keeps its introductory interest rate for three years, then the rate adjusts annually. So it’s not like your mortgage payment would be a moving target month to month.
Even so, not knowing year to year how much you’ll be paying creates too much instability for many homeowners. Sticking with a fixed rate keeps things simple.
You may be wondering who would want an ARM, anyway?
Remember, too, that an ARM doesn’t have to leave you completely exposed to the whims of the market. Many adjustable rate loans offer caps on rate fluctuations or caps on payments.
These caps work pretty much like you’d expect. With a cap on your monthly payments, for example, even a skyrocketing interest rate will increase your payment only up to the maximum amount allowed by the loan’s cap.
Be careful with these caps, though. Just because you’re insulated from excessive payments doesn’t mean you’re insulated from the interest charges.
Sooner or later you’ll have to pay those charges. Chances are your bank would add them to your mortgage balance, meaning what you owe could keep increasing even as you make your scheduled payments.
So far we’ve discussed conventional loans which banks, credit unions, and mortgage finance companies offer. You fill out an application, the loan officer checks your credit score, and you usually need to put some money down.
Not everyone can qualify for a conventional loan. Maybe your credit score isn’t quite high enough yet. Maybe you can’t come up with a five-figure down payment.
Enter the federal government, which helps homebuyers through a variety of programs, giving people with lower credit scores and people with limited financial flexibility another route to home ownership:
This list simply hits the high points for government loans.
Other programs include loans to help make your home more energy efficient and loans to help Native Americans buy a house. You can find a more comprehensive list here.
The question is, should you get help from Uncle Sam to buy a home?
When you need the help, it’s a no-brainer. If you’re living paycheck to paycheck and just can’t find a way to save $20,000 for a down payment, these programs can help get you in a home so you can stop paying rent and start building equity.
If you can get a conventional loan, though, you should be aware of some drawbacks to federal programs:
When you need help getting into a home, and you plan to live in the home, a federally backed loan program is a great benefit.
If you don’t need the help and you’d like more control over the process, go for a conventional loan first.
Surveys consistently show that about 75 percent of recent homebuyers have one thing in common: They applied for only one mortgage loan.
These same new homeowners probably wouldn’t have bought the first smartphone or the first pair of boots they came across in a store.
So why take the first mortgage that comes along?
I have a hunch the answer has something to do with how hard it is to apply for a mortgage. All the paperwork and the income documentation and the disclosure of personal financial records.
Who wants to do that over and over?
Here’s another reason people often apply for only one loan: They think the mortgage lender will sell their loan to another bank anyway.
And they’re right.
Many loans get kicked around between three or four banks before they’re paid off.
To me, though, this is a reason to get the most favorable terms you can find, which you can do by applying for several loans.
Why? Because while your lending institution may change as the years go by, the lending terms will remain the same: your interest rate, your term length, etc.
Thankfully, the good ‘ole Internet makes comparing mortgages a lot easier. You can find details, get quotes, compare features, etc., without going to all the trouble of applying for the loan.
Many different kinds of financial institutions offer mortgages, so first things first: narrow down your choices.
Remember, you’ll be talking about your income, sharing bank statements, and talking about your future plans:
When you know what kind of organization you’d like to deal with, compare three or four different organizations.
Some institutions may have special programs if you’re a first-time buyer, an investor, planning to make the property environmentally self-sustaining. Other places might have promotional rates or may be able to waive the loan origination fee.
Basically, treat your new mortgage with the same scrutiny you’d expend on new curtains or your next summer read.
After you have found the right lender, it’s time to start the pre-approval process, assuming, of course, you’re ready to move into home ownership.
Some homebuyers skip this step and simply apply for a mortgage after finding the right house. I wouldn’t call that wrong or irresponsible, especially if you’ve bought homes before.
However, if you appreciate more certainty in life, a pre-approval from a mortgage lender will be right up your alley.
Once you’re pre-approved you’ll know how much money your lender will let you spend. You’ll have a much better idea about your monthly payments, too.
For many buyers this can be helpful knowledge as they tour homes and consider variables. For example, if you loved a particular home but it needed a new roof, knowing your pre-approved limit could help you negotiate with the seller.
