3 steps to becoming a savvier online shopper

(BPT) – Every day, people use data to influence their decision making — from where to go for dinner, to selecting stocks in which they should invest, to where to live. Every Google search we perform, every Yelp review read or written, each item of clothing, houseware or electronic device we put in our virtual cart, is another data point companies can use to personalize our experience with their brands.

Despite all the data at their disposal, it seems many brands still don’t fully understand what consumers want from them in terms of products or services or how to best engage with their end buyer. A recent survey from cloud and big data integration company Talend shows 88 percent of information technology leaders believe their organization truly understands its customers, while only 61 percent of consumers believe companies understand their needs.

This begs the question: How do we differentiate between those brands that are using our data the right way, versus those that have a long way to go? Second, how do we help the brands we love understand us better without sacrificing our privacy?

1. Understand which data to share.

Think about your favorite shopping app or website. Does it know which brands you prefer? What about your shoe size? Does it have your zip code stored for shipping estimates? Does it make appropriate recommendations? The strongest relationships in life work both ways, so if you want a brand to know what you want from them, perhaps it’s time to share a little. Taking five minutes to fill out some basic profile information in your “preferences” could, at the very least, save you time on future shopping excursions and might even lead to a surprise find.

2. Use data to get the best deals.

When you’re shopping online, you can quickly compare prices for the exact item you want to purchase across multiple vendors, and, if you have time to wait, be alerted should the item go on sale. The best example is travel. There seems to be a never-ending list of websites available for booking flights and hotels, but booking the first flight you see without shopping around is rarely going to get you the best deal. Countless studies have shown booking on certain days of the week, or a particular number of weeks ahead of your trip, will yield the best results. From there, one still has to compare prices against different websites to find the best fare. Luckily, some of the top search engines are making this even easier for consumers by indicating whether the price is high or low. The art of finding the best deal is really in comparing the data.

3. Know where to draw the line.

At the end of the day, privacy is still important, and it’s prudent not to share too much personal information. Think critically about which data is going to be absolutely necessary to enhance your experience with the companies you rely on. For example, it’s not necessary to share your contact list, your geolocation or (if you’re on a mobile device) access to your camera if you’re using a music or financial app. Some brands ask for too much, and it’s up to each individual to determine which data makes sense to share with each brand and what doesn’t. For example, don’t be too quick to provide broad access to an app you’ve just downloaded. Also, as painful as it may be, do read the privacy policy of the sites you frequent and understand how they use and protect the personal information they collect on you.

Ultimately, most companies today are still just scratching the surface when it comes to understanding the impact customer data can have on the profitability and success of their business. There is still a lot of room for growth when it comes to companies effectively using data to address consumer needs. It’s up to each one of us to make sure we are sharing the right data with them, while also using that data to our advantage to get the best deals and online experience possible.

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Rogue retirement account? Expert advice to reduce rollover stress

(BPT) – It’s happened to almost everyone: you leave a job and have a retirement account that you are no longer actively contributing to. It sits there for months — maybe years — because you’re not sure exactly where to move it or what the process is like to roll it over. You know that money could probably be better invested, but moving accounts is intimidating, so it sits.

“It’s common for people to be nervous about transferring retirement accounts like IRAs and 401(k)s,” says Nick Holeman, a financial planning expert at Betterment.com. “Moving accounts shouldn’t be something you fear or put off because you think it’s too complicated.”

Holeman says three main causes for concern are potential taxes, excessive fees and process complexity. However, these concerns are often based on misconceptions, and he wants to set the record straight to empower investors to take control of rogue retirement accounts.

Potential taxes

Many people worry about potential tax concerns when moving retirement accounts. They’ve heard about the high penalties for early withdrawal and figure the best way to avoid them is to let the account be.

“A rollover is not equivalent to a withdrawal,” says Holeman. “When you transfer retirement accounts through the appropriate processes, you’re still keeping it in the same categorization. It just now lives in a different place.”

A rollover can also help facilitate better control of your money. For example, if you roll over an old 401(k) into an IRA account, you are no longer limited to the investment options selected by your employer. This freedom of choice can help you make more customized investment decisions based on your personal goals. Of course, it’s important to remember that investing in securities always involves risk and there is the potential to lose money.

Possible fees

A rollover means closing an old account and opening a new account. This process can incur fees that will be unique to each provider. Many people worry about the potential cost, which causes them to leave accounts untouched.

