What's the Difference Between Pre-qualifying and Qualifying for a Loan?

When you start searching for a home, your real estate broker may ask you about potential financing options. Before you start discussing your financing, there are some terms you should be aware of. It is important to understand these terms could be used interchangeably but they are very different. These terms are prequalifying, qualifying or preapproval.  Here’s what each of these terms mean for you as a home shopper.

What does prequalifying mean?

If you are considering getting prequalified before shopping for a home, you will provide to a mortgage lender or broker certain information. This information will include your monthly income, monthly credit card expenses, and information about other bills such as a car payment, or insurance which are paid on a monthly basis. Your mortgage lender or broker will ask you specific questions regarding your credit including whether or not you have had any late payments during the last 12 – 24 months. None of this information will be verified by your broker or lender.

Once your mortgage professional has obtained this information, they will help you determine how much of a mortgage you may be qualified to obtain towards purchasing your new home.  This information is helpful because it will give you the flexibility of knowing approximately the price range at which you can purchase your home.

What does preapproval/qualifying mean?

While preapproval and prequalifying often are confused as the same process, there are very significant differences. During the preapproval phase, a lender will have you fill out a mortgage application, run a credit report, and verify the information they request from you. This process allows you to know how much money you actually can get approved for, versus an estimate of how much of a mortgage you qualify for.

In most cases, a lender will issue you a preapproval letter with certain caveats including that information provided on your initial application does not materially change between the preapproval or qualifying process. For example, if you maxed out a credit card which had a zero balance when you applied, that could impact your final qualifying. The same is true if you missed payments, changed jobs, or other financial circumstances which materially changes your initial application.

The advantage of a preapproval when shopping for a home is clear: When you are negotiating with a seller, you know exactly how much of a loan you will be eligible for, and you also know that unless something materially changes, you will be approved for that loan.

What happens after prequalification?

Once you obtain a prequalification, you can start searching for your home with the confidence that you know what range you can qualify for a mortgage. Once you identify your dream home, you will fill out a mortgage application, provide documents to your lender, and your credit will be checked. Assuming there are no material changes from the original information you provided to the lender, you may then receive a mortgage approval.

What happens after preapproval?

Preapprovals will significantly shorten your process of finalizing your home purchase. Your mortgage lender will verify your pay for the period between your original preapproval, ask you about any changes in your finances, and pull your credit report again to make sure there are no material changes since the preapproval. Assuming there are no material changes, your mortgage will be ready for the final step.

The homebuying process is exciting and you will likely hear several terms you are unfamiliar with. Never hesitate to ask questions of your realtor or your mortgage professional during this process so you understand what steps to take next.

Nine Great Options for Using Your Home Equity Today

Most people who have equity in their home think about using that equity using one of two methods. First, there are those who opt to refinance their home and get the equity in cash — a cash-out refinance. Others opt to take out a home equity loan which has a similar result, you get the cash value of the usable equity in your home. Another option to consider however is the home equity line of credit. Like the other two options, a home equity line of credit — a HELOC — allows you to access the equity in your home. However, unlike the other two options, you decide how much of the funds you want to use, and when you want to access them.

Home equity lines of credit give you more options because if you are not ready to use the funds, you need not take the funds. Only when you draw funds down from the line of credit are you obligated to make any payment. Depending on the terms, you may also have the option of using the same funds repeatedly, much like you would a credit card. As you make a payment and reduce the amount of principal owed, you have the option of reusing the line of credit. Here are nine ways millennials, and others, can take advantage of the equity in their homes.

1. HELOC For Debt Consolidation

According to a study conducted by Experian, millennials have an average amount of $4,712 each in credit card debt as calculated during Q1 2019. Credit cards have notoriously high interest rates when compared to a home equity loan. On the lowest end, credit card issuers charge about 14 percent interest while a HELOC rate can be as low as six percent. This is a significant difference and can save you a lot of money over the repayment period.

2. Real Estate - Investing for Your Future

While there is no guarantee that real estate values will always remain high, another practical and creative way to use a HELOC is to fund the purchase of an investment property. When you apply for a mortgage for a second home which you do not intend to occupy, there are different down payment requirements. In nearly all cases, you should be prepared to make a down payment of 25 percent of the purchase price. A home equity line of credit could offer you the cash you need. Additionally, investment property can add a new stream of revenue to your monthly income when you rent out the property. Remember, when you make a significant down payment, you are also creating additional equity which may give you the option of obtaining another home equity line of credit later.

3. Educational Expenses — Reduce or Prepare

Whether you have several student loans and you are considering consolidating the loans, or your children are currently thinking about college, education is expensive. A HELOC can help you prepare for college, or help you reduce your current student loan debt. According to a recent release by the Bureau of Labor Statistics (BLS) millennials have the highest levels of student loan debt.  If you are planning to use a HELOC for reducing existing student loans, be sure to review your current payments and interest rates carefully so you are not paying more using your HELOC.

