Top Personal Finance Blogs
Friday November 17th 2017

Five Steps to a Better Credit Score

No it’s not a game. Although a credit score may seem like an abstract number with little relevance to your every day life, a low credit score may eventually have very negative ramifications. A credit score can be the determining factor of whether or not someone can afford a new home. A credit score is even used by some employers as part of the hiring process.
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Wills and Executors – Need to Know Tips

Wills receive a lot of attention. Even though the number of people who actually follow-though on the creation of a will is still small, everyone knows the role a will plays in an estate and why it’s a good idea to have one. Receiving less attention is the role of the executor in the successful implementation of wills. Your choice for the executor of your estate is one of the most important decisions you will make. It is the decision that will have the greatest impact on your loved ones after your death, and it’s the decision that, if poorly made, will be impossible for you to fix when it is most crucial.

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Consumer Beware: Refund Anticipation Loans

A Refund Anticipation Loans (RAL) is short-term debt that a taxpayer may take on when expecting a refund on federal taxes. Although RAL lenders charge what seems like a small fee, consider that a $60 fee on a $1,000 refund amounts to 6% monthly or a 72 percent Annual Percentage Rate (APR)!

Government Saves 90% on Benefit Issuing Costs

Government to Cut Costs With Electronically Payable Benefits

In this technological age, the paper check is starting to look like an ancient relic from an age long past. Most people pay their bills online, make purchases online, or get payments directly deposited into their account. Nowadays, most people use their debit or credit cards to pay for items that were more often paid for with checks.


Changes in Overdraft Protection – Get Ready

Bank fees, particularly overdraft fees can deplete a customer’s bank account. In the past, a customer could be enrolled in automatic overdraft protection by their bank. There was no upfront fee, banks charged overdraft fees to accounts with insufficient funds resulting from a debit card or ATM transaction. A law was passed to protect consumers from banks automatically enrolling then in overdraft protection.

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How to Buy an Affordable and Dependable Used Car

If you know even a little bit about cars, you should know that you should always buy used. Some of the richest people in the world buy used. Why? They know new cars are a waste of money, losing significant value as soon as you drive them off the lot.

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Online Banking Security: Bank with Confidence

Online banking is about much more than just convenience. Banks that do business exclusive on the Web typically offer higher interest rates on savings, free bill-pay services, and some even offer free posting when mailing a check on your behalf. Because these institutions have no branch offices to maintain, their costs are lower. Those savings are passed on to the consumer.

But many people shy from online banking because they worry about security. Here’s what you need to know about online banking to gain the benefits of these services and still feel secure.

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FHA Loan Changes are Coming

In the last few years, private mortgage lenders have been reluctant to approve new loans. As a result, the government-backed FHA has substantially increased its loans. Today, according to the CMPS Institute, FHA mortgages comprise nearly 30% of all existing loans compared to only 3% in 2006. FHA loans require only a 3.5% down payment compared to traditional mortgages which require 20%.

Unfortunately, this rapid growth has created increased risks and led to higher loan losses. According to the Department of Housing and Urban Development, 21.1% of FHA mortgages that originated in 2007 are now in either foreclosure, bankruptcy or delinquent over 90 days. This compares to 14.2% just a year ago. Of the loans originated in 2008, 17.3% are in this category compared to only 8.4% the year before.

The FHA’s loan loss reserve has fallen dramatically. As of September 30, 2008, the loan loss reserve stood at $19.3 billion. Now, as of June 30, the reserve is only $3.5 billion. The financing account of the FHA, which uses reserve funds to pay for loan losses, has risen from $9 billion at September 30, 2008, to the present level of $29.6 billion.

The FHA is concerned that the reserve fund and the financing accounts could be depleted if housing prices continue to decline. The FHA has implemented changes to strengthen the reserve accounts and to lessen future risks of loan defaults.

Increased Annual Insurance Premiums

The agency plans to increase the annual premium to a range of 0.85%-0.90% from the present range of 0.50%-0.55%. This premium, or PMI, is included in the monthly mortgage payment. However, the FHA will probably lower the mandatory upfront premium to 1.00% from the present 2.25%.

