6 Birds That Make Great Apartment Pets

If you’re looking to add an animal to your apartment, consider birds as they’re great companions and affectionate pets.

When you think of getting your first pet, cats or dogs are the first species of animals that come to mind. But, have you ever considered a bird? Birds are popular pets as they’re friendly and affectionate yet they don’t take up too much space in your apartment.

Birds are great pets for apartment dwellers because they’re low maintenance while still being extremely affectionate with big personalities. Whether you want a few smaller birds or one large parrot, it’s important to discover which popular pet bird species is right for you.

Throughout this article, we’ll talk to you about all the different species and help you decide which is the friendliest pet bird species for you.

Welcome to the bird world

Are you new to pet ownership? Don’t fret. There are several bird species and they all make for wonderful pets. But before you go to the local pet store or aviary, you need to ask yourself a few questions to determine which pet is the best one for you.

Don

Don

Does your apartment complex allow birds?

Before bringing any type of animal into your apartment, you need to read your lease agreement and talk to your landlord about the pet policy. The first thing to find out is if your apartment allows pets, and specifically if they allow birds.

If your apartment is not pet-friendly, don’t sneak a pet into the apartment as there are serious negative consequences. Once you get the green light that your apartment is pet-friendly, then you can continue your search for the perfect pet.

Can you afford it?

As with any pet, you need to do some math to ensure that your budget can stretch to accommodate your first bird. In addition to purchasing the cage, which varies in price, you’ll need to calculate the cost of birdseed, fresh fruit and veggies, toys for mental stimulation, veterinary care, cleaning and grooming costs and additional money for unexpected costs that may arise.

Different species can cost different amounts, too. Owning a bird can add up, so make sure you can afford the care needed to take care of your little feathered creature.

How much time do you have to care for it?

While some birds are more low maintenance than others, all birds need some human attention every day to thrive. Ask yourself how much time you actually have each day to care for your new pet and give it the human interaction it deserves.

If you only have an hour each day to dedicate to your pet, consider a parakeet as they’re a low-maintenance bird. On the other hand, if you have ample amounts of time at home to care for and train your bird, you may consider a parrot species.

Do your research to understand the level of training, stimulation and care each different bird species needs to thrive.

Birds need stimulation with toys.

Birds need stimulation with toys.

Where is it coming from?

We don’t just mean which pet store is your bird coming from. Unfortunately, birds are illegally obtained and sold. In fact, some birds — like the African grey parrot — are on the verge of extinction from the illegal bird trade. African greys are intelligent birds that people love as pets, but they face extinction in their natural habitat due to illegal activities.

Responsible pet owners will ask the breeder where the bird came from to ensure they aren’t contributing to the illegal bird trade. Another great option is to adopt a bird from a shelter. That way, you’re saving a life and helping to give a shelter pet a friendly new home.

Is the species compatible with children and other pets?

Are you looking to add some playful birds to your house? Well, if you have children or other animals in the house, you need to make sure that your new chirpy addition is good with other animals, children or other birds.

Don’t bring a new bird into the apartment and expect it to get along well with others. Some birds are great with other species while some are better suited alone.

For example, if you have a cat, it’s probably not smart to add a bird to the mix. The cat may view it as lunch. Save yourself some tears and heartache and make sure that all family members, pets included, are compatible with your new friend.

Top 6 best pet birds

OK, so you’ve decided that you want a pet bird and want to bring one home. But, what are the best pet birds for you? Here are some different options to consider.

Pionus parrots

Pionus parrots

Pionus parrots

  • Blue and green
  • Medium size
  • ~30-year life span

The Pionus parrot is part of the parrot family and is originally found in South America. This is a great species for families to own as the species isn’t prone to attaching to a single person, as other parrots sometimes do. This intelligent one is sure to charm you as it’s relatively quiet and reserved. This pet bird does need a lot of attention, otherwise, it can get moody and demanding.

If you’re looking for a great companion for the whole family, the Pionus parrot is a good choice to consider.

Cockatiel

Cockatiel

Cockatiels

  • Gray, white and yellow
  • Small size
  • ~ 20-year life span

These little birds are some of the most popular pets for bird owners. They’re friendly, lovable and great for apartment dwellers. They love whistling and will likely serenade you throughout the day. Part of the parrot family, they do require attention and stimulation but are on the smaller side, so they won’t take up too much space in your apartment. They cost anywhere from $30 to $250 to purchase.

If you’re a new pet owner, experts recommend getting a female cockatiel as they aren’t as moody and possessive as their male counterparts. They love company so you can even consider getting two so they have each other. If you want two cockatiels, a male and a female will work well together. Keep in mind that if you only get one, they may require more attention from you. However, you’ll have the perfect companion on your shoulder.

Hyacinth macaw

Hyacinth macaw

Hyacinth macaws

  • Blue
  • Large size
  • ~30+ year life span

Native to central South America, the hyacinth macaws are the larger cousins to something like the Pionus parrot. These beautiful birds are spectacular and full of personality. They love to play and be seen. The hyacinth macaw definitely needs attention from its pet owner.