4. Investing in Your Current Residence

Regardless of how long you have lived in your home, the chances are high there is something you would like to change. Whether you are considering upgrading your roof, going solar, or you are considering landscaping your property, a home equity line of credit can provide you the funds you need to invest in your current home.

5. Fulfilling a Dream

Destination weddings, a dream vacation, or a cruise for the entire family — these are some of the more exciting ways of using the equity in your home. Make sure before you decide to use your HELOC in this manner you are not going to regret later. After all, using the funds from a home equity line of credit to splurge may not fit your overall financial goals.

6. Making Self-Employment a Reality

For millennials who have the entrepreneurial spirit but are having problems securing business loans, a home equity line of credit can provide the funding you need to launch a new business. Many studies over the last several years have shown that millennials are more likely to forgo traditional business models and go to work for high-tech start-ups or opt to work for themselves. Using a HELOC to fund a new business can be rewarding in the long run.

7. Saving for a Rainy Day

There is no doubt many of us are poor savers. However, a HELOC can help you get a leg up on some of your savings needs. If you have no current emergency fund and you are concerned that a sudden problem with your car, furnace, or other big-ticket item could wipe you out financially, a home equity line of credit could be a great fallback. Remember, if you have not drawn any funds down from the HELOC, you are not making any payments. If you do take a draw of funds, you are only making payments on the amount drawn, not the entire balance.

8. Creating a Nest Egg and Taxes

Millennials may feel retirement is years away, and for most it is at least a couple of decades in the future. However, this time gap does not mean you should avoid planning for retirement. In addition to the earnings on your retirement savings, there may be tax benefits available which could help offset the cost of using your home equity line of credit to fund your annual retirement account or start your retirement account for the first time. Before using a HELOC in this manner, make sure you explore the pros and cons.

9. Caring for Family

Millennials are often faced with the challenge of caring for an aging parent or grandparent. Having some financial flexibility can be very helpful in this situation which is when a HELOC can be very beneficial. You may also be expecting a new family member either through birth or adoption and having access to additional funds could prove helpful.

While a home equity line of credit is not right for everyone, these are some simple idea to make use of the equity you have worked so hard to build up in your home.

Best strategies for refinancing your home

Chances are that your local newspaper has advertisements from home mortgage lenders advertising new, lower interest rates.  You log onto your computer and all over the internet you see ads for lower interest rates.  You might be wondering if it is time to consider refinancing your home.  Let us look at the best strategies for refinancing your home since interest rates are lower.

• Calculate the difference - the first thing you should do is determine how refinancing your home is going to affect your monthly payments.  Not only should you consider how much your mortgage payment will change but, you should also look at how it will impact your homeowner’s insurance and your income tax.  Since your mortgage interest can be deducted on your taxes, determine the impact.
• Can you consolidate? - if you have credit card debt or other debt that you can pay off by refinancing your home, you should also calculate the amount that you may be saving. There are mortgage calculators that are available on-line that will help you determine (based on set rates) how much your mortgage payment will be.  Gather all of your credit cards together, and sort them by interest rate.  Write down the current balances and use a credit card calculator to determine how long it will take to pay them off if you do not include them when refinancing your home.
• Contact a Realtor - get an approximate market value of your property.  Once you have obtained a market valuation (not to be confused with an appraisal) you can determine if you are eligible for a refinancing of your home.
• Obtain your Credit Report - before you take any further steps towards refinancing your home, contact all three credit reporting agencies and request a copy of your credit report.  Remember, you may request one free copy of your credit report every twelve months.  Verify that all the information on your credit report is accurate.

Once you have completed these steps you then can decide if you will benefit from refinancing your home. The next best strategies come when you begin discussing your situation with lenders. Here are some strategies for helping ensure you get the best possible refinancing terms for your home.

• Contact your current lender - if you currently have an adjustable rate mortgage (known as an ARM) you should discuss with them the possibility of refinancing to a fixed rate mortgage. Let them know how much work you have already done in research.  Advise them that you have done the calculations (and at what rates), if you are paying off credit card debt (known as a cash out refinance).  Also let them know what you have found out about the current market value of your home and any information that might be pertinent from your credit report.
• Contact other lenders - contact other lending institutions after you speak with your current home lender (regardless of what they tell you) and find out if you can get a quote for a lower interest rate.  While these quotes are usually non-binding until contract, they will give you some leverage with your own lender.  Make sure you provide these lenders with the same information you provided to your lender (with the addition of your current outstanding mortgage).
• Negotiate - there is usually room for negotiations with your lender. You may be able to get them to waive all (or some) of the closing costs, if you decide to stay with the same lender many times there are other fees they would consider waiving.   You should attempt to get the best deal possible when you are attempting to refinance your home. 

These are some of the best strategies to employ when you are considering refinancing your home. After you have thoroughly reviewed all the implications of refinancing your home, you will see that these best strategies can help you successfully close the deal.

