• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Tips on the Health Insurance Marketplace/Exchange

No matter your personal political views on the Affordable Care Act of March 2010 (ACA), there is some good news if you need to purchase health insurance for either your family or yourself for 2015. The website that hosts the Exchange (where you apply for health insurance) has fixed some of its previous bugs and added some new features that make the site much easier to use. This year you can easily preview the rates, policies, and tax credits (which are applied in advance) you are eligible for merely by answering a few simple questions before going through the entire formal application process. If you enter your zip code into HealthCare.gov it will guide you to your state’s personal exchange if they have one (only thirteen states plus the District of Columbia have their own exchange). The SHOP (Small-Employer Health Option Program) allows the owners of small businesses with 50 or less employees to insure their employees. Small businesses with less than 25 full time employees may qualify to receive tax credits. There is an employee choice option that allows a business’ employees to choose amount a vast amount of plans in a selected tier, but it is only available in 14 states as of 2015. However, employee choice has been delayed in 18 federal exchange states until 2016. In those 18 states, employers will only be able to offer their employees a single health and a single dental plan. Applying for health insurance is a pretty complex process, so you may want to get started early (as in now). For coverage starting on January 1, 2015, the enrollment process began on November 15, 2014. February 15, 2015 is the last day to enroll for 2015 coverage. However, there are a few key things that individuals must know to avoid frustration during the applying process and get the insurance they need.

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Be Sure you’re Eligible to Apply

Whether you’re a 55 year old who lost employment or health coverage, a parent who needs affordable coverage for your family, or a 26 year old just now coming off your parents policy, you may be eligible for significant tax credits (which are delivered in the form of reduced premiums) which will help you to afford the coverage you need. People who cannot use the marketplace include people who have an employer-sponsored health plan, including COBRA, or people who have TRICARE for military families, Medicaid or Medicare.

Understand That Health Conditions Do Not Raise Rates

The best part of the Affordable Care Act (aka Obamacare) is that insurers cannot reject applicants or charge them anymore because of their gender or pre-existing health conditions. But keep in mind that rates still vary based on whether the applicant uses tobacco, whether you’re buying individual or family coverage, where you live, and your age.

Collect Key Information before You Start

When you begin the application process, you’ll be asked many questions. The first few will be about your household size and income. While some of these questions may seem straight forward, there are permutations. For example, the phrase “Household size” actually means “dependents” not actually the number of people who live in your home. When you apply for health coverage, you’ll be asked to estimate your income for 2015 and your credits will be based off of this. Estimate this number carefully because if you make more money than you estimate, you may have to pay back when you file your next tax return.

Choose the Right Plan for Your Needs

Every plan offers the same essential health benefits, including coverage for laboratory and wellness services, prescription drugs, mental health and substance use services, maternity and newborn care, hospitalization, emergency services, and outpatient care. The differences involve cost (obviously) and optional other health benefits the health insurance may cover.

Avoid Penalties for Being Uninsured

The Affordable Care Act requires all citizens to obtain at least the minimum standard health insurance starting in 2014. The penalty for not having health insurance in 2015 is $325 per adult and $47.50 or 2% of your total income, whichever is greater. The penalty will increase every year, with 2016 penalty being $695 per adult, $347.50 for every child, or 2.5% of family income with a maximum of $2,085 per year. However, certain groups of people are exempted from the penalty.

If you are just too intimidated and confused by the idea of purchasing health insurance, there are many insurance agents and brokers who can help you get through it. Just remember to remind them that if you think you could qualify for tax credits, they’ll need to enroll you into a marketplace plan. If you get on the HealthCare website, you can look at all of the plans that you qualify for and sort them in order of their deductible and premium amounts. If you have any difficulty with the enrollment process, you can call a hotline number 24/7. 1-800-318-2596

Do Better than Resolutions: Create Habits

Sure, making resolutions for a new year are fun and all, but there’s more substantial work one could be doing to make big changes in their life. A lot of the reason we make bad decisions in all aspects of life is because we’ve formed habits that don’t serve us best. There are all kinds of things that we can do to create habits that will work best for us in the long run. You’ll be surprised at the goals you can achieve if you formulate a thorough plan and make sure you follow through and document your progresses.

