Credit Management During the Holidays

Holiday shopping is fun (and stressful) at best but if planned well, it will not affect your credit score.
Below are some important reminders when spending during the holiday season:

Tip #1 

Don't sign up for new credit unless the savings is substantial. Many stores promote 0% interest on a purchase if you sign up for their credit card. This application will result in a credit inquiry which can affect your score negatively – do not add new credit unless the savings is substantial.

Tip #2 

Do not put all your purchases on one credit card – Unless you plan to pay off the balance when the payment is due, charging more than 35% of the total credit allowed, can lower your credit score significantly.

Does Home Refinancing Make Sense for You?

photo credit: deposit photos

Refinancing a home mortgage is a big decision. Your situation and needs change so should your mortgage. Current market conditions have brought low rates and increasing home values so the time to evaluate your options is here.

If you have an FHA mortgage, which you entered into before January 2015, then you may want to take advantage of a new reduction in the mortgage insurance premium. This has opened the door to refinancing your mortgage using a streamline option which can allow a reduction with no appraisal or income qualification. Some restriction apply but the reduction can save you money on your monthly payment.

How do you decide if refinancing makes sense for you? Ask yourself these questions:

• Are you in an adjustable rate mortgage?
• Do you have mortgage insurance added to your monthly payment?
• Are the current mortgage rates at least .75 to 1% lower than your current rate?
• Do you need cash out for other financial opportunities or to pay debt?
• Does the cost of refinancing divided by the monthly payment savings equate to a reasonable term for recapturing your fees?

How Does a Home Appraisal Work?

During most real estate transactions, it will be necessary to have a home appraisal completed. This formal process of evaluation is the most effective, un-biased way to determine the current value of a home for everyone involved in the transaction. While the concept might not seem confusing, there are several misconceptions that can make the process seem complicated. Understanding what the appraiser does and how their evaluation plays a role in your financing can make the transaction easier.

Home values fluctuate because of a variety of factors including supply, demand and regional influences. A home appraisal determines the current market value of a property on the date the inspection is completed. Since this value will be used by the lender to determine the loan amount, an approved, reputable appraiser must be hired to complete the evaluation. It is important to note that the formal appraisal report is filed with a national bureau when financing is being used from FHA, FNMA and Freddie Mac. The report and the property value is registered with the national database and kept on file for six months. This keeps buyers and sellers from “shopping around” for a different value.

Should You Add Solar Panels to Your Home?

photo credit: Wikimedia Commons

"Going Solar" is a hot phrase! If you're considering solar, review some of the pros and cons:

The Pros of Adding Solar Panels to Your Home

• Lower Electric Bill  - Depending on the size of your home and your electricity use, adding solar panels to your home can reduce your monthly bill.

• Installation Costs are Lower than Ever - Since 2011, the cost of installing solar panels has dropped by 60%. There are also federal and local tax credits & subsidies to help lower the upfront setup costs.

• Flexible Purchase Options - Due to the increased interest in solar energy, there are more companies to choose from for installing solar panels  more ways to afford the installation. You can choose to lease, buy or finance. There are also energy assistance programs such as mPower that tie the payment for the solar in with your real estate taxes. It is important to make sure than any financing option has a lower payment than your average electricity bill to ensure that you are saving money.

Canceling Private Mortgage Insurance

Private Mortgage Insurance is a special type of insurance policy, provided to protect the lender against loss if a borrower defaults on their loan. Most lenders require PMI when a homebuyer makes a down payment of less than 20% of the home's purchase price.

The Homeowners Protection Act provides two methods for you to remove PMI (Private Mortgage Insurance) from your home loan: requesting cancellation or automatic cancellation. Keep in mind that these rules apply to conventional mortgage loans and are only applicable to loans that closed after July 29, 1999.

Requesting PMI Cancellation

You can request that your lender cancel PMI when the principal balance of your mortgage falls, or is scheduled to fall to 80 % of the original value of your home.

Here are some additional requirements that must be met in order to cancel PMI:

• Your request must be in writing.
• You must have a good payment history and be current
• on your payments.
• Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.
• Your lender can also require you to provide evidence, usually with an appraisal, that the value of your property hasn't declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.

Economic Revolutions: Boomers to Millennials

The Baby Boomers and the Millennials are two special generations. Their influence is worthy of evaluation especially because it is likely you will be interacting with both groups in some way in your daily life. Whether you work for a Baby Boomer or you’re trying to have a positive relationship with your kids (or grandkids), the trends and ideologies of these two groups of people are driving our social and economic structure.  Why? The Numbers – 82 million Millennials (born 1981 to 2001) and 77 million Boomers (born 1946 to 1964).

Baby Boomers were the generation that pushed revolutionary ideas in marriage, relationships, civil rights and social commentary. Millennials are the first generation to have computers in the home and classrooms, to have cell phones, instant messaging and hundreds of cable channels. The ease at which they use technology is the greatest difference between Millennials and every other generation.