Credit card debt reduction tips

In a study conducted by Creditcards.com it was estimated that the average adult with a credit card maintains debt on those credit cards in excess of $5,600.  This amount is staggering, and many people are searching for opportunities to reduce their credit card debt but are uncertain as how to get started.  Here are some simple to implement credit card debt reduction tips.

• Stop using them - all too often, having a credit card in our wallets is like having permission to purchase anything we want at any time. Rather than carrying your credit card (or cards) with you, leave them at home. If you commit to using your credit cards only for emergency purposes, this will be one way to immediately reduce your credit card debt. Avoid using your credit cards for "want-to-have" items instead of saving for them.
• Consider consolidation - check all credit cards and determine which one has the lowest APR. Once you do that contact them and ask about transferring balances from your higher APR cards. If this is not possible, consider searching for a lower APR credit card and consolidating all your balances to that card. Some credit card companies may offer 0% APR for a specific period of time for transferred balances.
• Contact Creditor - contact your credit card company and ask them if they would be willing to consider a reduction in your APR. This can be accomplished if you have an excellent history with the card company. Many card companies are willing to negotiate if you are not delinquent in your payments.
• Double payments - instead of making your minimum monthly payment, try making payments that are equal to two monthly payments each month. This will help reduce the interest you are paying on your credit cards and help lower your balances faster. This is especially helpful if you are double paying your higher interest rate cards.

Instead of swimming in credit card debt, plan today to help reduce the amount you owe. If you use these simple to follow credit card debt reduction tips, you may soon find your credit card debt down to far more manageable levels. Get free of credit card debt beginning today. Remember, you did not accumulate your credit card debt in one day, and credit card debt reduction will not happen overnight. Using a sensible plan, you can free yourself of your credit card debt.

Important papers and documents you need to keep safe for future use

One challenge often faced by family members after the death of a parent, spouse or other loved one, is finding important paperwork.  Here are some of the documents that family members may need access to.  These should be considered important documents and they should be kept safely for future use.

Life insurance policies

You might be surprised to learn that life insurance policies are difficult for family members to locate after a death. In fact, nearly 20% of life insurance policies are misplaced and turned over to states according to the National Unclaimed Property Network.  All life insurance policies along with any addendum should be considered important papers and should be kept safely for future use.

Bank statements

Heirs are often in the dark about checking, savings, IRA, and other financial accounts that are held by family members. It is critical that bank statements are kept safe for future use.  Along with the stress of a death in the family, trying to find bank statements to make sure all assets are accounted for can add additional stress.  Considering bank statements important documents will help keep them safely for future use.

Stock certificates or statements

In most cases today, stock certificates are held in "street name" by the brokerage house that maintains financial accounts.  Because of this, it may make it more difficult to track stocks and bonds that are owned.  Rather than have family members trying to determine what you own for stocks, bonds and other financial instruments, keep careful records. These can be maintained in a file on your computer or may be kept in a folder in a safe place.  A record of dividend or interest checks should also be kept safely for future use.

Real estate information

While family members may be aware you own one (or more) pieces of real estate, there are other considerations that must be paid attention to if someone dies.  Deeds, mortgage documents, tax bills, and insurance documents should be considered important documents.  These must be kept safely for future use.

Trust instruments and wills

Over the years, if you have a trust document or a will, you may have made changes to it.  Keep all documents along with changes in a safe place along with the name and telephone number of any attorney or other person who has assisted in the preparation of these documents.

There are several important papers and documents that you need to keep safely for future use. These are just a small sampling of them.  If you are in doubt as to whether a document might be important, it is better to keep it safely.

How to transfer mortgage title ownership

Transferring ownership of a mortgage title is a complicated legal process that involves numerous steps. In most cases, homeowners should consider getting legal assistance to make sure that this process is done properly. The home title and the home deed are two different items, the deed specifies who legally owns the home while the title to the home reflects who the owner is as well as who has legal rights to the property based on amounts owed (if any).

Investopedia defines title as “The right to the ownership and possession of any item that may be legally recognized as belonging to someone or something...”.  They further define deed as “A legal document that grants the bearer a right or privilege, provided that he or she meets a number of conditions...”

In order to transfer mortgage title ownership, a deed is required in all cases. Deeds may be prepared by an individual provided they understand which type of deed they need. There are three common types: (a) quit claim deed, (b) grantor deed and (c) warranty deed. In most cases, a quit claim deed is used to transfer the ownership of property from one person to another. There are other types of deeds, but these are the most referenced ones.

Reasons for transfers

A homeowner who has a mortgage on their home will have the right to have the lien that is placed by the mortgage company removed from their home via a deed. This provides the homeowner a title free from a mortgage lien. The mortgage company typically completes this transfer once they have received the final mortgage payment from the homeowner. The homeowner may then be required to pay a fee to the mortgage company to pay for the filing fees needed for filing the deed to transfer mortgage title ownership.