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You always say it; you always spike yourself up to believe that you’ll tackle every goal on your list with no problems. How can you make anything happen if you don’t find ways to change your negative patterns of action. Making change is neither simple nor easy, but in most cases it will prove to be extremely beneficial. More than half of Americans don’t even bother making New Year’s resolutions, but the ones who do can hardly stay committed to their goals. The time right in the beginning of the year as things start to take shape–during the first two weeks–is the easiest time to stick to your commitments. After the initial shine of a new calendar year has worn off, people tend to fall off the bandwagon and forget the goals they set out to achieve. It takes at least two months for a person to begin to form new habits, so it makes sense that so many people can’t keep their new practices in check. If you really want to see what kind of results you can bring to fruition, don’t refer to them as resolutions: resign yourself to trying to create habits that can sustain your through life.

You’ll be surprised at your skill to create habits and you won’t believe the things you’re able to do.

“I Just Want To Save A Little More Money.”

The best way to create habits that serve your financial status is by thorough planning of all the dollars you bring in and send out. When you stay on top of your budget with a fine tooth comb, you won’t run into as many surprises as you might have in the past. Once you’ve got a very functional budget to work with, you can begin to formulate a plan to save more money. You don’t want to overdo the savings plan, but starting simply with reasonable goals will make it so that you don’t feel pressured or shamed if you absolutely can’t save more a little month.

Over time, if you’re serious about saving, you’ll be able to see that account continue to grow.

 

Are you hoping to move into a new home this year? Crunch the numbers and find out exactly how much that will cost and start guiding your savings plan in that direction. You want to break down every level of saving and spending there is to get the most accurate figures to work with. If you’re sure you’ll always have the money in your account, you can set up automatic deposits to your savings account that will make saving less of a hassle. Doing a lot of math to find out workable figures can be difficult and somewhat frightening, so being able to have an automatic way to save is a bit of a relief. Increasing your spending by even a hair will add up in the long run.

When you create habits that force you to save, you will be very happy when you go to your savings account for an emergency expense.

“If Only I Could Save a Bit of My Raise…”

When you have to start living on a tighter budget, it can be very difficult to actually go through with it. Saving feels bad in the moment because you have to eat out less, you can’t shop as much and you can’t have the extra little things you like as much as you used to. That’s why getting a raise or bonus is always a wonderful time to save some that you weren’t going to spend anyway. If you didn’t have a bonus or a raise, you wouldn’t have the extra to do extra with. If you get a bonus every year at a certain time, it’s probably in your best interest to save it all. You’ll feel better about saving it if you’ve got a long-term or even a short-term goal coming up: it could help you get it done! If you must, you can take a small portion from your bonus to play around with!

When you create habits that feel like a stress-free necessity, you don’t feel like you’re losing as much and it becomes easier to be appreciative of your progress. Create habits that are both realistic and purposeful to get to your goals even faster.

5 Tips to Save Money with Coupons

It should come as no surprise that there is a slight obsession with getting tips to save money through coupon shopping in America.  It makes sense, since Americans are trying to spare money wherever they can, and when it comes to food any money you can save is big money.  There’s even a reality show dedicated to giving tips to save money, called Extreme Couponing, and in 2013, Americans used 2.8 billion coupons on packaged goods.

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Obviously we don’t all have enough free time be going through countless daily newspapers and circulars, nor to cut endless coupons out of said papers, and then organize them in alphabetical order in a binder.  And most people certainly don’t have enough extra time to stand in the checkout line, arguing with checkers about what’s expired and how many coupons you can combine for one thing.

For those of us with the typical amount of free time (that being not much), there are tips to save money when you’re shopping.  If you’re just a casual coupon user, try these easy tips to save money:

Look through your Mail

Those bundles of ads you find in your mailbox aren’t just useful for potty training your puppy.   Most dedicated coupon shoppers prefer using paper coupons that they received in the mail.  They’re more appealing than the digital alternative, because they are often sent from the consumer’s favorite stores.

It’s not hard to get on a mailing list for your favorite retailers.  Common coupon supplying stores are Express; Bed, Bath & Beyond; and Home Depot.  The next time you find yourself shopping at one of your favorite stores, simply ask a salesperson to be added to their coupon mailing list.  Alternatively, you can often do this on the store’s website.