It’s kind of like grocery shopping. When you know exactly how much money you can spend on food, you tend to make more informed shopping decisions.
Remember this while you’re shopping, though: Your pre-approval amount may exceed your actual budget. Just because your bank says you can finance up to $200,000 doesn’t mean you could afford the payments on a $200,000 loan.
You know about financing, interest charges, and fitting a house payment into your budget.
Now for the fun part: shopping for your new home.
How would you like to go about it?
Any and all of these approaches would serve you well. I’d go so far as to recommend using all of them simultaneously to get the most thorough canvass of your market.
Here are some things to keep in mind as you search:
Realtors make a living by handling real estate transactions. They are experts on the nuances of their markets.
Yet I routinely meet buyers who aren’t all that eager to hire a Realtor. Often, they cite the agent’s commission as an unnecessary fee since they can search up houses online for free.
Give this some serious thought before deciding, though. A good agent can be your advocate throughout the buying process, protecting you from issues you may not even be aware of yet.
And about that commission: If you’re looking at listed properties (not for sale by owner properties), the seller has an agent who will be earning a commission from what you spend.
When you also have an agent, the two agents will split the same commission. So, you’re going to be paying the same commission anyway. Why not let half of it go to someone who has your back instead of the seller’s?
Every real estate market can be different, and your local market will also fluctuate from year to year. Sometimes the market favors buyers; other times it’s sellers who have the most influence over transactions.
If you’re shopping for a home in a seller’s market, you may face some fierce competition from other buyers.
So how can you make an offer that will get the seller’s attention amidst a flurry of other offers?
Other than making a cash offer exceeding the asking price, which is hard to beat, you could:
Your Realtor can guide you here by providing specifics about your market. He or she may know in advance how the seller’s agent would be inclined to respond to your offer.
When you’ve made an offer and the seller counters with a higher offer, you know you’ve gotten the seller’s attention. Let the negotiations begin.
Discuss with your Realtor whether you should accept the counter offer or make another offer of your own.
Once you and the seller agree on terms, it’s time to enter a contract.
With a contract, you’re agreeing to buy the house under the agreed-upon terms (from the offer) as long as certain conditions remain true. Likewise, the seller is agreeing not to sell to anyone else while under contract with you.
The seller or her agent may ask for earnest money. This is not a down payment on your loan, but it will go toward the purchase of the home assuming you close.
Essentially, the money — usually $500 or $1,000 — shows you’re serious.
If something happens and you do not buy the house, make sure you ask for the money back.
At this point in the process, you’ll need to hire an independent home inspector to explore every corner of the house, from the pillars to the roof vents.
Your Realtor, of course, may suggest some home inspectors, but consider finding one for yourself. This is your long-term investment.
You stand to gain or lose money. So you’ll want to know for sure that the inspector is looking out for you.
Read your home inspection report thoroughly. If you’re buying an older home, don’t be surprised if the inspector uncovers some minor problems with the plumbing or the insulation or the duct work.
Issues like those shouldn’t prevent you from buying the house, but you may want to consider asking the seller for a concession.
You could ask for a $500 discount on the home to fix a problem in that price range, for example.
Or you could ask the seller to fix the problems before closing.
The inspector may also find serious flaws with the home. If the inspector questions the structural integrity of the home, either because of foundation problems or some kind of extensive rot, it may be time to seriously consider moving on to a different property.
The same is true for safety issues. Old wiring or an ancient or poorly installed heating system could spell disaster down the road.
Yes, such problems can be fixed, but the cost and the amount of work may prove too big a hassle if you have other home options on your list.
As you can tell, you’ll be plenty busy during these few of weeks between agreeing to an offer and closing on your home. Don’t forget, you’ll also be packing and preparing to move.
And, there’s still work to do at the bank.
Wait a minute. Didn’t we already talk about mortgage loans?
Yes, but only for a pre-approval. When you have a house under contract and you fully intend to see the purchase through, you’ll need to make the loan application official.
With your pre-approval, the bank would have made some assumptions. Specifically, it assumed the information you shared about your income, your employment, your bank balances, and such, was true.
