Top Personal Finance Blogs
Tuesday December 10th 2019

Why and How You Should Avoid Late Payments on Your Mortgage

In this tough economy, home owners are increasingly struggling to make mortgage payments. The good news is that being a few days late paying your mortgage is not a big deal; most lenders give a 15-day grace period and as long as you get payment in during that time, there is no penalty whatsoever. After the grace period, you have an additional 15 days during which you will be charged a late fee. As long as you pay during this period, you are still considered to have paid on time. Now onto the bad news…

If you are 30 days late, your credit takes a hit. Depending on your beginning credit score, being just 30 days late can lower your score by 60-110 points and can take between 9 months and 3 years to fully recover from. The higher your score was before the late payment, the longer it takes to fully recover. If you start with a score of 780 and are 90 days late with a mortgage payment, your score may drop by 130 points, almost as much if you go through foreclosure. A low credit score can cost you more in many other areas too – they drive credit card rates up, affect auto loans and even drive up auto insurance premiums.

Clearly, it’s in your best interest to remain current on your mortgage payments. What should you do if you are having problems? First, keep your wits about you and don’t panic. Refusing to admit there’s a problem will not solve anything. Be proactive; contact your lender with your issues. Most of them are willing to work with you, but communication is key. Don’t just hope they won’t notice if you are late; they will.

Secondly, you need a plan. Track all of your expenditures to see where your money is going. Do it by hand, do it by computer spreadsheet; just do it. Keep track of everything for a month or two. This exercise alone may open your eyes. You may not have ever realized that you spend $15 a month on office birthday cards, for example, and may find something right away that you can cut out or reduce easily. It’s important to find out where your money is going.

Once you do that, you get to look for “extra” money. Don’t look at it as cutting things out or depriving yourself. Make it a challenge; make a game out of it. Cut back on obvious things first, like excessive shoe shopping or those office birthday cards. Analyze the expenditures you identified, and see what can easily be discarded without much trouble. Be ruthless, but make it as painless as possible. You may love your morning Starbucks coffee, but could you buy it at the grocery store and still enjoy it for less?

Then, take a closer look. There are tons of ways to save money you may not have considered. Cook more from scratch. Not only will you save money, you will eat healthier. Use generic products when possible; clip coupons and couple them with sales. Grow spices. Cut out commercial cleaners and start cleaning with baking soda and vinegar. You’ll breathe fewer toxins and help the environment at the same time. Be creative with your cost-cutting, but don’t make it painful or you will have a hard time sticking to it for long.

As you identify areas you can trim, take the “extra” money and pay that mortgage payment on time every month. You may find enough that you can even begin paying down other debts like credit cards too.

Hard times have a tendency to cause people to panic and get stressed out. You don’t need the added burdens that late mortgage payments and lower credit scores can bring. Remember, denial is never a good plan. Get help from your lender if you need it; then make a plan and stick with it.

How Much Car Can You Handle?

When you start shopping for a car, it is important to remember that there are more expenses involved in car ownership than just the initial sticker price. Once you pay for the car, you will need to purchase the title, pay the state taxes, and deal with regular maintenance costs. The amount of insurance that you carry on your vehicle may depend on what kind of car you purchased and how you paid for it. Many lien holders will expect you to carry full comprehensive coverage as long as the car is being paid off. Because of the various expenses involved in car ownership aside from just the sticker price, you must consider all expenses before you understand how much you can afford to pay for a car.

Factor in Tax and Registration Costs

The tax and registration costs can vary depending on the age of the car and the state you live in. The older the car is, the less expensive it will be to purchase and the lower the tax rate will be. Usually the tag and title is less expensive on an older car, as well. Make sure you remember to factor in the possible costs of registering your car when you are building your car shopping budget. You can get an estimated tax and title cost for any car by calling your local tag agent or looking the information up on the state department of motor vehicles website.

Monthly Maintenance Budget

Once you own your car, you will need to keep it running in good condition. There are several parts that will wear out eventually due to the normal operation of the car. Create a savings account or space in your budget to cover regular maintenance, like oil changes, tire rotations, and fluid checks. Car tires can be expensive, and the kind of car you buy will make a difference. Remember to look into the tire size and the typical costs for replacing tires on the models that you are interested in.