Become a Digital Coupon Expert

Clipping coupons isn’t one of the only tips to save money.  Digital coupons are becoming very popular, and many retailers are starting to provide them.  These coupons can be retrieved immediately, and can be sent to your email or straight to your smartphone.  20% of coupon consumers would prefer to get their coupons on their phones instead of any other methods.

The popularity of the digital coupon stems simply from its accessibility.  Ask most shoppers, and they’ve probably brought their phone with them to the store.  It’s so easy to pull out your smartphone while you’re getting rung up, to bring up any applicable coupons.  Once the checker scans the barcode on your phone, you have instant savings.

Check out your favorite store’s website to see if they offer digital coupons.  You may even receive an additional bonus for signing up for their mailing list; sometimes retailers provide additional percentages off your next purchase in exchange for your information.

Sign Up for the Card

You’ve probably heard of frequent shopper cards, but did you know a lot of these involve programs to discount merchandise and deliver savings to the customer?  There are over 2 billion loyalty programs for a wide range of products and services, like groceries, cafes, pet supplies, and hotel stays.

The discounts you can get with these membership cards can be major, and you can also be getting points while you shop with your favorite retailer.  When you shop often enough, you can use your points for purchases you’ll make in the future.  Some of the best known rewards cards are from Starbucks, Walgreens, and Macy’s.

Coupon Codes

By regularly checking the best coupon sites, you could be getting free shipping, Buy One Get One deals, and large percentages off your purchases.  Be sure to check your tips to save money before you skip to the checkout button.  Here are some sites to look through:

RetailMeNot.com

This is the most widely used coupon website.  It breaks the coupons into different groups and keeps an updated list of valuable promotional codes to use when shopping online.

Coupons.com

There are a range of coupon types at this site, including printable, online codes, and coupons for grocery stores.  They also provide a tool so that you can keep track of how much you’ve been saving with your coupons.

FreeShipping.org

This great site will make it so you won’t have to pay for shipping when shopping online ever again.  Get shipping deals from over 800 well-known retailers.

Use Your Apps

There are even smartphone apps that will do all the work for you.  Here are some apps that you can bring up while you’re out shopping and looking for a deal:

Coupon Sherpa

You can download this for iPhone or Android, and you’ll be able to search for coupons by category, or for exact items.

RetailMeNot

Similar to the website mentioned above, find deals from your favorite stores and even get notified when new offers are added to your inbox.

ShopSavvy and RedLaser

Scan a barcode and find out if you’re getting the best possible deal.

With all these tips to save money there’s no excuse not to become a coupon addict!

Tips for College Students: Save and Manage Your Money Better

If your child is one of the millions of college freshmen headed off to school soon, you probably have a lot of shopping, textbook gathering, and packing that’s on the brain coming up in the near future. Yes, you and your child may be knee deep in figuring out the dorm decor to go with but there is deeper, more pressing subject matter just below the surface of the college experience: like your kid’s personal finance plan and crucial tips for college students. As their parent, it’s your responsibility and obligation to prepare them for the challenges that are sure to come as a college student on a budget trying to navigate strategies for smarter spending. You have to give them the tips for college students that will make the difference in their undergraduate lives.

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Your kid might roll their eyes, they might moan and groan and they might even exclaim that they know things will be difficult. That won’t change the fact that they’ll need to have a basis to work from. The following tips for college students will be paramount in their successes with money from an early age.

Create a Budget

High school students without too many cares feel free to spend whatever money they have at their disposal while they live off of part-time job earnings or a parent’s generosity. It might be a hard pill to swallow, but that can’t be the attitude of a college freshman. Sit down with your child for a serious talk about the value of budgeting. Outline the streams of income he or she will have coming in from money you’ll provide, wages they’ll earn working a job and student loan and grant money. Show them how important it is to categorize their expenses so they can easily trace where all of their money is going. Of course, you can’t force your prospective student to use a budget, but knowing that you’ve given them the tools they need to create one to realize what’s affordable. These tips for college students can mean a lot.

The trick to a budget is sticking to it. It doesn’t do much good to go through the process of creating one just to wind up not even using it. Educate your kid on the value of smart money choices that work with their budget. Help them find out more about low-cost or free entertainment options in their area. As a parent, you know your child and their habits best. If they have a knack for spending loads of money on expensive coffee or clothes, let them know about the benefits of shopping at outlet stores where you’ll get the same brand names for cheaper or simply brewing their own coffee drinks at home that are comparable to the expensive ones they like. It can be hard to try not to control your child’s budget, but college is the first glimpse that most kids get of life on their own and you want them to start building on the principles that will make them responsible with money as they grow further into adulthood.