Now it’s time to prove it.
The lender will ask for documentation to support your application. Expect to share tax forms and recent checking and savings account statements.
Don’t be surprised if the lender calls your place of employment.
It may feel as though nothing is sacred by the time you finish the application.
Don’t sweat it, though.
As long as your fiscal house is in order and you can document it, you should be fine.
As you apply, it’s time to decide about your loan’s terms.
Can you afford a 12-year or a 15-year mortgage? Should you play it safe with a 30-year loan? (Scroll up to the types of mortgage session for a refresher on this subject if you need it.)
Your lender will be doing some work of its own during this time that you’ll want to be aware of:
If all this, along with your financial documentation, checks out, you should be good to go. The lender will issue a loan commitment, which means you’ve got the financial backing to make your homeownership dream come true.
Your contract should include a closing date, which may be scheduled a month, or even longer, into the contract period.
Until after the closing, either party could back out of the deal, so people tend to think of closings as stressful.
In reality, you should know days or even weeks before your closing date whether everything will happen as planned.
Your real estate attorney (your Realtor can recommend one or you can hire an attorney yourself) should be experienced and have a knowledgeable staff.
When you’re in good legal hands, even the most complicated parts of your transaction will seem easy. Your attorney will find out about any past due taxes on the property and make sure you’re not held responsible for property taxes accrued before closing.
Your attorney will do a separate title search and be able to show you any encroachments on your new property.
If a neighbor, for example, has placed a storage building across the property line, you’ll find out.
You’ll hand over your down payment if you haven’t already, and the money from your mortgage lender.
Then, you’ll sign document after document after document until they all begin to look the same.
Before the closing, you still have a few things to take care of on your own:
Your closing attorney will most likely mention an escrow account for insurance and taxes. You don’t have to go this route, but many homeowners find it helpful.
Here’s how it works: Each time you make a house payment, part of your payment goes into a separate, escrow account.
The money builds up as the months pass, then when it’s time to pay your property taxes or the insurance premium, you have the money available.
Your lender will maintain the escrow account and even pay the tax and insurance bills.
Other than monitoring it once in a while, it doesn’t require much thought from you.
All the work you’ve done to prepare for homeownership — all the saving, the research, the applications — should seem worth it when you leave the attorney’s office with your house keys.
Celebrate.
Decide what your first meal in your new home will be.
Show the kids or your pets around the place.
Introduce yourself to the neighbors.
Get settled in.
Take time to enjoy the win because, soon enough, you’ll start to become acquainted with the challenges of homeownership.
Of course, there’s the huge mortgage balance to get paid off, so we’ll start our “New Homeowner Frequently Asked Questions” here:
Yes! The more you pay on your loan’s principal, the less interest you’ll pay in the long run and the faster you’ll be out of debt.
You probably saw a “truth in lending” disclosure at your closing. The form should have shown you exactly how much money you’d spend on the loan if you paid on schedule.
For example: If you have a new, 30-year, $175,000 mortgage loan at 4 percent interest, you’d pay about $125,000 in interest charges over the next three decades. So, you’d actually be paying $300,000 to buy your $175,000 house.
It’s annoying, I know, but such is the mortgage lending business. Banks don’t help you buy a house for free.
However, by reducing the length of your loan, you can reduce the amount you pay in interest. How do you reduce the length of your loan?
By paying extra on the principal of the loan.
“Principal” refers to the actual balance.
In the example above, the $175,000 would be the principal. For this to work you need to pay your scheduled payment which will automatically include interest charges, then make an additional payment on principal.
Your lender’s online payment system should offer a way to designate the extra payment to principal. If it doesn’t call the lender to ask about it. Unless the extra payment gets properly designated, you may be simply paying the next month’s scheduled payment.
What is the effect of paying extra on principal?
On the $175,000, 4 percent, 30-year loan from above, by paying an extra $100 a month you’d save about $25,000 over the life of the loan and have the house paid off five years sooner.
Like a lot of great questions, the answer here isn’t as simple as you’d think.