The FHA expects these changes to produce a net increase in premium income, which will provide more funds to cover future loan losses and reduce the decline in the loan loss reserve account.

Reduction in Seller Closing Cost Contributions

Previously, sellers could contribute up to 6% of mortgage closing costs. This will be reduced to 3%, which will increase the buyer’s financial commitment towards the purchase of his house.

Higher Credit Score Requirements

In the past, the FHA did not have an official minimum required credit score. That determination was left to the individual loan underwriters. Now, the agency has proposed a minimum required credit of 500 with a down payment of at least 10%. In order to qualify for a 3.5% down payment, the credit score will have to be at least 580. Nevertheless, these credit score minimums are still below the requirements of a conventional mortgage, which are 660 to 720 with a 10% down payment.

The FHA is also asking lenders to tighten underwriting criteria by more closely examining a borrower’s cash reserves, debt-to-income ratio and credit history. The effects are already apparent. As of April 2010, only 2.4% of FHA loans had credit scores less than 620 compared to 37.5% in January 2008.

While FHA requirements are still generous compared to traditional mortgage loans, they are becoming more stringent and qualifying will become much more difficult in the future.


Don’t be a Horror Story: Protect Yourself from Identity Theft

Protecting yourself from identity theft can almost seem like a job in itself, and it seems like the criminals are always one step ahead of the good guys. If you’re like most people though, you probably know someone, or have at least heard a good horror story or two, from people who have suffered identity theft. And more than likely it took these poor souls a lot of work to straighten out the issues created by the theft of their identity — issues you would probably like to avoid.

If you would prefer to be proactive to the threat of identity theft rather than reactive, here are a few steps you might take that can help you protect yourself.

Mail and Documents

Knowing when particular bills and account statements arrive can be instrumental in recognizing when something might be amiss. Not receiving regularly scheduled bills, or account statements coming in haphazardly might indicate a case of identity theft. On the other hand, receiving similar documents for accounts that you don’t recognize but are in your name could also be a red flag that someone has opened accounts in your name without your knowledge. Getting bills and statements online might be one way to circumvent the possibility of identity theft through the mail.

It is also important to remember that once these types of documents enter the house, they still aren’t completely safe. Should you throw paper statements away in the trash, you are risking the chance that they might fall into someone else’s hands. Therefore, if you plan to dispose of such documents, typically the safest way is either by burning them or cross-cut shredding them.

General Security

Some documents like house or car titles, tax information, and other paperwork with critical personal information contained upon it, can’t be shredded or destroyed. It might therefore be pertinent to rent a safety deposit box which may be used to hold some of these documents. However, a safety deposit box might not be feasible for all documents since it might be troublesome to go back and forth to obtain needed information or you might just have too much.

Therefore, you might want to have a central location in your home for your important documents that you may need to refer to on a regular basis. With a space in which this information is filed neatly and orderly, you can tell if something has been disturbed should a break-in of your home occur.

Internet

The internet is probably one of the easiest ways to have your identity stolen these days. With the proliferation of online shopping, phishing scams, viruses and keystroke capturing programs, the internet is full of potential threats to your personal and financial information. By making use of virus scan software, only using known and trusted internet sites, and restricting the amount of information you provide over the internet, you can better protect yourself from threats. You might also reduce the risk of financial security breaches by using payment programs like PayPal to make internet purchases.

Credit Reports and Common Sense

Checking your credit reports can be another good way to protect yourself from or identify identity theft. At https://www.annualcreditreport.com/ you can start the process of checking your credit reports. You can select one free annual report each from TransUnion, Experian, and Equifax, choosing to do all three at one time or spacing them out throughout the year. Spacing them out might allow you to keep a better eye on your credit so that there isn’t a year long gap between when your run the reports.

Using your common sense in situations in which you think something might be amiss or when you are uncomfortable providing personal information may also be key to protecting your identity. Strange calls from collection agents or charges for products or services you never requested might also be red flags that your personal information has been compromised.

For more information regarding identity theft, how to protect yourself, and what to do should identity theft occur, you can visit the FTC’s Identity Theft Website at: http://www.ftc.gov/bcp/edu/microsites/idtheft/.