Check in with how their finances are going from time to time, but let them take the lead.

Utilize Online Services

Most college students won’t feel like they have to time to sit down and review Excel spreadsheets to keep track of a budget, especially when there are other options for them to go with. Put your kid on the right track with a smartphone app or online provider that makes managing their money easy and pretty painless. These kinds of services generally also provide personalized tips for college students that work well since they’re always on their phone anyway! Mint is one of many money management apps that keeps the busy and sometimes forgetful college student on their toes. You upload your bank account and expense details and you can manage each of your accounts from one place with no hassle. In addition to an app like Mint, an online banking service app will go the extra mile to make sure that your child can access or transfer money whenever they might need it. Mobile deposits make it easier to get cash fast if your kid ever finds that they’re in a bind and need to tap into a balance.

Keep Those Debts in Check

You want to minimize your student’s debt cap as much as possible, so you want to go over these principles with them thoroughly before they leave the nest. Spending money on the right things is crucial. It goes without saying that spending financial aid money on a pizza night with friends is a bad idea, but that doesn’t mean that the temptation to do so will fall away.

Educate your kid with these tips for college students and they should be well prepared for the long road ahead!

5 Signs that you’re living beyond Your Means

Many people in the United States are in the habit of living beyond their means. Between 1993 and 2008, the rates of saving have declined increasingly and they hit the lowest levels they’ve ever seen since the Great Depression in 2006: they literally fell into negative territories. But by 2009, they had risen again about 7%: the highest rates had been at since 1993. Why did things change so drastically? When a recession swept in and left us all in financial gloom, consumers found that they had acquired more debt than they realized was possible and they should have paid attention to the signs that you’re living beyond your means. It took the global economic system almost crumbling to bits to get Americans to stop overspending. A lot of people ignored what has happening for far too long, and the National Bankruptcy Research Center shared that the number of bankruptcy filings had almost doubled by the time the year 2008 came to a close.

Are you worried about your financial state? Learn more about the most common signs that you’re living beyond your means.

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Your Credit Score Is Lower Than 600

It’s the job of the credit bureaus to keep track of your payment history, loan balances and debts. They use the information the compile to arrive at a specific number that lets potential borrows know your creditworthiness. A credit score can go from a low of 300 to a high of 850. The higher your number is, the better. Generally, if your score is lower than 600, you might have a more difficult time getting loans. If you haven’t checked your credit score before and you don’t know what it is, you can get in contact with one of the major credit bureaus–TransUnion, Equifax or Experian–for a copy of your credit report. Improve your credit score by paying down debts and judgments and don’t apply for new credit cards: you might even want to consider closing a few accounts while you’re at it.

You’re Not Even Putting At Least 5% Into Savings

The average rate of personal savings in 2006 was a staggering -0.5%. This illustrates that most people were not only spending just about all their money, but they were also most likely dipping into their savings for funds to spend. Saving money can never be too much of a priority and in the crazy lives that we lead today, there will always be another expense to address that creeps onto our radars somehow. There are so many emergency situations that arise and you have to be as prepared as possible. When your retirement age comes around, you don’t want to have to struggle or depend on Social Security alone. Saving at least 10% of your gross income can create a very well-stocked savings account that will give you peace of mind. Stop ignoring signs that you’re living beyond your means!

You’re Not Attacking Your Credit Card Balances in Full

If you’ve heard somewhere that making the minimum payment on your credit each month is the right way to go, you’ve been told a terrible fib. Avoiding paying those credit card balances off in full only make the interest on the balances rack up with a vengeance. If you can’t seem to get together more than enough to pay tiny pieces of those balances off, you’re probably facing signs that you’re living beyond your means!

You’re Using More Than 28% Of Your Income for Housing Costs

What percentage of your monthly income goes to paying your mortgage, insurance or property taxes? If you’re coming up with a figure that’s more 28% of what you make, that’s probably one of many signs that you’re living beyond your means. Conservative lenders have always believed that using a rate that sits at 28% still allows everyday people to pay their mortgage and enjoy a standard of living that gives them wiggle room. You have to make it a priority not to get involved with anything that will keep you in debt longer. Only chase what you can reasonably afford.