Yes, your mortgage is a big debt, and yes, it would be better to own the house outright and cut back on some of those interest charges.
But a singular focus on paying off the mortgage can also cost you.
For example, you shouldn’t rack up a bunch of credit card debt because you’re making three house payments a month. Or, some people may benefit from saving for retirement each month instead of paying extra on the house.
Even if you can afford to pay down the mortgage quickly without making sacrifices elsewhere, some tax professionals think you can benefit more by writing off your mortgage interest at tax time, which you can’t do after you’ve paid off the mortgage.
Long story short: There’s no one-size-fits-all answer to this question.
Consider your individual circumstances and ask a financial advisor for help.
The emails and postcards may already be flooding in. Since you’ve bought a house, insurance companies will be offering you mortgage insurance which would pay off your loan if you died.
That way your family wouldn’t have to worry about paying off the house or selling it.
It sounds like a sensible precaution, but like a lot of unsolicited offers, you can probably do better.
If you’re worried about protecting your investment and your family’s overall financial security if they suddenly did not have your income, you’re not alone.
There’s an entire industry set up to address that need. It’s called life insurance. A term life policy may suit your needs better than mortgage life insurance.
Mortgage insurance would pay off the balance of your loan if you died. Term life would pay your beneficiary (your spouse, partner, adult child, etc.) if you died.
Your beneficiary could then use the money as he or she saw fit rather than having it automatically go to your mortgage lender.
You’ll also get offers to refinance your loan.
When you refinance, you’re getting a new mortgage on the same house. The new mortgage pays off the existing mortgage, then you start over paying off the new loan under its terms.
If you can get significantly better loan terms by refinancing, then go for it. Here are some questions to ask yourself:
Usually, when you refinance, you need to pay closing costs again. Be sure the new loan will save enough money to justify a second round of closing costs.
To understand how second mortgages work, you need to know about equity. Equity refers to the amount of the house you actually own.
If your house is worth $200,000 and you still owe $150,000 to your mortgage lender, you own $50,000 in home equity.
You can tap into that $50,000 by getting a second mortgage or a home equity line of credit.
After doing so, you’ll still have your original mortgage to pay and you’ll have a second mortgage to pay each month.
A lot of people got into serious financial trouble in the late aughts when the housing market plummeted and their equity, which they’d already borrowed against, vanished.
So, don’t overdo it.
Save this option for home improvements, even when you’re tempted to pay off credit card debt or a car loan with a second mortgage.
By investing your equity back into your home, you can increase the home’s value. But don’t go too far here either. It is possible to invest beyond the value your local market can re-pay.
Your home’s location has a big say in its value. No matter how nice your new appliances and cabinetry may be, your home’s overall value will still be constrained by the local market.
A home equity line of credit works similarly, but rather than having a fixed amount, you can borrow against your equity as needed.
Think of it as a cross between a second mortgage and a credit card.
When people say your home is your biggest investment, they’re not talking about only money.
You’re also investing time, patience, and knowledge.
And your knowledge investment can make your financial investment go even further.
Knowing how to determine your price range, how to avoid excessive interest charges, and how to interpret a home inspection report, for example, can protect you from costly mistakes.
Knowing how to make an attractive offer and how to back away from a counteroffer will serve you well in your local market.
Take your time and learn about the process. Research your loan options, even after you’ve closed on the home. Consider the long- and short-term effects of each option.
With the right knowledge, you can do home-buying your way.
The post How To Get A Mortgage (With A Lot Less Hassle) And Get Approved appeared first on Good Financial Cents.
Connie writes in:
I am 37, female, and single, and have no interest in getting married or having kids of my own. My younger sister (33) and her husband are having their first child in November. I want to help that child succeed. What’s the best way to do that? I have read about a 529. Is that the best route?
This is a subject that’s near and dear to my heart. As the parent of three children, having extended family that’s supportive and actually cares about your child is a truly wonderful thing.
There are a ton of things you can do to help that child succeed, not just financially, and all of these things are important. The key for you is to choose a few things you can easily do and do them well, rather than pledging to do most of them and not really doing them well at all. Some of these have financial commitments and some of them do not.
