Every day, people have to make decisions about their money. The choices they make have an impact on their financial health, so people have to be informed if they want to make the right decision.
When presented with the choice to invest or pay off your debt, you need to understand how each will affect you if you want to determine which is the better option.
How Can You Benefit from Investing?
Investing is one way for people to build their wealth. Whether you choose real estate, stocks, bonds or other types of investment, the many investment opportunities that surround you can benefit your financial health in more than one way.
An additional source of income: You probably already earn an income from working a job, but investing allows you to create an additional source of income. Depending on the investment, the return may be small, but it is still money in your pocket.
Reduce your taxes: Certain investments, such as retirement accounts, are tax-deductible. However, this is not the case with all retirement accounts. Additionally, there may be a limit on how much you can deduct.
Extra money to save for retirement: Retirement is expensive. Even though you probably won’t retire until the age of 65, the traditional age of retirement, you have to start saving early if you want to have enough money to cover all the expenses during this phase of your life. With more money coming in from your investments, you can have extra cash to put away for retirement to ensure you reach your savings goal.
How Can You Benefit from Paying Down Your Debt Sooner?
Many people view debt as a burden. Even if repaying these debts takes 20 years, they have to be repaid. But you always have the option to pay down your debt early.
Having debt can negatively impact your life, but when you pay it off sooner, you’ll experience a number of positives.
Save money: If you have credit cards or loans, you are expected to pay interest. The longer it takes to repay the debt, the more money you will pay in interest. By paying down your debt sooner, you will save money because less interest will be paid.
Improved credit score: Credit scores factor in how much a person owes. A high amount of debt can contribute to a low score, so when you pay down your debt, you will see a score increase. This increase will be slow if you take your time paying back the debt, but you can see a significant change in credit score if you pay off your debts sooner.
Peace of mind: Debt is a source of stress for many people. Repaying your debt sooner can decrease stress and give you peace of mind because you will be free to spend your money the way you would like and not have to worry about paying any more debt.
Should You Invest Your Money or Use It to Pay Off Debt Sooner?
Should you invest your money or use it to pay off debt sooner? There is no definite answer that can be given to this question because it depends on your individual circumstances.
One thing you can do to help you determine which option is best is to ask yourself questions that will help you get a better idea of your financial health.
What types of investment opportunities are you interested in?
How much can you potentially earn from investing?
Is there a chance of losing your money if you invest?
How much debt do you owe?
How soon would you be able to pay it off?
How much would you save by paying off your debt sooner?
There are ways you can benefit from investing, and there are ways you can benefit from paying down your debt sooner. Remember that what may be a smart move for one consumer may not benefit you in the same way. Regardless of which option you choose, you have to be the one to decide if it would be a smart move for you.
Understanding how your credit is calculated is the first step to cleaning up your credit history and improving your credit scores. The FICO scoring system takes several key aspects of your credit file in order to come up with the number that the creditors use.
Because all three credit bureaus have their own relationships with creditors who report your payment history, it is quite likely that your credit score will vary among Equifax, Experian, and TransUnion.
This also means that any negative information that is on one credit report may or may not be on the other two. That’s why some lenders may approve you for a loan when they pull your credit report versus another lender who denies you elsewhere. They could be using different information pertaining to your credit history.
Grab Copies of Your Credit Reports
It’s important to check all three of your credit reports regularly so you know exactly what items are potentially damaging your credit score. You can get a free credit report from each of the three major credit bureaus at AnnualCreditReport.com.
Once you have the facts, you can develop a plan to get your finances back on track. And since the information listed on each credit report can differ, you should always comb through all three to get your full credit picture.
We’ll show you how to clean up your credit so you can increase your FICO score. That way you can start getting better access to credit cards, loans, mortgages, and other types of financing you may need.
What items can damage your credit score?
There are three areas where your credit scores may be impacted, outside of major negatives such as bankruptcies, foreclosures, and judgments. These common damaging items include:
Charge Off Accounts
As you can see by the charts below, there is wide room for improvement by getting inaccurate and negative information on your credit report removed.
How to Start Cleaning Up Your Credit
Each type of negative item comes with different nuances for getting them removed from your credit report. But before you even start that process, you have to prepare your case effectively.
Follow these steps to get started so that you can successfully clean up your credit regardless of the type of items causing damage. Thorough preparation is the best way to set yourself up for a quick dispute process that is free of headaches.
Order and Review Your Credit Reports
You’re entitled to free copies of your credit reports from Equifax, Experian, and TransUnion each and every year. You can’t dispute anything until you know what’s on there, so this is the absolute first step to cleaning up your credit. Go through each section and look for any potential red flags, including:
Inaccurate personal information, such as your name or social security number
Accounts that don’t actually belong to you
Inaccurate account details, such as amounts owed or credit limits
Missing information, such as closed accounts being listed as open
Outdated, negative information still listed after the seven- or ten-year limit
Determine Which Accounts to Dispute and Gather Evidence
Any error on your credit reports can be disputed, especially if it’s hurting your credit score. Go through each of your credit reports and mark which ones you want to challenge. If you’ve been a victim of identity theft and don’t recognize the accounts or even if you see anything that is questionable, you have the right to dispute it.
If you have a lot, you might want to narrow things down in one of two ways. The first method is to only dispute a few at a time. If you choose to do this, start with the most damaging items first.