Planning for Insurance Payments

Your insurance costs are based on several factors. Some of those factors are directly related to the kind of car you purchase. A brand new car should be covered with a comprehensive policy to make sure that the car can be repaired or replaced if it is involved in an accident. Comprehensive coverage can be more expensive, but it is a necessity on a new car because repair work on new vehicles is also very expensive. If you plan to purchase your car through a loan, you may be required to carry full comprehensive coverage. Make sure you can afford to make those insurance payments once you have purchased the car.

You can lower your car insurance costs by purchasing slightly older vehicles. Look into the types of cars that are stolen most often in your area and avoid buying those cars. You can find information about local crime rates online, or you could contact your local police department to find out where the information is compiled. Some research into the safety ratings of the cars you are interested in can also save you money on your car insurance. The safer your car is, the less you will need to pay.

Five Tips for Buying Your First Home

Buying a home can be an intimidating process if you have never done it before. These five tips are a great place to start if you are considering becoming a homeowner.

Clean up Your Credit Rating

Most homeowners need to acquire a mortgage. The recent problems in the housing market have led to a large number of foreclosures, so lending institutions have become much stricter in their lending policies. Your best bet is to have an excellent credit rating before you approach a bank for a mortgage loan. Before you begin house hunting, look into your credit report to see what your rating looks like. Take care of any outstanding problems prior to speaking with a lending institution about a mortgage.

Buy in Good School District

Whether you have children or not, a good school district is a great selling point for any home. The biggest benefit of living in a high quality school district is that it will help your home sell faster when you are ready to move. Most buyers place a high priority on school districts.

Work With a Professional

Some of the details of home buying can be confusing for someone who has never gone through the process. A professional realtor will be able to help you create a more successful strategy for shopping for the home as well as guide you through the steps involved in the purchasing process. Home shoppers have great access to home listings online, but a realtor can provide advice based on years of working in the housing market.

Lowering the Interest Rate

Many mortgages will allow you to choose to pay a higher down payment in return for a reduced interest rate. If you plan to own your home for more than a couple of years, the interest rate reduction will save you more money the longer you are paying on the loan.

Become Pre-approved

Pre-approval for a mortgage can help you become a more informed shopper while you are house hunting. You will know exactly how much you can afford to pay for a home, so you can avoid spending time looking at houses that may be outside your price range. Pre-approval helps speed up any offer you might want to make on a house that you like, as well. During the pre-approval process, the bank will examine your financial data to determine a realistic mortgage offer for you before you find a house.

Should You Pay Off Your Student Loans Early?

Should you pay off your student loans early? Absolutely! Paying off your student loans as soon as you possibly can is the best thing you can possibly do with your money. Tons of people graduate from college with thousands of dollars worth of student loans and completely forget or neglect to pay the money back once they are out college. This is one of the worst mistakes you can make. There are a number of reasons to pay your loans off as soon as possible.

Better Credit

First of all, paying your student loan as soon as you can will lower your debt to income ratio. This will allow you to have more money when you start to make important financial decisions later on down the road. Having a good debt to income ratio will allow you to afford a nicer house, car, and other objects you may desire. You may even be able to take the extra money afforded to you and invest it in order to start making even more money. Bottom line, the financial position you will be in later will be well worth the money you pay now.

Interest Savings

The longer you wait to pay your loans the more your loans will cost. Each month you don’t pay is more interest being added to the previous interest your loans have accumulated. The longer you wait to pay the more interest you will have to pay. The sooner you pay your loans the less you will pay altogether which could potentially save yourself thousands of dollars.

You’ve Got to Do it Sooner or Later Anyway

You cannot escape your student loans. You still have to pay your student loans even if you declare bankruptcy. Should your finances tank you will still have to climb back up with your student loans weighing you down. Paying your student loans early will allow you to deal with a financial crisis easier.

Most people start out with student loans as their only source of debt. Why not start your debt free life sooner than later by paying off your only source of debt as quickly as possible? You have nothing to lose and everything to gain from paying your loans right away.

Even if you can only pay off a portion of your loans you will still benefit more than not. Getting your finances in order as quickly as possible should always be your number one priority.

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.

Mortgage Basics: Terms You Should Understand

When you apply for your first mortgage, you’ll hear many new terms that can be confusing. Don’t assume you understand what mortgage terms mean. Take the time to educate yourself so you know what  you’re getting into. Before you ever see the mortgage contract, you’ll be discussing certain terms with the lender.