5 Ways to Look for a New Job

This post can be found en Español here. The current coronavirus pandemic has caused a large upheaval across many different areas. In addition to the changes COVID-19 has made in the areas of health and safety (masks, social distancing and…

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The post 5 Ways to Look for a New Job appeared first on MintLife Blog.

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The Highest Paying Trade Jobs On the Market

Pursuing a four-year degree or higher isn’t for everyone. If you fall into that group, it doesn’t mean you can’t get a high-paying job. There are a surprising number of trade jobs that pay salaries at or above careers that require a four-year degree. They pay well because they’re in demand and are expected to […]

The post The Highest Paying Trade Jobs On the Market appeared first on Good Financial Cents®.

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How to Get a Personal Loan (Application, Approval, Alternatives)

Personal loans are typically unsecured loans offering up to $50,000 with a term of up to 5 years. They come in several shapes and sizes and interest rates, fees, and terms can differ greatly, but the average personal loan in the United States is between $7,000 and $8,000 and charged at a rate of 11% and 12%. Steps to Getting a Personal […]

How to Get a Personal Loan (Application, Approval, Alternatives) is a post from Pocket Your Dollars.

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Student Loans vs. Financial Aid

As of early 2020, student loan debt in the nation had reached more than $1.5 trillion. More than 44 million individuals have student loan debt, and the average person with student loans owes a bit over $32,000—which is more than half of the average household income in the United States. As a new school year… Read More

The post Student Loans vs. Financial Aid appeared first on Credit.com.

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How do Life Insurance Companies Make Money?

Life insurance seems like a pretty good deal. You pay $30 a month for 20 or 30 years and in the event of your death, your family gets a sizeable cash sum, often in excess of $250,000. Every 12 seconds someone dies in the United States and these deaths occur across all demographics (although the […]

How do Life Insurance Companies Make Money? is a post from Pocket Your Dollars.

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What's the Best Type of Mortgage for You?

When you're ready to buy a home, choosing the best lender and type of mortgage can seem daunting because there are many choices. Since no two real estate transactions or home buyers are alike, it's essential to get familiar with different mortgage products and programs. 

Let's take a look at the two main types of mortgages and several popular home loan programs. Choosing the right one for your situation is the key to buying a home you can afford. 

What is a mortgage?

First, here's a quick mortgage explainer. A mortgage is a loan used to buy real estate, such as a new or existing primary residence or vacation home. It states that your property is collateral for the debt, and if you don't make timely payments, the lender can take back the property to recover their losses.

In general, a mortgage doesn't pay for 100% of a home's purchase price.

In general, a mortgage doesn't pay for 100% of a home's purchase price. You typically must make a down payment, which could range from 3% to 10% or more, depending on the type of loan you qualify for. 

For example, if you agree to pay $300,000 for a home and have $15,000 to put down, you need a mortgage for the difference, or $285,000 ($300,000 – $15,000). In addition to a down payment, lenders charge a variety of processing fees that you either pay upfront or roll into your loan, which increases your debt.

At your real estate closing, the lender wires funds to the closing agent or attorney. After you sign a stack of mortgage and closing documents, your down payment and mortgage money go to the seller and various parties, such as a real estate broker, title company, inspector, surveyor, and insurance company. You leave the closing as a proud new homeowner and begin making mortgage payments the next month.

What is a fixed-rate mortgage?

The structure of your loan and payments depends on whether your interest rate is fixed or adjustable. So, understanding how these two main types of mortgage products work is essential.

A fixed-rate mortgage has an interest rate that never changes, no matter what happens in the economy.

A fixed-rate mortgage has an interest rate that never changes, no matter what happens in the economy. The most common fixed-rate mortgage terms are 15- and 30-years. But you can also find 10-, 20-, 40-, and even 50-year fixed-rate mortgages.

Getting a shorter mortgage means you pay it off faster and at a lower interest rate than with a longer-term option. For example, as of December 2020, the going rate for a 15-year fixed mortgage is 2.4%, and a 30-year is 2.8% APR. 