Hire a Professional Company
The second method to clean up your credit report is to contact a reputable credit repair company like Sky Blue Credit Repair. They file a dispute for you, which can be especially beneficial if you feel overwhelmed or unsure of the process.
Once you decide which items to include in your dispute letter you need to gather all of the evidence to support your case. You don’t need to include it in your dispute request because the burden of proof remains with the credit bureaus.
It’s their job to verify each item with the relevant creditor, and if they can’t do that, then the item must be removed. But if the creditor supplies faulty information, it’s smart to have your own paperwork on hand to support your case.
Keep these documents ready to have when you need them. When working with a credit repair service, they might also request this information from you to bolster your case during the process.
If you’ve been 30 days or more past-due with your bills, you may find delinquencies listed on your credit report. While these delinquencies are definitely damaging, they can sometimes be easy to fix.
Start with the late payments that are the most past-due, i.e. the 90-day and 120-day debts. The reason to start here is because these are the accounts that are most damaging to your credit scores. They are also the accounts that are most likely to be sent to collections or charged off.
If you can make a payment that will bring you current, you should call your creditor and be prepared to negotiate. If these delinquencies are for an account that is currently open, you have some leeway here.
Updating Late Payments
Ask the creditor if they are willing to update the account as being paid on time, rather than showing a history of past-due payments.
For the 30-day and 60-day accounts, if you have any paperwork that shows you made or mailed the payment within that 30-day window, you should call up the creditor and dispute the derogatory listing.
Many times, creditors are willing to work with a good customer who is only rarely late with payments. Otherwise, you will have to make your complaint in writing with the credit reporting agencies and your creditor in order to get the inaccurate information updated.
Debt that has been charged off means that the creditor has declared it unlikely that you’ll ever repay the debt. They still have the right to attempt to collect the money that is owed.
However, in most instances, they’ll sell it for pennies on the dollar to a collection agency to begin their own collection process. When it comes to your credit score, charged off debt has a greater negative impact than a late payment.
Creditors don’t like to see debts that haven’t been repaid and are much less likely to extend credit to you while charge offs are on your credit report because it essentially looks like abandoned debt.
How to Remove Charge Offs from Your Credit Report
Some loans, such as mortgages, require that all charged-off debt be settled or paid off before you can qualify, no matter what your credit score happens to be. Removing a charge off from your credit reports will take more work, but it is possible.
You will need to:
Contact the creditor and ask if they are willing to settle – this can be done by phone or by letter, but the most effective way to have proof of the settlement is to get everything in writing.
Make the payment in certified funds – so you have proof the debt is paid.
File a dispute with the credit reporting agency and use your proof of payment to support having the disputed charge-off removed.
Sometimes you’ll luck out, and a creditor that has been paid won’t bother to respond to the dispute because they have payment in hand. This will get the item deleted from your credit report entirely.
Other times, the creditor will update your account to say ‘Settled,’ which is still better than having an unsettled charge-off on your credit report. However, it won’t help your scores as much as a deletion would.
Collection accounts are usually the most complicated issue on anyone’s credit report. These are the collection accounts that have been sold to debt collection agencies – sometimes multiple times.
The collection agencies have zero interest in helping you. They only care about being paid as much as possible.
How to Remove Collections from Your Credit Report
However, there are some bright spots when it comes to removing collections from your credit report:
If the debt is past the reporting limit (generally more than 7 years old) then the collection agency cannot list it, and you can dispute the information to have it removed.
If the collection agency has reported the wrong date, the wrong amount, or other erroneous information, you can dispute that as well and have the negative listing deleted.
You have 30 days to request validation from the time the creditor first contacts you. In this time, they cannot perform any collection activities and they cannot add the debt to your credit report while the investigation is ongoing.
For older debts, especially, collection agencies are often unable to come up with accurate information that proves they own the debt and that you owe it. So more often than not, it pays to dispute any inaccurate information.
Understanding these basics to clean up your credit will put you on the right path, but it’s only the first step. The sooner you get actually get started repairing your credit, the better off you’ll be, both financially and emotionally in the future.
What to Do After You File a Dispute
Once your dispute is removed, there are a couple of steps you can take to continue cleaning up your credit.
First, ask the credit bureau to send notification of the change to any financial institution that has accessed your credit report in the last six months. They can do the same for any potential employer that has viewed your credit report over the last two years.
Just note that these actions don’t happen automatically, you have to make the request in writing to each applicable credit bureau. But it’s a worthwhile trick to implement if you’ve been trying to get credit recently or if you’ve been applying for a new job requiring a credit check.
What to Do If They Won’t Remove It
In the event your request for a removal is denied, there are a few more methods to try. First, you can always wait for the negative item to drop off naturally.
Most stay on your credit report for seven years and actually stop hurting your credit score after the first few years lapse. If you’re close to that drop-off mark, it may be worth just exercising a little patience.
If you’ve tried to clean up your credit on your own, consider hiring a professional. Depending on how much your bad credit is costing you in high interest rates or lack of credit altogether, the fee for a professional credit repair service could likely be worth it.
How can you clean up your credit report fast?
Cleaning up your credit certainly takes some time. But once you’ve initiated the dispute process on your inaccurate negative items, there are other things you can do to repair your credit quickly. They are as follows:
Reduce or eliminate your revolving debt, particularly from high-interest credit cards.
Consider a debt consolidation loan or balance transfer credit card. Paying down credit card balances as quickly as possible will help you lower credit utilization ratio.