“Research account closing fees but be sure to keep in mind the big picture,” Holeman says. “It’s like ripping off a bandage. For example, a one-time $20 closing fee is better than a $100 annual fee that could be reduced when you move your account.”

Holeman’s advice: always know what fees you’re paying. Before selecting a new financial organization for your retirement savings, research fees and consider selecting a new account with no trading costs, commission fees, or rebalancing fees. For example, Betterment’s Digital plan charges just 0.25 percent per year and that covers goal-based financial advice, tax-efficient investing, automatic rebalancing, and other smart features that help you keep more of your money.

Complexity

“People tend to treat rolling over a retirement account like going to the dentist,” Holeman says. “It’s important but usually not urgent, so people tend to put it off.”

What’s more, people are intimidated by all the paperwork, lengthy forms and seemingly complex steps, so they delay rollovers. Holeman says moving accounts is typically easier than most people think, and in fact, after the process is complete, many people regret not doing it sooner.

“Often, moving retirement accounts can be done completely online thanks to advanced technology,” says Holeman. “Betterment offers a ’60 second rollover’ for certain accounts from supported companies, and there’s someone available to help should you have any questions. Moving accounts is typically easier than people imagine.”

You should carefully consider whether a rollover is right for your own personal situation, including the specific fees and services associated with your 401(k). Visit betterment.com/rollover to learn more about factors you should consider when deciding whether a rollover might be right for you.

Betterment LLC distributed this article through Brandpoint.

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Ready to start saving? Sometimes the best rates can be found across state lines

(BPT) – With interest rates on the rise, now is a great time to start saving. Whether you want to put away money for a large purchase — such as a down payment on a new home or to purchase a vehicle — or you need a secure way to generate a return on money you’ve already set aside, certificates of deposit (CDs) or high-interest checking accounts can be a solid option.

Often, the best rates on CDs and checking accounts aren’t always found at your local bank. Bellco Credit Union, a not-for-profit credit union based in Colorado that has been in operation for more than 80 years, offers some of the most competitive rates on CDs and checking accounts in the nation.

It’s a common misperception that in order to join a credit union and take advantage of the benefits and rates, people have to be a local resident or part of an organization that the credit union serves. However, many credit unions offer alternate forms of membership, and online banking has made it easier for people to manage their finances without ever visiting a branch.

For example, anyone in the U.S. can become a member of Bellco, and enjoy all of the benefits that come with it online, by visiting their website at www.bellco.org.* After joining, members can take advantage of high-interest-rate accounts, including:

CDs with high rates and flexible terms**

Bellco is the rate leader in CDs, offering several different options, including Regular, Jumbo and Index Advantage CDs, as well as youth CDs and IRA CDs. With various terms and a choice of fixed or adjustable rates, there’s a perfect option no matter your savings goals.

Boost Interest Checking***

This account pays a higher interest rate than most checking accounts — up to 2.25 percent APY — for doing the things people normally do with a checking account, such as making debit purchases, scheduling direct deposits and banking online. There is no minimum balance to start earning the highest rate, but the returns are greater the higher your balance, up to $25,000.

Still need more reasons to take advantage of high savings rates? Bellco is a financially stable organization, having received the Bauer Financial “Five Star Rating” as of December 31, 2016. Founded in 1936, Bellco is a not-for-profit organization, which allows them to return profits to its members in the form of higher deposit rates and lower loan rates. In addition, money donated by members to the Bellco Foundation helps support several national nonprofit organizations such as the American Red Cross, Bright Pink, American Legion and the American Heart Association.

If you’ve been thinking about how to start saving while also getting a high return, now is the time to explore and think outside of your neighborhood to find different savings options.

*Membership eligibility required to join and to open any Bellco account. Visit www.bellco.org for membership requirements. Your deposit dollars will be maintained and serviced in Colorado. Application for membership will be reviewed and a decision made in Colorado.

**Certain requirements apply to open a Bellco CD. To learn more about our CDs, visit Bellco.org/CDs, or call 1-800-BELLCO-1. Federally Insured by NCUA.

***APY = Annual Percentage Yield and is accurate as of 04/01/2017. The interest rate and APY may change after the account is opened. No minimum balance is required to open or to earn the advertised APY. Fees may reduce earnings. Visit BellcoBoost.com for more details about applicable fees and terms.