Those who have inherited property due to the death of a parent or spouse may also need to have a deed drawn up to claim ownership of a property left to them via a will. In some cases, the property has more than one name on the title and the name of the decedent must be removed from the title. In this instance, a deed would be filed to change the ownership from two owners to the sole owner or in the case of parent to children transfers, from the parent to the child. Generally, the administrator of an estate does this. In some cases, a homeowner may have filed a beneficiary deed prior to their death which can make the process less complicated.

Complications hampering transfer

If a homeowner has a mortgage on a property, before they can transfer ownership, they must obtain the approval of their mortgage lender. Most lenders have a “pay on sale” clause or a clause that prohibits the mortgagor from transferring the ownership of the property while monies are outstanding. In some cases, this can still be done by filing a quit claim deed that goes into effect once the mortgage is paid in full.

Understanding the process

A quit claim deed must be drawn up with the current name of the property owner, the information regarding the property and the information on the person who is going to be the new owner. The information for the property often includes book and page number (found at the courthouse or other legal authorities office) and a legal description of the property including the mailing address. The legal signatures of the person transferring the property and the person accepting the property may also be required.

The deed then must be filed at the proper legal offices for the county where the property is located. In some cases, this may be the county courthouse while in other cases it may be filed with a registrar of deeds office. There is generally a filing fee that is required to complete this type of a transfer.

The reasons for transferring a title on a property are varied including divorce, paying off mortgage or a gift to a child from a parent (before or after death). Each municipality may have different rules when it comes to filing the needed documents including when and where they are to be filed, if they need a notary seal to validate them and whether fees are involved.

Those who are considering a transfer of mortgage title ownership need to be aware of all the legal ramifications of this type of transfer including assuming of property taxes on the property. Other considerations that must be taken into consideration include whether a mortgage exists on the property. While it is possible to facilitate this type of a transfer without the guidance of a lawyer, it is strongly recommended that a qualified real estate attorney be contacted for guidance.

The high value of relationship-building

As more businesses turn to the Internet for marketing purposes, and fewer business ventures involve face-to-face contact, one of the aspects of successful business marketing is getting lost. In years past, companies depended on face-to-face relationships for building a successful client base. Today, more business ventures are forced to accept the new reality and learn relationship building from an entirely new perspective.  Building relationships with clients is still the best way to find long-term success in business, it simply needs to be evaluated differently in today's global economy. This leaves many companies struggling with gaining more clients through successful relationship building in a new marketplace.

Communication matters

Entrepreneur Magazine offered some great tips for relationship building. At the very top of that list is developing information that helps clients make a decision. Communication is the secret to great relationship building and this can be done in numerous ways, even through the internet. Whether a company decides to utilize social media, articles or newsletters, keeping clients informed is the best way to strengthen the relationship.

Not all about sales

While sales will drive long-term business success, developing relationships will be what leads to long-term client building success. When providing reliable, verifiable, and well thought out information to customers and potential customers, do not always focus on selling to that customer. One of the most effective ways to drive sales is to enhance the credibility of the company, the leadership of the company and the product or services that are offered. Providing great information while not constantly begging for a sale can be very effective.

Customer development

Another important aspect of relationship building is active involvement. All too frequently, entrepreneurs tend to filter their client relationships down to salespersons, customer service staff and others in the company. Once the account is landed it is oftentimes easier to do this than deal with them on an ongoing basis. However, keeping in contact with clients on a regular basis can help not only develop that customer further, but can lead to new business. Another important benefit of keeping actively involved in customer development is staying in touch with what is happening across the company. This regular interaction keeps the entrepreneur involved in all aspects of the company.

There is little doubt that the internet, social media marketing and a global marketplace have changed how entrepreneurs deal with clients and potential clients. However, rather than becoming more detached from the relationship-building aspect of business, this is the time when better relationship building should become the norm. While business development, product development and sales have a major impact on the long-term success of a business, relationship building will ultimately be the deciding factor in long-term success.

Image credit: Stuart Miles: http://www.freedigitalphotos.net/images/shaking-hands-through-computer-shows-online-deal-photo-p211003

A simple investing strategy to help your money grow

DRIPS (Dividend Reinvestment Plans) are the most common vehicle for dollar cost averaging investments. These plans allow you to make small investments on a regular basis. Combine a small monthly investment with dividends that are received being put back in and soon you will have a nice little nest egg.

Short Term Dollar Cost Averaging

If you have only a modest amount of money to invest on a regular basis, you might be wondering how to invest them. You can go to your local bank and earn a standard interest rate. This will secure your basic investment and slowly grow over time. The secret here is that it will grow slowly.

Dollar cost averaging allows you to invest that small amount into a larger portfolio. You can create additional wealth by investing in a dollar cost averaging stock plan. Many large companies offer these types of plans allowing you to diversify your portfolio.

Like other stock market investments, there are risks involved. You may find that over one year you have invested $1,000 and at the end of the year your investment is worth $500. This is where a dollar cost averaging plan can help you.

Benefits of Dollar Cost Averaging in DRIPs

A dollar cost averaging plan means that when you invest additional money you are investing in shares that have a fluctuating purchase price. You may purchase some shares at $100 and others at $75. This brings down your average purchase price.