Ask for a credit limit increase. This can also help to lower your credit utilization.
Consider getting a secured credit card. Secured credit cards require a security deposit but allow you to build credit when no one else will give you a credit card. You can often upgrade to a better credit card once you’ve proven yourself to the credit card issuer.
Think you’re too young to save for the future? Think again.
You may be able to ace the big test after a late-night cram session or get a gold star on you term paper after putting it off until the final hour. But when it comes to saving? Not so much.
In fact, the earlier you start saving, the more financially confident you’ll be. True story. Yet many college students struggle to get in a savings groove. Balancing your studies and social life can get pretty time consuming, after all.
Here are four simple steps you can fit into your college schedule today to build good savings habits with long-term payoff:
1. Understand why starting now is critical
Time really is money when you’re in your teens and early twenties, thanks to compound interest. Compound interest means your money has the ability to start making you more money because you’re earning interest on previously earned interest.
To see how saving small now can pay off big down the road, crunch the numbers with a savings calculator. You’ll find that stashing away money in your college years will make your long-term financial goals far easier to reach than if you wait until your mid-to-late thirties to make saving a focus.
Haven’t worked out your long-term financial goals just yet? No problem. By saving now, you’ll have money in the bank when those goals become more concrete.
2. Choose the right savings account
You need to find a place to put your money (other than below that dorm room mattress). Look for a savings account with few or no fees that offers a competitive interest rate.
You earned it. Now earn more with it.
Online savings with no minimum balance.
Discover Bank, Member FDIC
The more interest you earn on your savings, the more your money will compound over time. This compounding effect is how you can accelerate the amount of money you build up in your account without any additional work on your part.
Choose an account with an institution that offers mobile banking and lets you set up automatic transfers from your checking account to your savings. Make it your goal to open your new savings account within the next week.
3. Start a monthly contribution
Next, set up automatic deposits to your savings account. Set a small goal to start—even a reoccurring transfer of $10 per month from your checking account is better than nothing. Start with what you have and what you can do, and build from there.
Automating these transfers means consistently and easily adding to your savings. There’s no need to schedule reminders each month, and the money won’t be sitting in your checking account, tempting you to spend it.
4. Look for more ways to save
The fastest way to save more is to cut expenses. Look for inexpensive or free alternatives to pricey items and activities, and cut out small expenses that add up over time. While you’re at it, try to limit unnecessary and impulse purchases (online shopping, anyone?).
When you’re ready to do even more, look for ways to boost your income. That might mean working a part-time job or picking up more hours at your current gig. With your newfound savings knowledge, you’ll be better prepared to put that additional cash toward your financial future.
It’s been about eight months since my last mortgage match-up, so let’s give it a whirl again.
Today, the focus will be on taking out a mortgage versus simply using cash when purchasing a home.
Of course, it’s not that simple for the majority of the population to throw a few hundred thousand dollars (or more) down on a property. So for many, this won’t even be an option.
But it’s worth visiting regardless to see how even the very rich often opt for a home loan when they’ve got plenty of cash to spare.
Buying a Home with Cash Has Its Benefits
Cash buyers are more attractive to home sellers
The home buying process can be a lot faster without a mortgage
Don’t need to abide by any mortgage lender’s rules
No property restrictions or inspections to worry about
Don’t have to pay interest to the bank for several decades
First let’s talk about buying a home with cash. This is almost certainly the favored approach of real estate investors and perhaps the mega-rich, though billionaires like Mark Zuckerberg still take out mortgages.
And investing gurus like Warren Buffett think the low mortgage rates are a great deal…
But for a large swath of the population, this either/or question doesn’t even get any consideration because most of us can’t afford to buy a home (or even a small condo) with cash.
Still, there are some advantages to buying a home with cash as opposed to taking out a mortgage.
The most obvious is that you don’t pay any interest when you buy with cash. That’s right, no mortgage, no interest payments.
Additionally, you don’t have to make any payments to principal either, seeing that you own your home free and clear right off the bat.
However, that doesn’t mean you won’t have recurring costs. You’ll still need to pay homeowner’s insurance (unless you’re really brave), along with property taxes and possibly HOA dues depending upon where the property is located.
The insurance thing becomes optional when you own your property outright. Not so if you have a mortgage because you don’t really own your home. Your lender does, until that loan is actually paid off in full.
Another plus to paying with cash is the negotiating power you gain when making an offer. If you’re going up against some other would-be buyers that need to finance the purchase, you’ll have the upper hand in pretty much every situation.
Sure, you could get outbid by another buyer willing to offer more for the home, but your cash offer should be king if all else is equal. And it may still be king even if you offer less than the competition.
Once your offer gets accepted, you won’t have to worry about dealing with a bank or mortgage lender. That means it doesn’t matter if your credit score is in bad shape, or if you don’t have the necessary income to qualify for a mortgage. Or if you’re a foreign national who might otherwise have difficulty getting a loan.
There is still a process to purchasing the home, but you can cut out the middleman, otherwise known as the lender. And that means you won’t have to pay lender fees, including a costly loan origination fee, or lender’s title insurance, underwriting fees, and so on.
But you might not want to skimp on the appraisal, even though it’s not a requirement. It’ll buy you some time to determine if the house is in good shape and worth what you agreed to pay.
That lack of a mortgage also means you’ll be able to move in sooner, or rent out the property sooner. Speaking of renting it out, you won’t have to worry about occupancy issues, or a higher mortgage rate because it’s an investment property.