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Changing weather patterns leave homeowners underinsured

(BPT) – The U.S. has experienced significant shifts in the frequency, severity and locations of natural disasters — including floods, hurricanes, tornadoes and wildfires — during the past decade.

As a result, more than 800 emergency or disaster declarations were made in the U.S. from 2005–2015, according to FEMA data. The insured losses stemming from natural catastrophes such as these average $24 billion annually.

Homeowners face severe risks from these disasters, yet many have not connected the dots between these shifts and the impact on their home insurance needs. A recent survey commissioned by the National Association of Insurance Commissioners (NAIC) found that fewer than 22 percent of homeowners view weather patterns or disasters as an important factor when updating their homeowners insurance policy. Missing these links can be costly.

“Changing weather patterns can dramatically impact what insurance should be carried on a property,” says Mike Consedine, NAIC chief executive officer. “When homeowners don’t regularly review their policies, important gaps in coverage can be missed. You should re-evaluate your risk profile at least once a year to ensure your existing homeowners policy provides the protection you need.”

Despite Consedine’s recommendation, the survey revealed that 56 percent of homeowners have not reviewed their insurance policies in more than a year. Fourteen percent are unsure when — if ever — they last reviewed their policies.

If it’s been awhile since your last insurance review, there’s no better time than the present. When evaluating your policy, consider the following questions:

1. Am I now at risk? Are earthquakes, wildfires or other disasters now a threat in my state or region? If you live in Oklahoma, for example, the risk of earthquakes has significantly increased in the last decade. Do I need flood insurance? Some incidents such as floods are not covered by a typical homeowners policy, so you’ll need additional coverage.

2. What has changed in my home? If you’ve moved in with your significant other or an adult child has returned home, consider the impact their belongings will have on your coverage. Create a home inventory and update it annually. The NAIC’s MyHome Scr.App.book app (available for iPhone and Android) lets you quickly capture images and descriptions of your possessions. Keep in mind personal items like jewelry, antiques and artwork may require special insurance coverage.

3. Do I save my receipts? Take photos or save receipts from major purchases and store them in a safe place away from your house or apartment. Quick access to these receipts will make filing a claim much easier.

4. What home improvements have I made? Renovations and additions can change the value of your home. Make sure your homeowners insurance policy reflects your home’s current value. Some security or smart home features may qualify you for premium discounts.

5. How can I learn more about being prepared? Get educated about your insurance options now to avoid surprises later. Insure U’s new Disaster Prep Guides can help determine the best course of action before, during and after a disaster strikes. The guides include information and tips for tornadoes, hurricanes, floods, earthquakes and wildfires.

For unbiased information and resources to help you rethink insurance, visit insureuonline.org. For insurance information specific to where you live, contact your state insurance commissioner.

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Survey: African-Americans passionate about homeownership, but fewer own homes

(BPT) – More than any other demographic group, African-Americans perceive homeownership as an integral component of the American Dream, and a way to build security and wealth for their families, according to a recent survey.

The poll by Ipsos Public Affairs, conducted on behalf of Wells Fargo, found that 90 percent of African-Americans said homeownership would be a dream come true, and more than half were considering buying a home within the next two years.

However, African-Americans currently have the lowest rate of homeownership among ethnic minorities — just 42 percent, or 20 points short of the national rate, according to U.S. Census Bureau data. African-Americans are expected to represent the third largest segment among new households (renters and owners) in the U.S. by 2024.

“Americans of every demographic aspire to homeownership, but this survey indicates African-Americans place high value on the emotional and financial benefits of owning a home,” says Brad Blackwell, executive vice president and head of housing policy and homeownership growth strategies for Wells Fargo. “Unfortunately, myths about down payments and credit often deter people from inquiring about loan options.”

Barriers, real and imagined

Like many Americans, African-Americans want to own homes, but are often challenged by factual and perceived barriers. Real barriers include tight credit markets, lack of affordable inventory in many areas and underemployment or unemployment.

Perceived barriers are directly related to a lack of experience with the homebuying process. For example, in the Wells Fargo survey, nearly half of African-Americans believed a 20 percent down payment is necessary to buy a home. However, many home loans permit down payments of less than 20 percent. Some are as low as 3 percent.