You’re Having Trouble Getting Your Huge Stack of Bills under Your Control

Buying on credit is almost an institution in America. It might be easier to buy that expensive television with your credit card when the salesman puts it into monthly terms, even if there’s an extra $50 added on to your bill. At first, it’s all very easy to handle, but before you know it, you have a stack of bills before you that you have no clue how to handle. You have to recognize the signs that you’re living beyond your means and reel yourself back in!

If these aren’t enough signs that you’re living beyond your means, it’s certain you already know a lot of the others if you’re in a sticky financial situation. With continued hard work and effort, you can change your unfavorable circumstances.

9 Money-Saving Tips for Sports Fans

As long as the economy is sluggish, sports fans will be reluctant to purchase high-priced tickets to their favorite games. However, there are money-saving tips to help fans enjoy their favorite sports without breaking the bank.

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1. Consider Other Sports

Obviously, the NBA, NFL, MLB, and NHL teams are the most popular, and get the most attention from fans, but there are many other sports out there to enjoy. Tennis, soccer, or volleyball might appeal to you, and tickets are far more affordable.

2. Charity Events and Exhibition Tours

Many sports teams participate in games which raise money for charity, and tickets are available at reasonable prices. Charity golf events feature many popular professional golfers, but tickets can be less than $20. Off-season exhibition tours are also a good way to see your favorite players for less.

3. Minor League Games

Minor league teams in baseball and hockey provide the professional teams with up and coming players. These teams are where new players get their start, and you can see them play for a very low price. Minor league games are so affordable that this is a money-saving tip that benefits the whole family!

4. Visit Training Camp or Pre-Season Games

  • For years, baseball spring training has been a favorite event for fans, and now, other professional sports are offering this to their fans. NFL teams allow fans to visit training camp for very little money, and some teams even let fans in for free!
  • Tickets to pre-season games are always available, and give you a chance to see your favorite rivalries face off for a very low price.

5. Share a Season Ticket Package

Season tickets work out to be less expensive than if you bought a ticket to each game individually, but most people can’t make that kind of investment. You can split a season ticket package with a friend or friends, and have a chance to see some of the games for less money than you’d pay otherwise.

6. Ask the Box Office about Promotions

When ticket sales are low, teams will run various promotions to get more fans in the door. Call your box office and ask about any specials. Sometimes there are special deals for buying tickets at the last minute, because venues want to fill those seats. The official websites for professional baseball and soccer both list each team’s deals and sales for the entire season. This allows fans to save up for tickets ahead of time, or work the price of tickets into their budgets, which is another little money-saving tip!

7. Check Your Warehouse Stores

Member-only warehouse stores, such as Costco or Sam’s Club, oftentimes offer deals on ticket bundles. These deals can offers like buy-one-get-one-free, or family four packs of tickets. Costco is currently offering two different professional basketball ticket packages.

8. College Sports

If you can’t afford tickets to see your favorite professional sports team, consider becoming a fan of a college teams. Even tickets for the most popular college teams are considerably less expensive than professional games. College games are not only money-saving, they are known for their fun atmosphere and very enthusiastic fans.

9. Use the Internet to Find Last-Minute Deals

This great money-saving tip needed to be saved for last. Many times, people purchase tickets for sporting events, and then, due to some unforeseen circumstance, can’t make it to the game. Ticket holders then turn to the internet to recoup at least some of the money they spent. StubHub is a website solely devoted to ticket sales, but you may also find tickets being sold on sites like Craigslist. If your schedule allows you to see games at the last minute, you can find tickets for a fraction of their original price.

Just because money is tight, it doesn’t mean you have to give up sports completely. With these money-saving tips, you can still enjoy the games, and you may even discover new sports to love. Being a fan doesn’t have to be expensive!

Should You Spend Your Money Or Your Time?

Everyone has heard the old saying that “time is money”. What this means depends on who you ask.

  • If you make good investments, over time, you will earn more money.
  • Wasting time is like wasting money.
  • Time spent doing things you don’t enjoy is gone forever.

If you spend your time, rather than your money, you may miss opportunities do things you love. If you spend your money rather than your time, you lose the chance to save for the future.