Taking Out a Mortgage, Even If You Don’t Have To
A lot of very rich people take out mortgage loans
Not because they have to, but because they know home loans are cheap
Instead of tying up all their money in a single property
They put their hard-earned cash to work in other investments that can yield better returns
On the other hand, there’s the traditional approach to buying a home, with the help of a mortgage.
This is kind of the default option more out of necessity than preference. As I alluded to earlier, most of us can’t afford to buy real estate with cash. We need a mortgage to get the deal done.
In fact, many Americans need a sizable mortgage to get the job done, with practically zero-down FHA loans a popular choice for a large number of prospective home buyers.
So like it or not, a mortgage is often just a fact of life.
The number one downside to a mortgage is all that interest. On a $200,000 loan set at 4.5%, the total amount of interest due over 30 years is close to $165,000. Y
eah, you pay nearly double what you agreed to pay for the home. Sounds pretty rough, doesn’t it?
But like I said, this is the price of not having a substantial amount of money to put down. Along with that, you also have to pay a bunch of lender fees, which can certainly add up.
If you put down a very small amount, you’ll also be subject to paying mortgage insurance premiums, possibly for life if you go with an FHA loan and never refinance.
Oh, and you don’t just get a mortgage. You need to qualify for a mortgage, and not everyone qualifies for countless reasons. Having the lender pry into your personal and financial life may also be extremely annoying and frustrating, but if you need hundreds of thousands of dollars, they’ve earned that right.
The good news is that you write off that mortgage interest as long as you itemize deductions and they exceed the standard deduction. So some of that interest can result in a lower tax bill each April, which lessens the blow pretty significantly.
Additionally, mortgage rates are dirt cheap compared to just about every other type of loan out there. Yes, you pay a lot of interest, but it’s only because the loan amounts are so large.
That means there’s a decent chance you can invest the money that would be locked up in your home (if you paid cash) at a better return elsewhere.
Having a mortgage on your home also means you’ve got more liquidity and less at risk, assuming something goes wrong.
Imagine something devastating happens to your home that isn’t covered by insurance. Would you rather have 20% invested, or 100%?
Also consider the recent housing bust – a lot of homeowners were able to walk away from their homes relatively unscathed because they didn’t have much invested.
Those who purchased all-cash could cut their losses, but they couldn’t walk away without losing a lot of money. There’s also that old saying about putting all your eggs in one basket.
If you don’t have money in other places, it certainly shouldn’t all be tied up in your home.
[Mortgage affordability calculator]
Can You Get the Best of Both Worlds?
Most home buyers put down a small amount of cash and take out a mortgage
The sweet spot might be a 20% down payment
This allows you to avoid costly mortgage insurance and obtain a low mortgage rate
You can invest your excess funds elsewhere or prepay the mortgage if that’s your goal
Absolutely. Most people buy homes with cash and a mortgage, not just either or. In other words, when you put 20% down on a house, you’re paying a decent chunk of cash and financing the rest.
As a result, you avoid the requirement for mortgage insurance, you get a lower rate of interest, and you have an equity investment.
Putting down 20% or more should also put you in a pretty good position when it comes to a bidding war, though an all-cash buyer willing to make a good offer will always have the upper hand.
Additionally, you can always pay your mortgage off earlier than planned seeing that most mortgages don’t have prepayment penalties anymore.
Sure, you will subject yourself to the closing costs associated with a mortgage, along with the qualifying process, but you don’t have to pay off your mortgage over 30 years.
If you decide your money isn’t earning as much as you’d like, you can move more of it towards the mortgage balance.
Got plans to retire in 10 or 15 years? Start prepaying the mortgage faster so you’ll be free and clear by the time you’re on a fixed income. Or go with a 15-year fixed mortgage instead.
Remember, it doesn’t have to be an either/or discussion. You can make adjustments based on your financial standing as time goes on. With cash, you can also pull equity via a cash out refinance. So both options provide flexibility.
Advantages to Buying a Home with Cash
No need to qualify for a mortgage
No need to shop for a mortgage
No mortgage payments (good if you lose your job or are close to retirement)
No interest due
No lender fees
Homeowner’s insurance isn’t required
You don’t need to pay for an appraisal
More negotiating power when making an offer
Lower purchase price possible
Faster closing process
Could be a better return for your money than a low-yielding CD or bond
Set it and forget it investing (don’t have to manage your investments)
Can tap home equity if and when needed
Can always sell or take out a mortgage
Less hassle overall (one less thing to manage)
Sense of security because it’s your home!
Disadvantages to Buying a Home with Cash
Most of us don’t have the money required to buy a home with cash
Mortgage rates are a cheap source of financing
Real estate is an illiquid asset (not easy or free to sell)
The property could lose substantial value
You could lose a lot of money if your home is destroyed and not covered by insurance
You miss out on the mortgage interest deduction
Your return on investment might be poor relative to other options
Poor diversification if a lot of your money is in one single property
House rich and cash poor if savings get depleted
Advantages to Buying a Home with a Mortgage
Mortgage rates are very low
Mortgage interest is tax deductible
Inflation should make future monthly payments “cheaper”
You only need to bring in a small down payment
More cash on hand for anything else
Getting a mortgage isn’t really that difficult
A mortgage can actually improve your credit score
You can prepay your mortgage whenever you want in most cases
You can invest your money elsewhere for a better return
Your money is more liquid
Forced savings each month
Less risk if something happens to your home or if values drop
Disadvantages to Buying a Home with a Mortgage
Tons of mortgage interest must be paid
30 years of monthly payments (maybe less, but still a long time!)