Mortgage approval is not contingent on full-time employment, either. Homebuyers need only be able to demonstrate their ability to repay their mortgage loan, regardless of whether their income comes from a full-time or part-time job. However, 54 percent of African-Americans believed homebuyers must have full-time jobs in order to qualify for a mortgage. In some loan programs, income from others who will live in the home, such as family members or renters, can also be considered.

The survey also highlighted the possibility that some credit education could help aspiring African-American homebuyers. Eighteen percent weren’t sure what constitutes a good credit score, 35 percent didn’t know what minimum score they would need to qualify for a mortgage, and 20 percent didn’t know their own credit score range. While lenders do consider credit scores in making mortgage decisions, credit scores are only one factor, and minimum credit scores vary based on the type of mortgage and loan amount. Homebuyer education and credit counseling could provide key information about the elements of a good credit score or how to develop a good credit profile.

Improving African-American homeownership

“Just 5 percent of homeowners are African-American, according to the National Association of Realtors,” Blackwell says. “African-Americans and other minority groups should have equal access to the wealth- and stability-building benefits of homeownership. In an effort to positively impact the homeownership rate among African-Americans, Wells Fargo has committed to providing education, counseling, a more diverse sales team, and mortgages to African-Americans.”

Wells Fargo recently announced plans to lend a projected $60 billion to qualified African-American consumers with the goal of increasing the number of African-American homeowners by at least 250,000 by 2027. They’ll also hire more African-American mortgage consultants in an effort to make their mortgage workforce more closely aligned with the populations they serve. Finally, Wells Fargo will provide $15 million to support educational initiatives and counseling for African-American homebuyers.

Meanwhile, if you want to purchase a home, you can maximize your chances of getting approved for a mortgage with several important steps, including:

* Monitor your credit — Your credit report and score can affect your ability to qualify for a mortgage, how much you can borrow, and the interest rate and terms you’ll be offered. Review your credit report and score at least once a year. You can get an annual free credit report from all three national credit bureaus at www.annualcreditreport.com.

* Control other debt — Debt-to-income (DTI) ratio is an important factor lenders consider in mortgage applications. This ratio compares your total monthly debt to your monthly income. Keep your DTI below 36 percent by paying down credit cards, auto loans and student debt.

* Save — Even though you don’t always need 20 percent down in order to qualify for a mortgage, having savings can still positively affect the mortgage process. Some financing programs allow qualified homebuyers to secure a mortgage with as little as 3 percent. Or, you may qualify for programs that benefit veterans if you’ve served in the military.

* Be able to prove income — Although you don’t need a high income to qualify for a mortgage, you will need to be able to document your income with W2s, tax returns and other paperwork.

* Build up an emergency fund — Unexpected expenses are a reality of homeownership. An emergency fund can help you cover costs such as repairing a leaky roof or replacing a broken-down appliance. Lenders are also likely to view you as more financially responsible if you have six months’ worth of expenses saved up.

To learn more about homebuying and to find a mortgage professional near you, visit www.wellsfargo.com.

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5 tips to help teens master their money

(BPT) – For most teens, high school is an exciting time, one that offers the opportunity to set their own path and make some of their own decisions. However, with this added independence comes additional responsibility, especially regarding money.

Today teens are spending $260 billion a year in the U.S., yet only 17 states require completion of at least one financial literary course for high school graduation.

“So many teens don’t realize how important saving is,” says Angel Carter, an Atlanta teen who was selected by Boys & Girls Clubs of America to serve as national ambassador for its financial education program called Money Matters: Make it Count, created in collaboration with Charles Schwab Foundation. “They don’t understand the importance of saving for their future needs and tracking or prioritizing their purchases.”

Taking part in this program had a profound impact on Carter, along with more than 725,000 other Club teens who have completed Money Matters. And because April is Financial Literacy Month, now is the perfect time for Carter to offer a few tips she learned to help others manage their money.

* There’s no such thing as “too young” or “too much.” Because of the way compound interest works, the earlier you begin to save, the less of a burden it is. For example, regularly saving 10 percent of your income is a good savings goal if you’re in your 20s or younger; however, if you wait until your 30s to start saving, that number increases to 20 percent in order to reach the same long-term goal. And if you wait till your 40s, it goes up to 30 percent. So it’s better to start putting money away as early as possible. Talk to your parents or another adult you trust about setting up a savings account, and how much you should regularly set aside.