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When you first become an independent adult, you usually don’t have much money, and have no choice but to spend your time. As you progress in your career, however, you gain the ability to choose to spend your money or your time. It’s up to you to decide when you want to do a job yourself and when you want to hire a professional to do it for you.

How should you make the decision to spend your money or your time?

If You Don’t Have the Money to Spend, Spend Time

If you are low on funds, this is a very easy choice, because it’s not much of a choice at all. You can do things yourself, or do without them. This doesn’t have to be a bad thing. You can use the opportunity to learn new skills and become more self-sufficient. And in the end, you may enjoy your new skill so much that it becomes a hobby. Nowadays, there are more resources for learning skills than ever before. With YouTube alone, you can learn everything from knitting to building an igloo. The internet is full of tutorials and tips for any project, and if computers aren’t your thing, there are still libraries.

Spend Time Instead Of Money to Experience New Things

You can find excitement in learning new things, even simple home improvement jobs. Don’t think that for something to be fun, it needs to be extreme like bungee jumping or mountain climbing. Creating or fixing something with your own hands provides a great feeling of satisfaction.

Acquiring a new skill adds to your unique charm, and, depending on the skill, your resume!

Spend Time to Teach Someone You Care About a New Skill

Spending your time instead of your money is especially important with children and grandchildren. Teaching someone you love a new skill is very satisfying for both parties. You will create a closer bond, and experience the joy of sharing your experience and knowledge. The person you teach gets to enjoy a hands-on learning experience, and will always treasure the memories of time spent with you.

Spend Time Instead Of Money on Tasks You Enjoy

Don’t pay someone to do things you love to do. Filling your life with pleasant experiences doesn’t exclude things that must be done, if you like doing them. Fixing something in your home brings beauty back to that object, which many people find very enjoyable. Doing your own yard work helps you get more exercise, and lets you spend more time outside in the fresh air.

Spend Money If Spending Time Cuts into Profitable Work

If doing a project yourself means taking time off of work that you cannot afford, it is better to hire someone else to do it. This can also apply to things that profit you emotionally rather than financially. If it is very important to you to help with a local charity, feel free to hire someone for household tasks so you have more free time.

Spend Money When Time Can’t Give You the Necessary Expertise

Some skills take a very long time to learn, and cannot be acquired by self-instruction, and other skills require expensive specialized tools. Unless you have a job performing these tasks, it is better to pay someone to do them for you. For example, it would be foolish to buy expensive tools to do a one-time repair on your car.

Spend Money If Your Safety Is At Risk

Many household projects can become safety hazards and should only be tackled by professionals. Things like rewiring a home, removing hazardous materials, or tree trimming and removal, should be left to the experts. Attempting to do these projects yourself could have you wasting your time and money in the hospital.

Deciding to spend your money or your time doesn’t have to be an agonizing choice. If you don’t have money, spend time, and use the experience to gain new skills, and maybe discover new talents. If you enjoy a project, spend your time, not your money, and create fond memories teaching family and friends. If a project requires years of training and specialized equipment, spend your money, and the same goes for household projects that may be dangerous.

Everything You Need to Know About Fannie Mae Mortgages

If you are interested in applying for a Fannie Mae mortgage, you should know that this famous name in mortgages does not itself lend money to borrowers.

Fannie Mae is the commonly used nickname for the Federal National Mortgage Association (FNMA), and what it does is purchase qualifying mortgages from lenders in the secondary mortgage market. Fannie Mae is what is called a government-sponsored enterprise (GSE), which was created in 1938 by Congress, to revitalize the housing market which had been destroyed by the Great Depression. Fannie Mae mortgages have allowed millions of Americans to own their own homes, and they are the largest backer of 30-year fixed-rate home loans.

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Fannie Mae is successful because it invests in the mortgage market, which creates more liquid assets for the lenders. The lenders then have the resources to underwrite, or provide the funds for, a larger number of mortgages. And this, in turn, makes mortgages more easily available to potential home buyers.

If you want to obtain a Fannie Mae mortgage, you will be required to use a lender that has GSE approval. There are eligibility requirements which must be met by all approved lenders, which include not participating in sub-prime lending. Sub-prime mortgages are offered to buyers with low credit scores. Lenders consider them high risk, so they are required to pay high interest rates on their loans.