You need to shop for a mortgage
You need to get approved for a mortgage
You could get declined
More (lender) costs associated with a mortgage
Closing process more work and more time
You may buy more house than you should (get in over your head)
Harder to sell the property if little or no equity
You can lose your home if you fall behind on payments
For people looking for a place to live that’s budget-friendly and near a major city, a bedroom community may be the ideal choice. It was for Susan French Gennace, a writer who grew up in Lehigh Valley, PA—a bedroom community of both Philadelphia and New York City.
“When I got a job in New York, I couldn’t afford to actually live there, so I made the commute,” she recalls.
Many people just like Gennace work for city-based companies and then head home to bedroom communities, usually within an hour’s drive, because they enjoy either the residential environment or the lower cost of housing—or both.
Simply put, “bedroom community” is used to describe a suburb or exurb populated primarily by professionals who commute to work in the city.
Characteristics of a bedroom community
Houses in these communities generally offer more space and a lower cost of living. Because there’s less hustle and bustle, people are seemingly more relaxed.
The challenge with bedroom communities, however, is that they can be a significant distance away from urban centers. So even though you get plenty of benefits, you may still have a lengthy work commute.
“Longer commutes and more traffic mean you have to leave earlier in the morning to avoid rush-hour traffic and you get home later at night—just in time to go to bed and wake up to do it all over again,” Gennace says.
Unlike large cities, bedroom communities often have limited options for entertainment, dining out, public transportation, employment opportunities, shopping, and schools.
“Residents who move to bedroom communities typically consist of couples with children where one or both parents travel to the city for their jobs,” says Dave Hyman, a Re/Max real estate agent based in Encinitas, CA. “Rather than apartments or condos, people in bedroom communities tend to live in single-family homes.”
Is a bedroom community for you?
Where you choose to live and work is obviously a personal choice, for which you must weigh both the pros and the cons. For some young adults, bedroom communities only emphasize what they’re missing.
“They are a reminder that you are somewhat close to where all the fun and action is, but far enough away that visiting the city is still a special occasion,” Gennace says. “Some people might complain how boring they are and count down the days until they can finally leave them.”
But for many working professionals, the cons of bedroom communities are minor compared to the following perks:
Affordability: Housing costs and taxes on property, food, and sales tend to be lower.
Less noise: Noise from automobile traffic, emergency vehicles, and construction projects is replaced by relative peace and quiet.
More privacy: Crowding is not a problem as homes tend to be more spread out, keeping nosy neighbors at bay.
Lower crime rates: Let’s be clear: Crime happens everywhere. But in bedroom communities, a smaller population means fewer people are behind bars.
If you’re looking for the financial security owning your home can provide, it doesn’t have to be a distant fantasy. In fact, it may be closer than you think. Here are nine ways you can pay off your mortgage faster.
1. Consider a larger down payment
Your down payment plays a big role in your mortgage payment calculations. The more you put down, the less you need to borrow. But your down payment affects more than that. Most conventional loans require one of two things — 20% down or private mortgage insurance (PMI). If you put less than 20% down, your lender requires PMI as a form of insurance in case you default on your loan.
If you increase the size of your down payment, you could avoid the extra cost of PMI and reduce your loan amount or term. The money you would be spending on PMI could be used to make extra payments on your loan, helping pay your mortgage off sooner.
2. Shop around before you buy
Mortgage rates and terms vary by lender. Compare your options before you sign on the dotted line. While one lender may offer a much shorter loan, the monthly payments could be very high. Paying off your mortgage quickly may be a priority, but make sure you can afford it before you select the shortest term.
In addition to mortgage rates, you also need to consider closing costs. In some cases, you may be able to get the seller to pay your costs. Talk to your lender about closing costs, and don’t be afraid to move on if you don’t feel like you’re getting the best deal.
3. Don’t overextend yourself
We all have a picture of what our dream home looks like. Maybe it includes a gourmet kitchen or, perhaps, a sprawling backyard. Often, we can become so consumed with our wish list that we push our budget further than we should.
If you want to pay off your mortgage earlier and don’t want to be overburdened with debt, take a close look at your finances. Use a mortgage affordability calculator to find out how much you can comfortably afford and stay close to that amount.
If you keep your payments within your budget, you’re more likely to have additional money at the end of the month. If you want to pay down your mortgage faster, using this extra money to put towards your balance is a good place to start.
4. Choose a shorter-term loan
When you purchase a home, you have several options. One of the biggest decisions you’ll make is what type of loan term you choose. Many homebuyers choose a 30-year loan. If you’re looking to pay off your mortgage faster, you may want to look at a 15-year loan. Ask your lender if they offer other terms such as a 20 or 25 year which may not have as much of a higher payment impact.
15-year loans result in higher payments because you’re paying off the loan in half the time. But these loans often offer more competitive rates. Because you’re paying a lower interest rate and paying that rate over a shorter period, you could end up paying less interest and spending less on your home overall.
Think a 15-year loan isn’t an option? What would happen if you made a larger down payment and chose a more affordable home? An online mortgage calculator can help you review your options and choose the right loan term.