The downside is that shorter loans come with higher monthly payments. Many people opt for longer mortgages to pay as little as possible each month and make their home more affordable.

Here are some situations when getting a fixed-rate mortgage makes sense:

  • You see low or rising interest rates. Locking in a low rate for the life of your mortgage protects you against inflation. 
  • You want financial stability. Having the same mortgage payment for decades allows you to easily budget and avoid financial surprises. 
  • You don't plan to move for a while. Keeping a fixed-rate mortgage over the long term gives you the potential to save the most in interest, especially if interest rates go up.

What is an adjustable-rate mortgage (ARM)?

The second primary type of home loan is an adjustable-rate mortgage or ARM. Your interest rate and monthly payment can go up or down according to predetermined terms based on a financial index, such as the T-bill rate or LIBOR

Most ARMs are a hybrid of a fixed and adjustable product. They begin with a fixed-rate period and convert to an adjustable rate later on. The first number in the name of an ARM product is how many years are fixed for the introductory rate, and the second number is how often the rate could change after that.

For instance, a 5/1 ARM gives you five years with a fixed rate and then can adjust, or reset, every year starting in the sixth year. A 3/1 ARM has a fixed rate for three years with a potential rate adjustment every year, beginning in the fourth year.

When shopping for an ARM, be sure you understand how often the rate could change and how high your payments could go.

ARMs are typically 30-year products, but they can be shorter. With a 5/6 ARM, you pay the same rate for the first five years. Then the rate could change every six months for the remaining 25 years.

ARMs come with built-in caps for how much the interest rate can climb from one adjustment period to the next and the potential increase over the loan's life. When shopping for an ARM, be sure you understand how often the rate could change and how high your payments could go. In other words, you should be comfortable with the worst-case ARM scenario before getting one.

In general, the introductory interest rate for a 30-year ARM is lower than a 30-year fixed mortgage. But that hasn't been the case recently because rates are at historic lows. The idea is that rates are so low they likely have nowhere to go but up, making an ARM less attractive. 

I mentioned that the going rate for a 30-year fixed mortgage is 2.8%. Compare that to a 30-year 5/6 ARM, which is also 2.8% APR. When ARM rates are the same or higher than fixed rates, they don't give borrowers any upsides for taking a risk that their payment could increase. 

ARM lenders aren't making them attractive because they know once your introductory rate ends, you could refinance to a lower-rate fixed mortgage and they'd lose your business after just a few years. They could end up losing money if you haven't paid enough in fees and interest to offset their cost of issuing the loan.

Unless you believe that rates can drop further (or until ARM rates are low enough to offer borrowers significant savings), they aren't a wise choice in the near term.

So, unless you believe that rates can drop further or until ARM rates are low enough to offer borrowers significant savings, they aren't a wise choice in the near term. However, always discuss your mortgage options with potential lenders, so you evaluate them in light of current economic conditions.

RELATED: How to Prepare Your Credit for a Mortgage Approval

5 types of home loan programs 

Now that you understand the fundamental differences between fixed- and adjustable-rate mortgages, here are five loan programs you may qualify for.

1. Conventional loans

Conventional loans are the most common type of mortgage. They're also known as a "conforming loan" when they conform to standards set by Fannie Mae and Freddie Mac. These federally-backed companies buy and guarantee mortgages issued through lenders in the secondary mortgage market. Lenders sell mortgages to Fannie and Freddie so they can continuously supply new borrowers with mortgage funds. 

Conventional loans are popular because most lenders—including mortgage companies, banks, and credit unions—offer them. Borrowers can pay as little as 3% down; however, paying 20% eliminates the requirement to pay an additional monthly private mortgage insurance (PMI) premium.

2. FHA loans

FHA or Federal Housing Administration loans come with lenient underwriting standards, making homeownership a reality for more Americans. Borrowers need a 3.5% down payment and can have lower credit scores and income than with a conventional loan. 