Conforming Loans

If a mortgage meets the requirements, and is purchased by Fannie Mae, it is called a conforming loan. A Fannie Mae mortgage must also fall under the limits set by the Federal Housing Finance Agency (FHFA).  In most areas of the United States, the limit for a conventional home loan is $417,000. In areas with a high cost of living, the limit is $625,000.

Fannie Mae cannot back loans that exceed these limits, and these loans, called jumbo loans or non-conforming loans, have higher interest rates than conforming loans.

How to Apply

After you have found an eligible lender, you can apply for your Fannie Mae mortgage. You will be required to supply this information during the process:

  • Credit History– This includes not only your credit score, but also your credit history, payment history, and the total amount of your outstanding debts.
  • Savings– You will be expected to prove that you can provide the required down payment and closing costs.
  • Income– You will need proof of all income, including, but not limited to, employment, child support, rental properties, pensions, and investments.
  • Work History– You will be required to show a stable work history for at least two years. There are exceptions for members of the military, retired people, and recent graduates.

Your Debt-to-Income Ratio

Your debt-to-income ratio is determined by what percentage of your income goes to pay for housing. To qualify for a Fannie Mae mortgage, your debt-to-income ratio cannot be greater than 28 percent. Those buyers who find that their debt-to-income ratio is too high can increase the down payment they make on their home, which will reduce the amount they need to borrow. The minimum down payment Fannie Mae mortgages require is 5 percent for a fixed-rate loan, but 20 percent down payments are considered ideal.

Credit Score Requirements

Would-be home buyers must meet certain credit score requirements in order to qualify for a Fannie Mae mortgage. Your credit score is also called your FICO score, which stands for Fair Isaac Corporation, the company which created the score. FICO scores are determined by an algorithm that takes into account the amount of debt you carry, your payment history, your credit history, the types of credit you use, and new credit you obtain. All these factors determine the risk you pose to lenders. The lowest possible score is 300, while the highest possible score is 850.

To qualify for a Fannie Mae mortgage, you must have a credit score of at least 620. The higher your credit score is, the more easily you can obtain lower interest rates. According to the records at Fannie Mae, the average credit score of their borrowers in 2013 was 744.

To Wrap Things Up

Since 2009, Fannie Mae mortgages have facilitated the purchase of 4.1 million homes. A mortgage backed by Fannie Mae may be right for you, if you meet the requirements. If you have a high credit score, a good debt-to-income ratio, and a large enough down payment, a Fannie Mae mortgage is probably your best choice, because the interest rates are significantly lower than those for non-conforming loans.

The Top Ten Sources of Non-taxable Income

The Government states that unless described so by law, all income from whatever source is taxable – however, there are some notable exceptions, commonly known as non-taxable income.  This can sometimes seem like a minefield and many people find themselves confused and not sure where they stand. It can help to have a clear explanation of taxation matters and hopefully you’ll find this guide to the top ten sources of non-taxable income listed below easy to understand and useful:

Its raining money

1.     Sale of the Main House You Live In

If a married couple decide to sell the house that they have lived in for more than two years and can prove they have owned it for longer than two, then they are entitled to exclude up to $500,000 (if married) and $250,000 (if single) from their capital gains tax once their home is sold. This one aspect and example of non-taxable income

2.     Monies Earned In Nine Specific States

If you live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington or Wyoming these particular states have chosen not to levy state income tax on their residents, this means that these particular places are indirectly encouraging more people to go and live there as they’ll be able to keep more of their income without being taxed on it.

3.     Corporate Income in Five Specific States

Following on from this, in Nevada, South Dakota, Texas, Washington and Wyoming corporations do not pay any tax on their corporate income, again, this is a sound way of getting businesses to relocate or start up in these areas, so that they will be able to keep a larger portion of their earnings.

4.     Estate Tax

Anything up to $1million is non-taxable income and this seems to unfairly penalize anyone who is a beneficiary of someone who had a lot of money. Estate tax – also known as Death Tax is something that is always very much in flux and changes regularly. It has fluctuated a great deal since 2005.  If you are a beneficiary of an estate that falls into the right category you will get the income tax free.

5.     Municipal Bond Interest

When you earn money from Municipal Bonds, it is tax free providing you’re still living in the state they were issued in at the time. This is non-taxable income even if they were bought as part of a bond scheme or simply as individual stand-alone certificates.