* Recognize needs vs. wants. Being smart about money doesn’t mean you can’t enjoy life, or do fun things with your hard-earned cash; but it does mean you need to plan for them. An easy rule of thumb is to figure out how much you need to set aside in order to meet your expenses, including savings, every month. Anything left over is for having fun. It might seem contradictory, but knowing ahead of time how much spending money you have available helps you know when you can comfortably say “yes,” and when you’re better off passing on an event or an impulse purchase.

* Know where your money goes. It may not be particularly fun, but tracking where and how you spend money is just one of those healthy habits that’s good for you, like eating spinach and exercising. You can record this information with a notebook or an app, but just remember to log your purchases, including all those “small” ones. Being aware of every dollar you spend will help you understand yourself and your spending habits — and can help you find ways to reduce your spending and save even more.

* Credit is like social media. You know how parents and teachers are always telling you to watch what you post on social media channels, because someday you’re going to have to apply for a job? Good credit is to your future purchasing what a clean social media history is to job applications: it takes time and commitment to build, and only moments to lose. A good credit score and a history of responsible spending give you options, which is priceless when you want to buy or lease a car, or apply for an apartment or even buy a house later on. How do you build good credit? Manage your checking account carefully, always pay your bills on time, and if you do choose to get a credit card, never charge more than you can afford to pay off in full every month.

* Keep it real. In today’s economy, managing money responsibly is a tall order, but it is possible, especially if you take control! Think about the kind of lifestyle you want to live, and figure out how much it takes to support yourself in those circumstances. Once you’ve done that, it’s simply a matter of solving for “x.” One good way to be astute about finances is to look for a financial education program geared for teens, one that covers budgeting, goal setting, and planning for the future. Some programs, like Money Matters, even offer virtual reality games to practice for the real world without real-life risk.

These tips are just a few Carter learned through the Money Matters program at her local Boys & Girls Club. A new component of the program, the digital game $ky, is now available to all teens. The game challenges teens to navigate financial decisions in a fresh, fun way that will keep them thinking prudently about their finances not only in April but in the months and years ahead.

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Spring cleaning to make money: Don’t toss these 5 hidden sources of extra cash

(BPT) – Before we soak up the summer sun, we need to think about spring cleaning. As you clear out your closets and drawers, be on the lookout for these five often overlooked sources of money:

1) Gift Cards: About $1 billion in gift cards goes unused each year, so instead of digging change out of your couch cushions or car seats, try looking through your junk drawer, email inbox or even your wallet for gift cards and egifts that you may have forgotten about. Instead of letting the funds go to waste, sell the gift card to a gift card exchange like Cardpool.com at close to the face value or to receive an Amazon gift card.

You also can look to a gift card exchange site to buy your preferred brand of gift card. After the holidays, gift card exchange sites are often stocked with gift cards ready to be sold at hefty discounts—up to 35 percent off. So, if you’re planning a trip and want to use airline or hotel gift cards to save money, or if a discounted gift card to a lawn and garden store would help to spruce up your yard, now is the time to buy.

2) Clothes: Cleaning out the closet can also mean money in your wallet. Sites like ThredUp buy and sell quality, name-brand clothes. ThredUp will even ship you a “clean out” bag, so you can fill it up at home, ship it back and receive payment for the clothes the company purchases. With this particular site, you can choose for the company to donate what they don’t purchase or send it back to you. If you prefer to sell your apparel in-person, take your gently used brand name clothes to a nearby consignment store where they’ll often pay cash on-the-spot.

3) Books: When clearing out the bookshelf, consider selling some of your old favorites on Amazon. When you create a seller account on Amazon, you can name your price and choose to fulfill orders yourself or via Amazon fulfillment.

4) Furniture: While Craigslist remains a popular avenue for unloading furniture you no longer need, if you have chic vintage furniture or décor that you’re ready to sell, check out Chairish.com. Chairish will list your furniture and décor for sale and will even coordinate all shipping needs for the seller to the buyer.

5) Electronics: From old iPhones or laptops to tablets and video games, sites like NextWorth or Gazelle will buy the electronics you no longer use for cash. Check each site to get a quote for what your electronics are worth and send them in to earn extra cash.

While de-cluttering can be cathartic on its own, leveraging the right tools to earn extra cash on items you may have otherwise tossed can make spring cleaning a rewarding experience, too.