Here are twelve things that can really have a profound impact on a child that you can provide in your situation. I’ve witnessed how powerful these things can be from all of the involved roles – child, parent, and extended family member. Believe me, Connie, you really can make a huge positive difference.
The first and perhaps most straightforward option to help a child that you’re not the parent or guardian of is to open a 529 plan for that child’s future educational expenses and contribute to it steadily, or else contribute to a 529 plan for that child opened by someone else (that child’s parents or grandparents, typically).
Money in a 529 plan is typically used to cover the costs of college – tuition, room and board, textbooks, and so on – or trade school. Money used for that purpose can be taken out of the account tax free by the student; money can be used for non-educational purposes, but taxes must be paid on the gains along with an additional penalty.
This is a great way to help a child prepare for the expense of college. The best way to do it is to set up automatic contributions each month. Let’s say you decide to commit $20 a month from birth. Over the course of 18 years, at an average annual growth rate of 7%, you’ll have accumulated about $8,500 for the child. Make that a $40/month commitment and you’ll have $17,000 put away for the child when that child’s ready for college. If another family member or two makes a similar commitment, you’ll be close to paying for their full tuition at a state school.
The key with a gift like this is consistency. You’ll want to set up an automatic contribution and then just forget about it. Don’t touch it, don’t even think about it, just let that $20 or $40 or whatever disappear from your checking each month into that child’s college savings fund.
What if you’re not sure that you want to give a gift that’s set up to be exclusively used for education? You can always set up an ordinary taxable investment account, contribute to that in a similarly automated fashion as is described in the section above about the 529 plan, and then gift the proceeds to the child when they graduate from college or get married or reach some other stage in their life.
The advantage here, of course, is that the money can be used for anything, not just college. The disadvantage is, of course, the taxes. As you go along and the investment earns returns in the form of interest or dividends, you’ll have to pay taxes on those – small at first, but it might grow to something noticeable later on.
You’ll also have to decide whether to control the account yourself and gift the money as a lump sum at graduation (you’ll want to be aware of gift tax laws if you do this, but you have way more control over when it’s gifted), or else gift the money as you go along into an account in their name (you probably won’t be responsible for the taxes at that point).
As with the 529 contributions, the best way to do this is to just open up a taxable investment account (either in your name or the child’s name) and then set up automatic contributions and never turn them off. Let it drip in at a rate of $20 or $40 a month and you’ll be able to give a five figure gift at their college graduation, something that can pay off a student loan or buy a car or make a house down payment or pay for a wedding. That’s the kind of thing that can change a life.
This might seem a bit out of place here, but bear with me. Being able to step in and provide emergency child care when something goes wrong in the lives of that child’s parents can make an enormous difference in several different ways.
For one, it takes a lot of stress out of an already stressful moment for the parents. It shields the child from having to share in that stressful moment, which is probably helpful for their emotional development. It also shields the parents from what might be a super-expensive child care decision.
There are all kinds of life crises that can come up, from health problems to a natural disaster, from a personal crisis to a professional one. There may simply be times where your sibling is just overwhelmed, and you can help both your sibling and their child by just stepping up and saying “I’ve got this” at a key moment. It will save them money and stress and possible long term emotional damage.
Just be ready and willing to step in when something really goes wrong in the life of your sibling and/or your sibling’s spouse. Take their child, no questions asked, and let them handle the crisis.
Another financial hand you can lend is by saving money in an ordinary savings account and coming through with the funds to cover an expensive extracurricular activity that might be extremely important to your niece/nephew but prohibitively expensive for the parents. You might be able to pay for the fees for a summer camp or buy a band instrument or something like that.
Just start at birth by putting aside $5 a week or something like that into your savings account. Set it up so that it’s automatic (notice a theme here) and don’t touch it. Instead, just let it keep building and then pay attention to what’s going on in the child’s life.
There will come a time when that child is really passionate about something that’s just beyond the reach of their parents, who are probably already strapped by the continual costs of food and shelter and clothing and all of the other financial and personal challenges of parenting. When that happens, you can step up to give that child a truly enriching experience – you can buy that instrument or pay for that camp or buy that robotics kit or whatever it is that really matters to them.