Another benefit to DRIP plans for dollar cost averaging is the ability to purchase fractional shares. This means that if you have a stock that is worth $100 per share and you receive a dividend (or make a small investment) that you will be able to purchase less than one full share.

Long Term Dollar Cost Averaging

When you continue a dollar cost averaging plan over time, you have the potential for significant rewards. If you continue making regular investments, you could recognize large gains in the value of your portfolio.

As stocks go up and down in price, your cost per share changes. Over time, your investment grows in increments and your cost of your shares changes with nearly every investment. Here is an example of how your costs can change:

Month 1: Invest $100

Cost per share of stock $50

Own 2 shares

Average cost: $50.00

Month 2: Invest $50

Cost per share of stock $45

Own 3.11 shares

Your average cost is $48.23 ($150/3.11)

You can see in the long term, the benefits would be significant.

No guarantee of success

A dollar cost averaging system does not guarantee your investment. Like any other stock market investment, you can lose your entire investment. Dollar cost averaging with a DRIP plan does allow you to invest in several companies.

If you are considering any type of dollar cost averaging through a DRIP plan, you will want to discuss the risks and rewards with a qualified financial planner. They can help you understand how dollar cost averaging can work for you.

Dollar cost averaging using a DRIP program is a great way to save money. Rates of return are much higher if you hold your positions for long periods. An advantage of dollar cost averaging is that you can make a small amount of money go a lot further.

How to request a hardship loan against your 401K

In tough economic times, you may need additional means to make ends meet. A hardship loan against your 401(k) is strictly regulated by the Internal Revenue Service and can often create additional hardships that could be more of a burden for you later.

Hardship loans on a 401(k) are available, but the restrictions are significant and the tax burden they create may not be helpful to you in the end. It is also important to understand that a "loan" implies the ability to repay.  However, a 401(k) loan cannot be deposited back to your 401(k).

With a hardship withdrawal there are specific prohibitions against putting the funds back into your 401(k) and in fact, you may also be restricted from adding funds for six months after such a withdrawal. Additionally, you will pay up to 35% in taxes plus a 10% withdrawal fee. If you still feel that a hardship withdrawal is the best way of securing emergency funds, here are the IRS defined rules for a hardship withdrawal and the documentation required:

• College Tuition - You can borrow against your 401(k) under the hardship withdrawal feature for tuition for yourself or a qualified family member. You will be required to obtain a tuition statement from the educational institution and proof of the student’s relationship to you.
• Medical Emergency - If you need funds to pay for extreme medical expenses this may be qualified under a hardship withdrawal. Medical bills will be required for this type of withdrawal. If you are having a procedure done that is requiring you to pay out of pocket, your plan administrator may accept a statement from the medical facility about anticipated expenses.
• Funeral Expenses - You may request a hardship withdrawal for funeral expenses for a family member. This will typically require a death certificate and proof of your relationship to the deceased.
• Principal Residence - A hardship withdrawal may be used to make a down payment on a primary residence, stop foreclosure on a primary residence or prevent eviction (if you rent). A hardship loan cannot be used for second homes or investment properties. The documentation required in this instance would be the foreclosure letter or eviction notice.

A 401(k) hardship withdrawal should only be used as a last resort. Since the funds cannot be placed back in your 401(k) you will be diminishing the amount that will be available when you retire. Contact your 401(k)-plan administrator to see if they have special forms that must be used to request a hardship withdrawal against your 401(k).

How to shed your holiday pounds

Everyone is wondering what the most effective way is to lose weight.  It does not seem to matter if we are short or tall, it seems like every year, we are trying to shed holiday pounds.  However, dieting isn't a one size fits all proposition. The fact of the matter is that almost all of us will put on upwards of five (5) pounds over the holidays - this is typically the result of more get-togethers with friends, co-workers, and family - it's almost inevitable.

If you are preparing to fight with losing those holiday pounds, do not to fall prey to the ads you're seeing all over television for "quick fix" drugs, juices or diets. No amount of drugging or starving yourself is going to help you lose weight in a meaningful, sustainable way.

• Control your eating - everyone can attest that it is not that easy. Do yourself a favor - post a white board or other reusable board in your kitchen. Every time you take something out of the cupboard, or the refrigerator mark it down on your white board. At the end of the day take your list and check out the caloric intake of everything you ate for that day! You may find that you are eating far more than you realize! Keeping a food diary (of some sort) can help you identify your trigger points as well. Chances are you may be able to skip something that is adding useless calories without feeling hungry.
• Don't skip breakfast - You may that if you're trying to control your eating that skipping a meal is one of the most effective ways to help you curb your food intake right? Time and time again, the notion that skipping breakfast helps you lose weight has been proven wrong. Skipping breakfast typically will result in a crash in your already low blood sugar (since you haven't eaten in at least 8 hours) and you're going to (1) eat something you don't want just to put something in your stomach (2) eat more than you really need.
• Drink water - Drinking water helps you feel full (and is good for you in other ways) so you will want to eat less. Plan on at least 4-eight-ounce glasses of water daily. If you find this difficult try 8 four-ounce glasses (which for many can be more palatable).
• Exercise - Don't overlook the simplicity of exercise - you don't need to run a marathon every day to help you maintain a slim, trim figure. Get out of the house and go for a walk - even around the block. If need be do it two or three times a day. Short walks can not only help you feel better, but they'll also help you keep those extra holiday pounds off.
• Simple things - If you drink coffee or tea with sugar and cream, consider switching to a sugar substitute with lower (or no) calories and a non-dairy creamer with low fat and cholesterol. This can be a major factor for those who have a multiple cup per day habit!