3. VA loans

VA or Veterans Administration loans give those with eligible military service a zero-down loan with no monthly private mortgage insurance required. 

4. USDA loans

The USDA or U.S. Department of Agriculture gives loans to buyers who plan to live in rural and suburban areas. Borrowers who meet certain income limits can get zero-down payments and low-rate mortgage insurance premiums.

5. Jumbo loans

Jumbo loans are higher mortgage amounts than what's allowed by Fannie Mae and Freddie Mac, so they're also known as non-conforming loans. In general, they exceed approximately $500,000 in most areas.

Always compare multiple loan products and get quotes from several lenders before committing to your next home loan.

This isn't a complete list of all the loan programs you may qualify for, so be sure to ask potential lenders for recommendations. Remember that just because you're eligible for a program, such as a VA loan, that doesn't necessarily mean it's the best option. Always compare multiple loan products and get quotes from several lenders before committing to your next home loan.

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10 Ways Coronavirus Tax Relief Affects Your Personal Finances

In response to the ongoing coronavirus emergency, the Internal Revenue Service (IRS) is offering federal tax relief to Americans. It’s part of emergency declarations that were enacted due to the Stafford Act. This response will undoubtedly help citizens and businesses cope with the crisis.

But what you may not know is that changes to the tax deadline affect several aspects of your financial life. In this post, I’ll explain what coronavirus tax relief is and 10 ways it affects your finances.

1. Your federal income tax deadline is postponed

The central feature of tax relief during the coronavirus pandemic is that the due date for filing and paying your 2019 federal taxes is postposed from April 15, 2020 to July 15, 2020.

You don’t have to be sick or negatively impacted by COVID-19 to qualify for this federal tax postponement. It applies to any person or entity, such as those who are self-employed, an unincorporated business, a corporation, estate, or trust that has 2019 taxes due on April 15. It doesn’t matter if April 15 is the original date for your return on an extension date you previously filed for—your new due date is still July 15.  

There’s absolutely nothing that taxpayers need to do to take advantage of this relief.

There’s absolutely nothing that taxpayers need to do to take advantage of this relief. The postponement will happen automatically for any amount you owe or any installment payment you were asked to make on April 15.

Of course, many Americans are expecting a tax refund. When you overpay taxes during the year, the IRS settles up with you during tax season by issuing a refund.

If you’re owed a tax refund, never wait to file your tax return. The sooner you send it in, the faster you’ll receive your money back. Getting a direct deposit is always faster and safer than a paper check. So, be sure to include your banking information with your return, so you receive your refund electronically.

2. Interest and penalties begin to accrue on July 16, 2020

As a result of the postponement of the due date for filing and paying federal income taxes until July 15, 2020, you’ll get a pass on interest and penalties if you pay up by then. However, the extra fees will begin to accrue on July 16, 2020.

3. Your state income tax deadline hasn’t changed

Depending on where you live, you may have to pay state income taxes, which have not been postponed. However, it’s possible that the states affected the most by the coronavirus could enact relief measures of their own.

Depending on where you live, you may have to pay state income taxes, which have not been postponed.

Seven states don’t charge income tax, including Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Additionally, New Hampshire and Tennessee don’t tax earned income, but they do tax your investment income.

If you live in any of the remaining 41 states, plan on filing and paying your state taxes as usual. Check with your state’s tax agency or Department of Revenue to learn more and stay as up to date as possible.

4. You can still file a tax extension

But what if July 15 comes and you need more time? Individuals and businesses can request an automatic extension to delay filing federal taxes. However, this doesn’t give you more time to pay what you owe, only more time to submit your tax form.

To get a federal extension, individuals must submit IRS Form 4868 on IRS.gov, using tax software, or through your tax professional, before the July 15 deadline. Most incorporated businesses must file IRS Form 7004.