5. Make bi-weekly payments
The average homeowner makes their mortgage payment once a month. That’s 12 payments per year. With bi-weekly payments, you pay half your monthly payment every two weeks. This way you end up paying 26 payments, or the equivalent of 13 months. In other words, one extra payment every year.
The extra annual payment can help you reduce the interest you pay, earn equity faster and, ultimately, allow you to repay your mortgage faster. Check with your lender to see if they offer a bi-weekly payment option. If not, see if you can still make payments every two weeks and make sure any extra payments are applied correctly.
6. Use an unexpected windfall to pay down your loan
Did you get a surprise bonus from work or receive a large inheritance? While the instinct may be to spend this money or put it in the bank, another option is to pay down your mortgage balance.
Before you write a check and put it in the mail or press send on your online payment, talk to your bank first. Different banks have different rules, and, in some cases, your lender may charge a fee if you pay off your loan early. You’ll also want to confirm the full amount goes to the loan principal. A quick phone call can help you determine whether you need to do anything to make sure your money goes to the right place.
7. Ask your lender about a mortgage recast
Putting extra funds towards your mortgage is great. Unfortunately, it doesn’t matter how much extra you pay, your monthly payments still stay the same. That is, unless, you request a mortgage recast.
With a mortgage recast, the bank looks at how much you owe on your loan and recalculates a new monthly payment spread out over your remaining loan term. Though this may not seem like it helps you pay off your mortgage faster, when you have extra money available at the end of the month, you can put that money right back into the loan.
8. Make paying off your mortgage early a priority
How much extra money could you find if you took a hard look at your budget? What if you made a few strategic cuts? Chances are, you can do without a few unnecessary costs or find ways to reduce monthly bills. When you shift your priorities, you might be surprised by how much money you’re spending on things you don’t need.
If there’s nowhere to cut, or you just don’t want to reduce your costs, consider how you can increase your monthly income. This could be achieved by working a few extra hours, asking your boss for a raise or bringing in some cash through a second job.
9. Refinance your home loan
Refinancing your mortgage can be a great way to reduce the length of your loan and pay off your home faster. If you’ve never refinanced a property, it’s important to understand the options available:
Interest rate reduction: Interest rates fluctuate throughout the life of your loan. As a homeowner, it’s always a good idea to watch current mortgage rates. Little changes might not make a big impact to your mortgage payment, but a rate drop of 1-2% could. If you’re not sure whether you should refinance, talk to your lender.
Shorter term loan: Maybe you couldn’t qualify for a 15-year loan when you first purchased your home, but now you can. Refinancing involves reevaluating your financial health. With a higher income, more savings and a better credit score, you could qualify for a much shorter term.
Paying off your mortgage early is a great way to free up extra money and gain financial freedom, but keep in mind that there are usually costs associated with refinancing your loan. There are many options available and your lender can help you determine the right ones for you based on your financial circumstances. If you’re thinking about buying a home, refinancing your loan or are looking for ways to pay off your loan early, talk to a Home Lending Advisor to discuss your options.
Here are 10 must-buy products from Amazon to keep your home Monica- clean. Check it out!
Cleaning, organising and re-ordering the structure of your home is not an easy task but it is something we all end up doing every day. To keep the charm of the home alive to make guests go awe in the sight of your perfect interiors, we need certain products on a daily basis to get the job done perfectly. Here we bring to you 10 such daily use products that you need in your home to bring the perfection you carve for!
The ultimate cleaning set
Cleaning your home with water and Dettol or any other anti-septic cleaning agent is a must. To make the process easier and a lot of fun, this cleaning set comes with a spin mop with a rectangular bucket and plastic basket for your daily cleaning needs. The sturdy stainless steel metal can handle the heavy load of water and make your cleaning experience quick and sleek!
MRP: Rs 1600
Deal of the day: Rs 849
This super-absorbent fabric can hold up to 5.6 times its weight of water and can be used in the kitchen, bathroom, garage and for wiping floors, crockery, cutlery and even as face towels.
MRP: Rs 559
Deal of the day: Rs 259
Washing machine cover
This pretty and quirky cover adds to your home decor and washing area and also keeps your washing machine free from dust particles. Aren’t they the ideal way to add some visual fun element to the otherwise boring daily use products?
MRP: Rs 700
Deal of the day: Rs 279
Featuring an eye-catching print and soft fabric, here is your ultimate picnic product. It’s flexible waterproof undersize prevent dampness from seeping through the blanket’s surface. The fold and secure blanket come with a velcro flap for easy transportation and packing.
MRP: Rs 1500
Deal of the day: Rs 659
These cutesy gloves come with elastic cuffs to hold on to the wrist and clean the surfaces. Its a daily use product that can be used in the kitchen, bathroom, garage and for wiping surfaces, crockery, cutlery and even for car washing. You need not keep looking for a waste piece of cloth or dirty your hands again.
MRP: Rs 400
Deal of the day: Rs 219
This Jewelry organiser is the best option to use while travelling and it will help you to keep your heavy jewellery in a separate cover from other items in your luggage without any damage. It also helps in keeping the sets safe and you will never lose them again!
MRP: Rs 700
Deal of the day: Rs 379
Maternity pillows are a comfortable prop for various sleeping and resting positions. It retains shape due to hypoallergenic filing of siliconised polyester fibre and gives you the best nap ever!
MRP: Rs 2100
Deal of the day: Rs 1329
This cotton top layer absorbs liquids and allows bedsheets to be spread evenly without lumps. It makes your bedroom look more aesthetic and create a visual elegance and luxe look. The waterproof bottom layer made of polyurethane protects your mattresses against liquid spills and stains.