Another common culprit to losing weight is soft drinks.   You'd be amazed at how quickly the calories mount up when you're drinking soft drinks (including tonic water). While sugar free soft drinks can help your waistline, be sure to check for sodium content which could cause water retention. Retaining fluids can add a few extra pounds.

Losing a few pounds is much harder than putting them on.  While the threat of gaining a few extra holiday pounds does not always curb our desire to eat, using common sense we can avoid putting on too much weight.  Using these tips in conjunction with a sensible diet can help you lose those extra holiday pounds. Before you let the holiday battle of the bulge result in pounds that keep adding up, learn how to shed your holiday pounds.

Save time by using online banking

For those who work outside the home full time, a lot of time can be saved by using online banking.  Unfortunately, those who work full time often discover they are spending a portion of their weekends running to the bank to make deposits and withdraw funds. This is inevitably followed by a trip to the post office to secure stamps to pay bills. Online banking has changed this and now, you can save time by online banking. Here are some of the time saving features that you can use when banking online:

Direct Deposit

Depositing your paycheck directly to your checking or savings account means you do not have to make a special trip to the bank to make a deposit. In addition to the time savings, you have the added benefit of the funds being available almost immediately after your employer makes the deposit.  Naturally you have these benefits without using (or needing) online banking but, online banking allows you to see exactly when new deposits are made.

Online Bill Pay

Paying bills takes a fair amount of our time each month. Insurance payments, tax payments, automobile payments, rent or mortgage payments and more take time to write up and balance your checkbook.  Instead of spending that time every single month writing out checks, you can set up online bill payments.  You simply add your payee, the amount, the due date and set it up once and literally forget it.  No more running out of stamps at the last minute, no more fighting to see where you missed the dollar on your checking account statement and no more late payments.

Balancing Your Checkbook

Unless you write a lot of paper checks and do not depend on an online bill payment system, your time to balance your checkbook should change considerably. In fact, if you do most of your banking online, you can almost eliminate needing to balance your checkbook. Instead, log into your online account and you'll see your balance, all your deposits and all your checks right in front of you.  Few things could be easier.

Online banking can save time and can save money as well. You can reclaim the hours you spend writing out checks to pay bills, reduce (or eliminate) trips to the bank and reduce your trips to the post office. Just think about all of the things that you can do with the time you save by using online banking.

FHA Loan Changes for 2020

With interest rates currently low, thousands of people will be considering refinancing their homes. Many will elect to use a cash out refinance option. If you're one of the millions of Americans who currently have a home mortgage with the Federal Housing Administration, the new FHA cash out refinance changes made in 2019 which may impact your ability to take cash out of your home.

Cash out refinance changes

During 2019, the FHA allowed borrowers to take up to 85 percent of the value of their homes when doing a cash out refinance. This was a reduction which went into effect in 2009 in response to the mortgage crisis which was going on at the time. In October, the FHA announced new changes which will have an impact on those borrowers who are interested in taking cash out  for the purposes of paying off credit cards, paying for educational expenses, or for other reasons.

One of the reasons for these changes was to reduce the risk lenders face with defaulted mortgages. Keep in mind, at one time, borrowers were able to borrow up to 95 percent of the value of their homes when doing a cash out refinance. There were specific requirements including two (2) appraisals and excellent credit. For many, this new change may have an impact on whether they opt to refinance their mortgage during 20202.

FHA Single Family Loan Limits

For those borrowers who are interested in buying a single-family home, or are considering refinancing their existing mortgage, FHA loan limits are critical. The new guidelines set out by the FHA for single family homes in low-value areas is $314,827 and those in high-value areas is $726,525.  The FHA estimates that slightly more than 80 percent of all borrowers will be subjected to the $314,827 limits.

Borrowers should also be aware that there are loans available for home repairs which have less stringent guidelines than those loans which are considered cash-out refinances. These loans, known as 203(k) loans, allow homeowners to make all types of repairs without worrying about how to pay for the repairs out of pocket. There are certain guidelines which must be followed, and the minimum loan amount is $5,000. Structural repairs, modernization, and energy efficient changes are all allowed under this program as are changes to accommodate a resident who needs their home modified due to disability.