If you choose to file an extension request, that would give you until October 15, 2020, to file your 2019 return.

If you choose to file an extension request, that would give you until October 15, 2020, to file your 2019 return. But again, to avoid interest and penalties on any outstanding tax liability, you must pay an amount you estimate is due with your extension request.

If you need a state tax filing extension, check with your state’s tax agency to see what’s possible.

5. Taxes you already scheduled payment for can be canceled

If you’re ahead of the game and already filed your 2019 taxes and scheduled payment to occur on April 15, you have options. If you don’t want your payment to go through, you can reschedule or cancel it until two business days before the payment date.

In other words, April 10 would be the last day to make a tax payment change. However, I wouldn’t wait until the last minute if you plan to reverse or modify it.

To make a change, visit the tax payment portal you initially used and follow the instructions. If you authorized an electronic funds withdrawal from your bank account, contact a U.S. Treasury Financial Agent at 888-353-4537 to request a cancellation. And if you scheduled a tax payment using a credit card, contact the issuer to cancel the card payment.

6. Only one estimated tax deadline for businesses is postposed

Most businesses make estimated tax payments each quarter. The 2020 schedule is:

  • First quarter is due on July 15, 2020, which changed from April 15, 2020
  • Second quarter is due on June 15, 2020
  • Third quarter is due on September 15, 2020
  • Fourth quarter is due on January 15, 2021

So, the first estimated payment that businesses need to make this year will be due on June 15, 2020.

7. Other tax filing deadlines have not been postponed

What about information returns that must be filed by certain types of businesses, or taxes that are due on other dates, such as May 15 or June 15? Unfortunately, individuals and businesses that have filing or payment due dates other than April 15 don’t get any relief at this time.

Again, the assistance only applies to federal income tax returns or payments due on April 15, 2020.

8. Relief doesn’t apply to other types of taxes

If you or your business owe tax other than income tax, such as sales tax, excise tax, payroll tax, gift tax, or estate tax, you must file and pay them as usual.

9. You have more time to make HSA contributions

You typically have until April 15 to make health savings account (HSA) contributions for the prior year. Under this relief, you can now make HSA contributions for 2019 at any time until July 15, 2020.

To qualify for an HSA, you must be covered by a qualifying high-deductible health plan that you get through work or on your own. In early March, the IRS issued a notice that a high-deductible health plan may cover the cost of COVID-19 testing and treatment before your deductibles are met. Also, just as before the coronavirus, you can pay for medical testing and treatment using funds in your HSA.

10. You have more time to make retirement contributions

Just like with an HSA, you typically have until April 15 to make contributions to a traditional IRA or a Roth IRA. Because the tax filing date is postponed to July 15, you can make IRA contributions for 2019 at any time until July 15, 2020.

However, for most workplace retirement plans, such as a 401(k) or 403(b), the deadline corresponds to the calendar year. So, December 31, 2019, was the last day to make 2019 contributions for accounts offered by an employer.

While this tax relief may not be enough to buoy many people and businesses that have been affected most by the coronavirus pandemic, it’s just one measure. There will be broader fiscal relief enacted to minimize the economic impact of this ongoing health crisis.

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3 Things Rideshare and Delivery Drivers Should Know About Car Insurance

Food delivery and ridesharing are great ways to earn extra income. The market for food delivery has increased as restaurants have had to adapt to COVID-19 precautions, and just about everyone could use some extra income as we continue to navigate life during a pandemic. If you’re considering joining a food delivery or rideshare company as a… Read More

The post 3 Things Rideshare and Delivery Drivers Should Know About Car Insurance appeared first on Credit.com.

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Understanding Long-Term Care Insurance

A lot of us don’t like to think about this, but inevitably there will come a time where we will all need help taking care of ourselves. So how can we start preparing for this financially? Many people opt to purchase long-term care insurance in advance as a way to prepare for their golden years. […]

Understanding Long-Term Care Insurance is a post from Pocket Your Dollars.

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