MRP: Rs 1900
Deal of the day: Rs 569
To make your fridge look more pretty and also to add more space and organise items in a professional way, this organiser cover set is the best option. It protects the fridge from dust and stains and keeps everyday products in an easily accessible space.
MRP: Rs 500
Deal of the day: Rs 299
Yet another interesting product that we think your home needs is a pretty wall sticker that adds to the home decor and creates a visual treat and fills the vacant space. Use in the bedroom, living room, playing room, kid’s room to enhance your living spaces instantly.
MRP: Rs 500
Deal of the day: Rs 299
Also Read: 4 Ways to make your humble abode summer ready
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Mold is a fungus that grows in a wet or damp environment. It reproduces and forms ugly black spots on your tile grout or your shower curtain. When left untreated, it gradually destroys the look, smell and structural integrity of your home.
Mold can cause health problems, too, such as allergic reactions and even asthma or lung infections. By keeping surfaces dry and clean, you’ll prevent damage to your home, save money and avoid potential health problems.
So, how do you kill and remove mold in your home? Clean with the right products like bleach and vinegar. They can both kill mold, so which is best?
Bleach is a popular cleaner because it’s powerful and leaves a surface looking clean and bright. Yet, using bleach is only effective on mold that’s growing on non-porous materials, such as tile and glass. Bleach can’t penetrate mold that’s growing on surfaces like concrete, wood, drywall and unsealed tile.
Unfortunately, using bleach on some materials kills the mold above the surface but the mold continues to grow underneath, which can cause it to return and grow faster. Another disadvantage of bleach is that it can damage the materials it’s used on as it is a harsh and toxic chemical.
For killing mold with bleach, use a ratio of one cup of bleach per gallon of water. Never mix bleach with ammonia or other household cleaners, as it will produce dangerous, toxic fumes. Wear rubber gloves and safety goggles to protect your skin and eyes. Open windows and doors to ventilate the room.
Although the active ingredient in bleach, sodium hypochlorite, is the main ingredient in many mold removal products, there’s a non-toxic alternative — vinegar.
Vinegar is a mild acid that’s effective for killing mold and can actually help prevent future mold growth. While not as strong as bleach, you can use vinegar to clean porous surfaces like concrete, wood, drywall and unsealed tile.
Don’t use vinegar to clean marble or granite because it can eat away at the surface and cause discoloration. To clean these fragile materials, the Organic Consumers Association suggests using rubbing alcohol or vodka with water.
To clean mold with vinegar, just spray it on the moldy surface and leave it. Repeat this every few days to prevent mold from growing back. Vinegar is a natural all-purpose solution for killing germs and removing odors. Combine it with some orange peels to make your own citrus vinegar cleaning spray and use it to clean everything in your home, from your bathroom to your kitchen counters.
Removing mold from your home
Because of its non-toxic nature, vinegar is usually the best cleaning product to use on mold. If vinegar isn’t strong enough, use bleach and heavily dilute it (about 1 part bleach to 10 parts water).
Cleaning mold with vinegar is safe and effective, but large quantities of mold should be cleaned with specialized equipment. If you have extensive mold growth, call a professional to tackle the job. If you’re renting and find mold in your apartment, contact your landlord immediately, take photos and keep records of any health problems that you encounter.
The CDC provides these suggestions for cleaning up mold in your home:
Tips for preventing mold growth
The best way to fight mold is to prevent it from growing in the first place. Keep your bathrooms, kitchen, basement, storage rooms and other areas of your home well ventilated. Humidity levels in your home should be no higher than 50 percent. Here are some things you can do to reduce the moisture and keep your home mold-free.
Fix leaky faucets, showers or household appliances that use water (dishwashers, refrigerators, water heaters, etc.)
Vent bathrooms, clothes dryers and other moisture-generating sources to the outside
Use air conditioners and de-humidifiers
Use exhaust fans whenever cooking, cleaning and bathing and run ventilation fans for at least 10 minutes after taking a shower or finishing cooking.
Fix leaks in your home’s roof or walls. Clean out gutters to prevent leaking.
Clean bathrooms and dry completely
Remove or replace carpets in rooms like bathrooms or basements that have a lot of moisture
Check windows for condensation and keep them clean and dry
In her role, Gabriela is the glue of real estate operations at Homie in Arizona. She assists Homie buyers’ and listing agents with uploading documents, updating statuses, submitting documents for broker review, and making sure everything stays organized.
Gabriela is an Arizona native. She can take the heat, she loves Arizona’s weather, and she enjoys mountain views. When she needs a break from the heat, she likes taking trips with her son up North to fish and camp, and she enjoys visiting our many lakes to ride jet skis.
She’s spent a large part of her career as a personal banker. She loves customer service and helping people. She loves organization and helping her team do their job seamlessly, which is why she’s a great fit for her current role.
Gabriela is also bilingual, speaking Spanish and English. She learned from her family in Mexico along with classes in school. She is a great addition to help our Spanish speaking Homie customers!
A fun fact about Gabriela is that she is a licensed aesthetician, specializing in corrective skincare.
Gabriela first learned about Homie through Jennifer Gutierrez, who was already part of the Homie team. In her previous role as a personal banker, she would often work with people who were buying their first home and with loan officers. She always thought real estate was exciting. She knew Homie’s flat rate model was going to be the future and wanted to be part of that. After meeting Homie co-founder, Mike Peregrina and reading reviews of Homie online, she was sold.