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Get extra money all year: Tips to adjust your tax withholdings

(BPT) – Every year, nearly eight out of 10 taxpayers receive a federal tax refund. Many of them are more than happy to see that “extra” money drop into their bank accounts. In fact, according to a recent TaxAct survey, 61 percent of tax filers said they’d rather receive a big refund than a larger paycheck throughout the year.

Unfortunately, many of those taxpayers don’t realize they could have that “extra” money throughout the year. That’s right — receiving a refund means overpaying the government in the form of a 12-month, interest-free loan.

“Receiving a refund check simply means you’re getting the money you already earned in the past year,” says Mark Jaeger, director of Tax Development for TaxAct. “It’s money you could have used to pay for things like car payments, student loans, groceries and medical bills — or even that island getaway you wanted to take last summer.”

Fortunately, there is something you can do about it. By making the necessary withholding adjustments to your Form W-4, you can have that money a lot sooner than tax season. Follow these three steps to take control of your finances and help give yourself a raise this year — not a refund next year.

1. Review your current withholdings.

To control your tax withholding and paycheck, you need to adjust the number of allowances (withholding exemptions) you claim on Form W-4. If you’re unfamiliar with Form W-4, it’s the tax document you complete each time you start a job to let your employer know how much money to withhold from your paycheck for federal taxes. To better understand how allowances work, think about it this way:

* To increase your paycheck, claim more allowances to withhold fewer taxes.

* To increase your refund, claim fewer allowances to withhold more taxes.

With one simple form you can make the necessary adjustments to give yourself a raise and put more money in your paycheck instead of waiting to receive it in the form of a tax refund. Take a moment to review your withholdings along with your current financial situation. Is it better for you to receive a larger refund or would additional money in each paycheck benefit you more?

2. Use tools to help calculate the appropriate withholding.

If you are unsure of what number of allowances is appropriate for your tax situation, a variety of tax tools can make calculating your withholdings easier. The Paycheck Plus calculator, for example, will use information like your income and tax deductions to help you determine how to make changes to your W-4 to receive a boost in your refund or more money in your paycheck.

By answering a few quick questions, you can easily adjust your withholdings to see how they impact your paycheck and your tax liability. The tool will also auto-populate your new Form W-4 if you choose to adjust your withholdings.

Using a tool like the Paycheck Plus calculator not only takes the stress out of estimating your withholdings on your own, it also lets you quickly see the potential impact on your finances before you make any official changes.

3. Assess recent life events.

As life changes, so do your taxes. Generally, you should consider adjusting your W-4 any time a major life event occurs, to ensure the right amount of tax is withheld from your paycheck. For example, did you start a new job this year or get a pay raise in your current position? A change in household income can impact your tax situation and require you to modify your allowances.

Did you recently tie the knot? Saying “I do” can affect your tax rate, especially if you and your spouse are both employed. Filing a joint return can lower your tax rate and qualify you for deductions you didn’t have as a single person. The same is true if the opposite occurs — divorce. Untying the knot will place you back in single status and take away many of the tax benefits available to those who are married.

A new baby is also a major life event that greatly influences your tax situation. This is true even if you adopt. Not only can you claim an additional allowance for your new dependent, you may also qualify for various credits, like the Child Care Tax Credit and the Child Tax Credit. Both of those decrease your tax liability. If your withholdings remain the same, you may receive a larger refund, but you will miss out on extra dollars in your paycheck to cover the costs of added expenses, like diapers and formula.

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How PMI can make your dream of home sweet home a reality

(BPT) – In the 2017 housing market, those who choose to pursue the dream of owning a home face several important decisions, such as how much to put toward a down payment. Twenty percent down is typically recommended by most lenders.

While 20 percent is not a requirement, paying less can have a big impact on the amount you pay monthly. It is important for home buyers to know that when seeking a conventional loan with less than 20 percent down of the sales price or appraised value of the home, lenders will often require Private Mortgage Insurance (PMI).

This article takes a deeper look at PMI by answering the most common questions on the topic.

What is PMI?

PMI is a type of mortgage insurance. Like most other types of mortgage insurance, it protects the lender in the event the borrower is unable to repay the remainder of the loan. In many cases, PMI is required on conventional loans when the buyer has a down payment of less than 20 percent.

Some lenders may offer conventional loans that require a smaller down payment without PMI, but the tradeoff can typically be a higher interest rate.

How does PMI affect your loan?

PMI can affect your loan in several different ways depending on the loan type and the lender. In some cases, the PMI will be required in a lump sum at the time of closing. This PMI payment type is called an upfront premium.