Homeowners and home buyers are encouraged to review the information provided on the FHA website for additional information including credit requirements before they pursue financing.

Lions Clubs: Service with a purpose

Every day we are inundated with requests for money from charities. In these difficult economic times, most of us are most interested in those charities that are local and help the needy in our own communities. These charities exist, you merely need to find them. This isn't always the easiest endeavor because many charities that help the needy are hidden away and don't have the budgets to blow their own horns. Let's look at a charity that you might not even be aware is in your community.

An International Presence

Lions Clubs International - Founded in 1917 by a group of Chicago businessmen, the goal of Lions Clubs International has always been to serve. Lions serve all of mankind with a focus on those who are in need. By their mandate, Lions Clubs all over the world (located in 205 countries and geographic areas) raise money in their communities for one purpose. For helping those who are in need of their assistance.

Lions serve without a lot of fanfare. Men and woman all with a common goal of helping mankind. Lions Clubs International Foundation is the grant making arm of Lions Clubs International. With donations from private trusts, Lions Clubs and Lions all over the world, grants are offered for building schools, hospitals, rebuilding after national disasters and more.

Since 1925 when Helen Keller appeared at their convention, Lions have dedicated themselves to eradicating preventable blindness. They do this through a variety of programs including Sight First, Eyemobile's that are funded partially by Lions Clubs International and many other sight related projects. But, Lions don't stop there. Let's take a look at some of the things that happen on a local level.

On a local level

Lions Clubs individually are comprised by men and women who feel that they can do something good in their community. These Lions join together and raise money by hosting pancake breakfasts, black tie galas, carnivals and flipping thousands of hamburgers annually. Fund-raising is one of the most challenging aspects of running a Lions Club. All dues that are paid by members are used to pay administrative costs of the clubs. This is because each club agrees that one hundred percent of the money that is raised for charity in the community must be donated to charity.

Food pantries, heating funds, holiday gift funds, food baskets, eye glasses, hearing aids and more. Lions all over the world help those who need their assistance in any way they possibly can. Lions do not just donate money. Hundreds and thousands of hours of service are accrued every year by Lions who help sponsor blood drives, clean highways, build ramps for the disabled, clean yards and install air conditioners for the elderly.

There are many more things that Lions do in the community. Lions Clubs International is one of the charities that help the needy at home and abroad. Consider contacting your local Lions Club and learning more about the various ways they give back to the community.

Regaining financial independence after divorce

Divorce statistics in the United States are staggering.  In fact, the Centers for Disease Control and Prevention released a report in 2011 that indicated that marriage rates were 6.8 per 1,000 people and divorce rates were a staggering 3.6 per 1,000. This data was based on results from 44 states and the District of Columbia.

When you consider the emotional impact of divorce, it is not any small wonder that finances are not always at the top of the couples list until the very last minute. Once the divorce papers are signed, both men and women may find that they are having trouble regaining financial independence after divorce. Let us explore some of the financial challenges and some possible solutions.

• Mortgage/Rent - Unless you sold a home and garnered a profit from that sale as a condition of a divorce, chances are that you have debt from a mortgage.  At a minimum, you will have monthly rent payments.  What once was easy to pay in a two income home suddenly becomes an overwhelming challenge.  Before you panic or ignore a potentially devastating financial setback, you should begin exploring your options. If you are paying a mortgage on a home, it may be time to consider some options if you feel that you will be unable to make your mortgage payments.  These options include (a) selling your home or (b) renting one or more rooms out. Either of these methods can help you regain your financial independence after divorce. If neither of these options are feasible, you may have to consider a part time job to make up the shortfall.
• Credit Cards - Chances are very high that both the spouses in a divorce have taken on part of the credit card debts that were incurred during the marriage.  The best you can do with credit card debt is pay it off as quickly as possible.  If you believe you cannot make more than your minimum monthly payments, you may want to explore debt consolidation loans that will pay off all of your credit cards and have one monthly payment to deal with. Chances are this single monthly payment will be less than the combined minimum payments. This is another positive step towards regaining your financial independence after divorce.

Typically these are the two main debts that are going to create major financial issues for you after a divorce.  It is important that you sit down as quickly as possible and create an action plan that includes a list of your debts and your income. If your income is insufficient to maintain your current debt levels you will have to explore ways to increase your income.  This may mean asking for a raise, looking for a higher paying job or learning to earn money online in your spare time. It may also involve getting a second job.  None of these options is appealing for many, however they will be necessary if you are working towards regaining your financial independence after divorce.

Does homeowners' insurance protect the valuables of kids at college?

Many homeowners' insurance policies will cover students' belongings away from home. This isn't always true though. Before your child heads off to school, you will want to find out what your homeowners insurance covers. The part of your homeowners' insurance policy that you're gong to want to verify is your Personal Property coverage - however, there are some things that you need to be aware of!

Homeowners' insurance policies often place limitations on what personal property may be claimed. This is especially important if your child is heading off to school and taking valuable computer equipment with them. Check your homeowners' insurance and see what the limitations are on electronics. If the limitations are in fact restrictive, you may want to consider renters insurance for your child.