Gabriela is most excited about Homie’s growth. She loves being part of a company that is expanding to new markets, nationwide. She feels like she has grown so much already professionally and can’t wait to see what the future holds. What makes Gabriela excited to go to work every day? She loves the vibe she gets from her team. She feels like her voice is heard.
“You are able to talk directly to the CEO and other co-founders at the company. When I worked at the bank, I could never get that close to leadership. If I have an idea, I know I can send an email or text to one of our executives and they will listen.”
Join the Disruption
If you want a career you love, want to help change the lives of others, and want to join a company in disrupting the real estate industry, check out careers at Homie! Want to learn more about what Homie real estate agents do for their clients? Click here.
Read other Homie stories:
Homie Highlight: Chris Fryer Homie Highlight: Jaime McAlarnis Homie Highlight: Jennifer Gutierrez Homie Highlight: Juan Gomez Homie Highlight: Tahni Harr
Did you know Giving USA reported that in 2018, Americans donated over $410 billion dollars?!
It’s around this time of year especiailly that giving back becomes top of mind for many. Whether it’s for a particular occasion or we’re looking at how to work it into our routine and monthly budgets, it can be tricky and overwhelming to get started.
With so many worthy causes, what should we focus our time, energy, and money on? What is the best way to fit this into our schedule and budget?
4 Ways Giving More Can Benefit You
There’s also another challenge: many Americans are dealing with debt and struggling to make their own ends meet.
If you’re trying to find the best path forward, you’re not alone.
Many families want to give more but are on a tight budget. You might be wondering, How can I give more without breaking my budget?
And I want to encourage you to look at a few ways to make it possible.
If you’re on the fence regarding whether you should give or you’re unsure about what you need to do begin, I want to share a few benefits of making giving a part of your schedule and budget.
You may not be aware that giving back can not only be a blessing and aid for others, but it can also help you with your own life and finances.
Here are four benefits to giving back and how it might improve your family’s finances.
#1 Be More Aware of Your Money
When you treat giving as a part of your budget, you tend to be more aware of your finances.
When I interviewed Wilson Muscadin, a Certified Financial Educational Instructor and creator of The Money Speakeasy, he noted that to help clients save more he tells them to budget their money in a way that they give first, save second, and then pay the bills third.
It sounds counter-intuitive, but this order has empowered some to see that their money is a reflection of their values and priorities. Defining those allows them to find those needless expenses that are eating up their paycheck and instead direct them towards what matters most to them. That insight, in turn, motivates them to be wiser and more conscious of the remainder of their money.
Here’s where a spending plan can be a fantastic aid.
Using apps like Mint, you can set up a goal or two along with a realistic budget that will allow you to plan for donations while hitting your other financial goals such as paying off debt, savings, or investing. Once you’ve set up your budget, you can then automate the bill payments, savings, and transfers through your bank or credit union.
This system can free up quite a bit of time and keep you on top of your finances.
#2 Develop Your Marketable Skills
Of course, you may not be in a position to give as much financial help as you’d like to for a charity that you appreciate. Perhaps you’re trying to pay down debt. The good news is that you can still give in a meaningful way.
Besides money, many charitable organizations could use volunteers, skilled and unskilled. In fact, some provide free training as long as you’re willing to learn.
If you’re using your talents and a skillset you’ve already have, this is an opportunity to challenge and grow your leadership skills as well. You could manage a small team of volunteers, apply your expertise to solve problems or vision for the organization, etc.
On the other hand, volunteering can be a chance to try something completely different than your day to day routine. Acquiring and widening your skills and expertise can make you a more desirable candidate in the job market.
You may now be qualified for a position with better pay and work more aligned with what you value.
#3 Become Happier and Less Stressed
You may be aware that there are different studies and research out there that point to how those who give have increased satisfaction and happiness. It might seem like a small deal, but improving your happiness and decreasing your stress can have financial benefits, considering there seems to be a link between the opposite scenario: stress and bad financial decisions.
Having an outlet, including volunteering and contributing to a charitable organization that you admire can alleviate some stress and may help you keep a level headed perspective on things.
By having meaningful work, you may find yourself dropping habits such as impulse that gave you fleeting satisfaction, but in the end, just ate up your budget.
#4 Manage Your Time Better
Besides reducing stress, giving and volunteering can be a wonderful motivator at approaching your life more holistically. Just like you’re more aware of your finances when you’re giving, you can also become better at managing your time.
While you don’t want to over-commit yourself to a ton of different volunteer projects and contributions, having some responsibilities can give a productive and fulfilling way to spend your time.
If you know you’re helping out at the food bank for a few hours in the morning, you’re probably going to relax and rest the night before.
Likewise, if you’re doing a 10k or marathon to raise money for a cause, you’re hopefully making healthier choices with your diet and exercise so you’ll be ready for the big event.
Budget for More Giving
Hopefully, you see how giving is really a mutually beneficial thing with your finances and others’ as well.
If you have a chance this week, think about ways you can include more giving. Can you start by choosing a small amount to contribute?
Do you have some time to see what local charities are in the area that could you an extra pair of hands? Can you offer up some time to your kid’s school for tutoring or helping out with school projects?
However you decide to give, please remember that this is a wonderful way to help your neighbors and yourself!