This is a confluence of two things – money when it’s needed and attention to know when it’s needed, plus an extra dollop of good communication with the parents so that it’s not a shock out of the blue that can cause problems. Just let your sibling know that you’re saving for this kind of opportunity at some point in their life and remind them every so often. Then, when you see a possibility, check in with them and if they’re okay with it, make it happen.
Another financially challenging helping hand you can offer is offering to be the guardian of that child should something happen to the child’s parents. Let’s say that your sibling and the child’s other parent (whatever that situation may be) are no longer able to be a parent to that child – could you be the one that steps up to the plate and takes over the job?
It’s a pretty challenging commitment. Sarah and I have made such a commitment a couple of times, but only after some difficult discussions.
The truth is that concerns about guardianship are something that most involved and caring parents worry about. How will our children be cared for if we were to die unexpectedly? Who would stand up to the job? Will they be able to afford to care for our children? There are financial concerns buried in there, too, related to life insurance and other such difficult questions.
The best thing you can do as a supportive relative is to simply make that offer to the parents, if you feel able to. Simply tell them that you are willing to be the designated guardian of their children if they were to choose you. That at least gives them an option of someone willing to take on that burden if needed.
That doesn’t mean that they’ll choose you – they may have multiple options available. However, it is a relief to a parent just to know that there are people in a child’s life who care enough to be willing to take on that burden if need be.
The rest of these suggestions are less directly related to finances, but more directly related to how you can have a profound positive impact on that child’s life by investing other resources you have, namely time, energy, and focus.
Being a parent is stressful in a way that’s often hard for non-parents to understand. You have to be in “parent mode” around the clock, making sure that the children are safe and cared for at all times. That’s a tremendous burden, and when life becomes difficult (as it does at inopportune moments), it can all feel like a pressure cooker. Even when parents behave well around their children, the children can still feel the stress and the pressure, and that’s not a good thing either.
It’s during those difficult moments when you can have a tremendously positive impact on both the life of the child and on their parents by simply stepping up to help relieve the pressure. Just volunteer to take the child for a day or two, or visit to serve as a short term “nanny,” or just make a home-cooked supper for them and eat with them and then do all of the cleanup (trust me, that last part is huge).
There are times where alleviating just a little bit of the pressure in a household with children can make an enormous difference in maintaining the sanity of the parents and the well-being of the children.
This is an extension of the previous idea (as it gives the parents an extended period of time without having to worry about their children), but it goes even further than that: it gives you the opportunity to spend extended time with those children and provides a place in which you can take on some of the subsequent tips.
More than anything, it’s an opportunity for children to truly understand that they are loved by more people than just their own parents. It’s a window of opportunity to really connect with that child beyond just family events where their parents are present, to be able to reach a level of comfort together where meaningful connection can occur.
Yes, it’s stressful to take on that kind of care for a child – and it can be a bit expensive because you’re now covering food for another person for a while and you’re probably doing some activities with a price tag. However, in terms of really connecting with a child, showing them that they’re loved by more people than they might think, and also giving the parents an opportunity to not carry that child care burden for a while, there’s almost nothing better that you can do.
Turn off your cell phone. Turn off your desire to talk and add to the conversation. Just listen and pay attention.
Listen to what that child is saying. Ask questions – not cute childish facetious ones, but real questions that you would ask of someone if you’re taking them seriously and listening to them. Don’t let yourself be distracted – keep your focus on the child. Let them ask you questions and answer them, but don’t dominate the conversations with your own offerings. Let them steer the conversation, even if you consider the direction to be “childish” – that child is showing you what he or she truly cares about, and that’s important.
This will facilitate an incredibly deep connection with that child if you do it with consistency. They’ll eventually come around to asking you questions that they’re struggling with, things they might not feel okay asking their own parents about. That takes time and it takes a lot of conversation and it takes a lot of building, but when it starts to happen, it’s incredibly valuable for that child.
Even the best parent sometimes steers their children’s lives down familiar paths, exposing the children to things that are on the radar of the parents rather than the full variety of experiences that the child could have. As a person involved in that child’s life, you can supplement those experiences with things that aren’t even on the radar of the parents.