• Find out location limitations - each homeowners' insurance company is allowed to put different limitations on their homeowners' policies (and personal property). Some may state specifically that only items that are kept in the home are covered by the homeowners insurance. If you find this is the case, you're going to want to look into the possibility of renters insurance.
• Sufficient Coverage - If you have 2 or 3 children in college at the same time you probably need to verify with your insurance agent if your homeowners insurance personal protection coverage applies to each of them. While it's highly unlikely that all 2 or 3 will have a problem at the same time, there's no point in taking that risk. If only one child is covered you might want to consider renters insurance for the other child (or children).

Nearly all homeowners' insurance has limitations on what it will and will not cover - whether it's in your home or in a child's dormitory. Make sure that you find out all of the restrictions and the potential problems that you might run into. Do not make the assumption that your homeowners insurance covers things, always verify them!

Homeowners' Insurance versus Renters' Insurance

If you're trying to decide what's best for your child using your existing homeowners' insurance (increasing personal property limitations) or renters' insurance the best option for you is to speak with your homeowners insurance agent and find out the cost of the two types of insurance. In some instances it might be more cost beneficial to you to increase your personal property amounts on your homeowners' insurance.

If you decide that renters' insurance is the most beneficial carefully review the renters' insurance policy for all limitations. You may find out that things you anticipated would be covered are not. Remember that both homeowners' insurance policies and renters' insurance policies will have specific limitations on values (especially for jewelry, furs, and other luxury items). If your student is going to have a large screen television for example you may need to show proof of purchase to the insurance company before they will agree to increase your personal property coverage on your homeowners' insurance policy (or renters' insurance policy).

What to do when a foreclosure notice arrives

Foreclosure - this single word can strike fear into the heart of any person regardless of their status in life. Society tends to think that if a person is facing foreclosure, they are deadbeats who lack motivation and refuse to pay bills on time. However, the reality is that many homeowners who are facing foreclosure are hard-working people who have fallen on hard times during a financial crisis.

While the primary cause of foreclosure is failure to pay a mortgage or tax bill on a home, the underlying causes are far more complicated. Those who have been laid off from good paying jobs, people who have gone through a costly divorce or those who have had medical issues that have weighed down their financial abilities all may be facing foreclosure. Combine this with the less than scrupulous mortgage lenders and brokers who preyed on unsuspecting homeowners and told them they could help them get out from under homes they could not afford, and you have a recipe for disaster.

Regardless of the reasons that a person is facing foreclosure, what is more important is to understand what to do once the foreclosure notice has arrived in the mail. Although the initial reaction may be to ignore it, this is not only lacking in sense, but it will not make the problem go away.  Here are some things that a homeowner can do when they receive a foreclosure notice.

Evaluate current financial position

The first thing that a homeowner should do when they receive a foreclosure notice is to sit down and honestly evaluate their current financial status.  Before taking any additional steps, a homeowner must be certain they can continue to pay their mortgage, taxes, insurance and continue to maintain the home.  Once a homeowner determines they can resolve their finances to maintain the home then they can proceed to the next step.

Contact the lender

It is important that a homeowner contact their lending institution when they are facing foreclosure. This is especially helpful if there has been a financial crisis that has been resolved. Many lenders may be willing to work with a homeowner to bring their mortgage current without needing to pay all of the arrears at one time. Past due amounts may be divided up over a twenty-four-month period (or longer) depending on the lender and added to the current mortgage payment.

Most lenders have a loss mitigation department. Remember, lenders are not in the business of property ownership. Many feel it is in their best interest to work something out with the current homeowner to continue paying their mortgage.

Homeowners who cannot afford their mortgage

For a homeowner who has determined it is not financially feasible for them to continue living in the home, the lender should still be contacted. The homeowner should review their loan documents and see if there is a "deed in lieu of foreclosure" clause in their mortgage.  If there is such a clause, the homeowner should negotiate with the lender regarding any potential deficiency judgment (provided the state allows such a judgment).

While the end result will be the same (e.g., the homeowner gives up their home and their credit is negatively impacted), the drawn out process of foreclosure does not have to be a burden to the homeowner or to the lender.

When lenders refuse to negotiate

While it may be less common, sometimes a lender refused to negotiate. A homeowner may contact FNMA and ask about the programs that are available to help them save their home from foreclosure. Never accept any offer from a person contacting you about saving your home from foreclosure that involves paying a fee. The programs that are legitimate are free to all homeowners and this help should not require payment of any fees.

While it may be tempting to ignore a foreclosure notice, it is very short-sighted. Deciding if there is stable income that will allow a homeowner to keep their home is the first step in deciding what steps to take.  Negotiate with the lender, work with the approved government programs and if all else fails, a homeowner may consider filing bankruptcy to stop the foreclosure process. None of these methods will be effective if the homeowner does not have a stable income.

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