Other PMI plans call for monthly payments where the total value of the PMI is divided and factored into your monthly mortgage payments. The PMI can generally be cancelled under certain conditions once 20 percent of the amount borrowed has been reduced from the principal balance, or amount borrowed.

Finally, the lender may also opt for a plan that requires both upfront and monthly PMI payments. In this case a portion of the PMI is paid at the time of closing, and then the remaining PMI is paid as part of the monthly mortgage payment.

Alternatives to PMI

Some government-backed loans offer alternative options to buyers paying less than 20 percent down on a home loan. There are several of these loans and each has a different approach to handling down payments and mortgage insurance. By being educated on the different types of loans you will have an easier time finding which best suits your needs.

Learning more about PMI

While PMI is an additional fee, it helps those with less than a 20 percent down payment realize their dreams of home ownership.

To learn more about financing options that can make your dreams of homeownership a reality, visit VMFhomeloan.com.

NMLS Disclosure

Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), Illinois Residential Mortgage Licensee, Licensed by the NH Banking Department, MT Lic. #1561, Licensed by PA Dept. of Banking.

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6 tips for decoding college financial aid award letters


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(BPT) – Whether you’re a high school senior or an adult looking to change careers, a college degree can be the key to a bright future. As acceptance letters arrive in the mail, another important document is not far behind: financial aid letters.

“College is a major investment, and many people require financial assistance to pay for it,” says Harlan Cohen, New York Times best-selling author and creator of the Naked Financial Minute. “It’s vital to understand financial aid so you can make informed choices and avoid surprises in the future.”

The average cost of tuition and fees for the 2016–2017 school year is $33,480 at private colleges, $9,650 for state residents at public colleges, and $24,930 for out-of-state residents attending public universities, according to the College Board.

In order to find out what aid you qualify for, you should start by filing your Free Application for Federal Student Aid (FAFSA). After your information is processed, and you’ve applied to the colleges of your choice, you’ll receive financial aid award letters in the mail with the results from each school where you were accepted.

Not all financial aid letters are the same, so deciphering and comparing them can be confusing. To help get you started, the experts at College Ave Student Loans share tips and tricks for how to easily understand your financial aid letter.

Look carefully at symbols and terms: College award letters may use different wording and abbreviations. For instance, rather than spelling out the word “loan” you could see “L” or “LN”. You might also see “net price” and “net cost.” Look carefully at how each school calculates these amounts. Some schools will subtract loan amounts from these figures. Just remember that loans need to be paid back, usually with interest; loans can help you spread the cost of college over time, but they don’t eliminate the expense.

Know the difference between gift aid and loans: Gift aid is money that is awarded to qualifying students that isn’t expected to be paid back. Gift aid includes things like scholarships, grants, and housing or tuition waivers. Not all applicants will qualify for gift aid, but most will be eligible for federal loans. As a general rule, you should expect that you’ll need to pay loans back, usually with interest.

Be aware of the impact of outside scholarships: If a student is awarded a private scholarship, the financial aid letter may list its effect on the amount of money offered by the school or in federal aid because the student’s financial need has already been partially covered. This could impact gift aid, loan amounts, or both.

Keep an eye out for work-study offers: If you indicated an interest during the FAFSA application, your financial aid letter may list approval for a work-study job that provides money toward your studies and fits with your class schedule. The money you earn is typically applied directly to your school expenses.

Understand your expected family contribution (EFC): Depending on your personal circumstances, there may be a line item for expected family contribution. This is the amount of money your family is expected to contribute toward your college education based on their tax and savings information. This will impact your overall award package.

Think about additional costs: Your financial aid letter may not include all of the costs associated with going to school. Think beyond tuition and make sure you have an idea of what you’ll be spending on housing, food, transportation, books, supplies, additional fees, and other living expenses.

If you find the amount of financial aid provided isn’t enough (including the amount offered in federal loans), families may want to research and explore private student loans as an option to cover the additional expenses. Look for competitive interest rates and flexible repayment options that match your budget. College Ave Student Loans also offers a calculator that showcases how much families can save with various loan options at www.collegeavestudentloans.com.

Finally, if you’re still unclear about the terms and conditions of any college award letter, it’s important to reach out to the school to ask for clarification or discuss your options. You don’t want to leave any money on the table.

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