Consider taking the child to art museums or musicals or a tractor pull or something that’s not normally part of their experience. Let them eat fried catfish or spicy Thai food that they’re not likely to get at home. Let them decide for themselves whether they like this new experience or not.
I had a few relatives and family friends who did this for me when I was a child and it had a profound impact on me. They gave me gifts that were outside my normal realm of experience and sometimes helped me have experiences that were outside my normal boundaries as well. Sometimes those things fell flat; at other times, they changed my life.
Give those experiences. Yes, some might fall flat. Don’t give up. Try other things. It only takes one new experience to change a child’s life.
One of the most powerful things that a child can have is an “ally” in their family who understands what they’re passionate about, particularly if their parents do not. This doesn’t necessarily mean that you’re also passionate about that thing, but that you care enough to learn more about it and are able to engage in conversation about that passion and are willing to help them explore it in new ways.
You hear that the child is really into collecting “bugs.” You don’t know the first thing about it, but hearing about that passion is enough for you to learn about insect collection and then a few days later you show up with a bug net and a small terrarium to whisk that child away for an afternoon of bug collecting.
You hear that the child is really into solving the Rubik’s cube. You don’t know the first thing about it, but you spend a few evenings and figure out how to do it (it’s not that hard if you give it some devoted time). Then you can solve it together, talk about better techniques, and maybe even go to a speed cubing competition together.
This does a number of things at once. For one, it helps to validate that child’s interests. It also helps build a bond between the two of you. It can also encourage them to add more depth to an interest that might actually lead to something that sticks with them for life and shapes their path.
This is a really simple thing that mostly just requires time and proximity. If the child you care about has an important life event coming up, take the time to be present for that event. Make it to their dance recital or their musical recital or a couple of their games.
You don’t have to attend everything, but making it to at least a few of their events is a powerful way to directly show that you are interested in and care about the things that they’ve invested time and energy on and feel proud of in their life.
This can be difficult to do, especially if you’re remote, so consider taking the time to simply visit your sibling at a time where you can actually partake in something that their child is involved with. Schedule a trip to visit your sibling during soccer season so that you can catch a couple of the child’s games, for example.
When you do this, be attentive about their performance so you can talk to them specifically about how they did, showing that you’re there in mind and spirit and not just in body. It makes a difference.
When you spend time with a child, just let your guard down and let yourself be your inner self. Let that inner child come out and don’t worry about who might see it. Roll down a hill. Run through a sprinkler. Play a game with serious intent to win. Talk openly about yourself. Make a mess.
Almost all of us, in our adult lives, have adopted personal “guards” of “adult behavior” that we use quite often, mostly to protect ourselves. Those guards really aren’t needed around children or even teenagers – in fact, it’s those guards and those efforts to seem like an adult that can prevent us from really connecting with children.
Let that guard down. Do what feels fun and right inside (as long as it doesn’t endanger the child in any way, obviously). Be open about things that you might never speak about. Be playful and experimental. Don’t worry about the mess – you can clean up the kitchen later. Don’t worry about seeming a little foolish in public – no one is going to hate you for dancing in the park with your niece.
Letting your guard down like that is going to make all the difference in the world when it comes to making a meaningful connection with that child.
The key element in all of the strategies listed above is consistency. However you choose to help, make that method a lasting commitment, one that will continue through toddler years, childhood years, preteen years, teen years, and even beyond. Don’t just do it when it’s convenient. Don’t be spotty with it. Be consistent, so that the child knows that it’s reliable. That kind of reliability is incredibly powerful and meaningful.
It’s also worth noting that many of the most powerful ways to help a child don’t involve money. They involve time, energy, and focus. Yes, there are situations where money can help, and saving for a child’s college education can be powerful and meaningful, but it’s not the be-all-end-all of how you can help a child you care deeply about. I’d far rather have involved aunts and uncles than aunts and uncles who are uninvolved but contributing quietly to a 529.
Good luck in whatever tactics you choose.
The post Helping a Child appeared first on The Simple Dollar.