6.     Disability Insurance Payments

These are non-taxable income if they meet a certain level of criteria, which are as follows:

If it is worker’s compensation

If it is compensation for a disability or injury

If the disability benefit comes from a public welfare system

If you purchase private disability insurance with after-tax dollars

Disability benefits under a no fault car insurance policy for loss of income are non-taxable income.

7.     Life Insurance Pay Outs

If a loved one dies and leaves you with a lot of money then you are not liable for any tax on this, however, there are some notable exceptions to the rule and you should always check the IRS Publication 525 for any changes or specific clauses that might affect you or your loved ones.

8.     Gift-Giving

If you have been “given” a gift of monetary value up to $13,000 then you are not liable for tax on it. As an example, two parents with three children could gift each of their children $13,000 each – a total of $78,000. Each child would have $26,000 and none of it would be taxable.

Other monetary gifts that are not taxable are:

Political donations to any party at any time

Tuition fees or medical fees that have been paid on someone else’s behest.

Charitable donations to any good cause

9.     Employer Provided Insurance

If you have something like this which has been provided by your employer or you pay into another such healthcare scheme then this is non-taxable too. Employer provided long term care is also not taxable.

10.    $3000 of Income Offset By Capital Losses

If you have investments and sell them at a loss you can use this loss to reduce your taxable income by up to $3000 per year. Losses like this can be carried over year to year until the entire loss has been totally offset.

It seems odd that the government taxes what you earn at work but not your life insurance – many people find this notion strange, regardless of their political beliefs, however, that is the way things stand legally and it cannot be argued with. The government will encourage activities that it thinks will have some monetary benefit to the country and discourage others that they will believe will have a detrimental impact or one that will not benefit the nation as a whole.

The Good And Bad Of Prepaid Credit Cards

Photo of hand holding credit cardsDid you know that there are both prepaid credit and debit cards? Prepaid debit cards are probably the most popular and are used by many people to help rebuild their credit. The way these cards work is that you load a certain amount of money onto the card (usually $300 or $500) and then use it just as you would a credit card. The difference is that every time you make a purchase, the money is subtracted from the balance on your card. When you reach zero, you need to either load more money onto the card or just toss it.

Like prepaid debit cards

An article recently on the web site Bankrate.com noted that prepaid credit cards work about the same way as prepaid debit cards. There are two kinds. The first are cards that you receive as part of a promotion. For example, you might buy an automobile or a big-screen TV and receive a prepaid credit card as part of the deal. The second is where you load money onto the card yourself.

Read the fine print

As this article pointed out, if you do receive a prepaid credit card, be sure to read the fine print. Many of them have expiration dates. For example, as this article reported one woman received a promotional prepaid MasterCard with a balance of more than $350. But she soon learned to her dismay that the money was gone because the card had expired. The lesson here is to read the fine print very closely.

No replacement card

This woman had expected a replacement card but that didn’t happen. When she called the company that issued the card she found that her balance was gone and that was it.

The difference between prepaid credit cards and gift cards

It’s better to get a gift card than a prepaid credit card. The reason for this is that the balance on gift cards will never expire. In addition, prepaid credit cards may have other restrictions that are not listed on the outside of the package. Instead, the fine print is sometimes inside the package.

Higher fees

Another negative of prepaid credit cards is that you may end up paying higher fees when you use them in comparison with traditional checking accounts. Why are these fees higher? It’s basically because these cards are exempt from the consumer protection laws that apply to bankcards. Plus, they come with no line of credit. Whether your card comes with a prepaid balance or you load money onto it yourself, once the money is gone it’s gone.

The benefits of a prepaid credit card

A prepaid credit card can be helpful because you can use it everywhere a Visa or MasterCard is accepted. You could use it to make purchases, which eliminates the need to carry cash. You won’t pay any interest because you’re not actually borrowing money. A prepaid credit card makes it virtually impossible for you to create any debt because you can use only the amount of money that’s on the card.

The disadvantages

As noted above, the biggest disadvantage of a prepaid credit card is the fees you will be charged. For example, you may have to pay a flat fee just to open the card and another fee to keep it active. If you decide to get one of these cards, make sure you choose one with a low transaction fee as you will be charged one of these fees every time you use the card. And not all companies who offer these cards report how you use them to the credit bureaus. This means that even if you have and use one of these cards sensibly, it may do nothing to improve your credit score.