The hyacinth macaw can live for at least 30 years or more and cost anywhere from $5,000 to $12,000 to purchase. They need a large cage that’s at least six feet, as they’re the largest parrot in the world.

If you’re experienced with birds and can give these gentle giants the proper care, then they do make great pets. But, if you’re looking for a friendly pet to start off with, this is not the right creature for you.

Scarlet macaw

Scarlet macaw

Scarlet macaws

  • Blue, red and green
  • Large size
  • 30+ year life span

When you think of a parrot, you probably imagine a rainbow-colored animal that can talk like and mimic humans. The scarlet macaw is that large, glorious, rainbow-colored bird. While they can talk, they don’t mimic the voice and tone (that’s the African grey!) of their owner.

Scarlet macaws are fun birds as they’re friendly, affectionate and intelligent. However, they’re not low maintenance and require a lot of time and human attention. The scarlet macaw will form strong bonds with you if it lives alone, just like it would bond with others if it were in the wild. If you’re looking for a long-term companion, consider this creature.

Green-cheeked conurre

Green-cheeked conurre

Green-cheeked conures

  • Green
  • Small or medium
  • ~20-year life span

This smaller species is a popular pet for families. They’re friendly birds that are affectionate and will dole out sweet gestures, like cuddling, when properly tamed. The green-cheeked conure will chatter but they’re good for apartment dwellers as they aren’t too noisy. These small birds cost anywhere from $150 t0 $300.

The green-cheeked conure is a playful, energetic and cuddly creature. While they demand attention, they just want love and if they live in positive environments, they’ll become your feathered best friend.

Amazon parrot

Amazon parrot

Amazon parrots

  • Green
  • Medium to large
  • 40+ year life span

Like most parrots, the Amazon parrot requires attention, proper mental stimulation and care. These mischievous birds like attention but are a great family pet. If you have the time to commit to it, the Amazon parrot is a friendly pet bird species to consider. You can teach it basic things and bond with this gorgeous creature.

Budgie

Budgie

What’s the easiest bird to have as a pet?

One of the easiest birds to have as a pet is the budgie, also known as a parakeet. These cute creatures are friendly pet bird species who love attention, food and play. If you’re looking for a new pet that’s easy but will give you love, cuddles and companionship, the bird world often recommends starting with a budgie.

Budgies want human interaction and don’t do well completely isolated. While they’re pretty low maintenance, they still want to interact with their humans and will be extremely affectionate with pet owners who show them love.

If you’re looking for an easy pet bird, consider the budgie or parakeet.

The best bird to have as a pet

What’s the best bird to have in your apartment? Well, that depends on what you’re looking for. Birds, in general, need attention, proper care and love from their owners. If you want a low-maintenance pet, then a parakeet is the best pet bird for you. If you want a lifelong companion you can train, then the African grey is a great option.

We can’t tell you the best bird as that depends on you and your lifestyle. But, we can walk you through all of the basic pros and cons to help you determine the best one for you.

Here are some of the common pros and cons bird owners share. Consider these when determining which feathered creature to take home.

Pros of having a feathered friend

Animals bring joy and birds are no exception. These are some of the best benefits of having a feathered friend in your apartment.

They can learn basic commands

Talking parrots aren’t just found on pirate ships. If you take the time to train your bird, you can teach it easy commands and different words and it’ll talk to you! This is one of the most fun and memorable aspects of owning a bird. We’d like to see a talking Golden Retriever!

Birds love a snuggle

Birds love a snuggle

They’re affectionate pets

You might think that only cats or dogs cuddle with their human, but you’d be wrong. Birds are affectionate creatures who will cuddle you if you love them. Let them perch on your shoulder or arm and you’ll have a featured friend who loves you just as much as you love them.

They’re extremely sweet

All birds have personalities and most are very sweet. Birds want love and attention, but in return, they’ll love you back. Some will charm you with little chirps while others will speak to you. They’re popular pets because of how sweet they are.

Cons of having a feathered friend

As with any pet, there are parts of pet parenting that aren’t so glamorous. Here are some cons to know.

Birds make a lot of noise.

Birds make a lot of noise.

They’re incredibly noisy

We all know that birds tweet, but some are very loud, especially when ignored. If you live in a small apartment space next to other neighbors, your bird’s continual chirping may not appeal to everyone.

They’re expensive

While some smaller birds cost $50 to purchase, their larger cousins can cost upwards of $12,000. And that’s just for the bird itself! That doesn’t factor in food, toys, vet bills, training and other pet-related costs. Birds are expensive to purchase and maintain, compared to other pets.

They require proper care and space

You don’t just buy a bird and call it good. Birds need the right cage with enough room to spread their wings, the right space and the right care. If you can’t commit to the proper training and attention needed, which is hours a day, then this is not the right animal for you.

Becoming a pet bird owner

Are you sold that these extremely sweet, feathered creatures are right for you? Make sure you’ve done your research, checked your budget and found the bird that you can grow to love and form strong bonds with. We know they won’t disappoint with their sweet and affectionate cuddles and beautiful birdsongs.

Source: rent.com

How to Become a 911 Operator

Ever consider what it’s like to be a 911 emergency operator?

Well now’s the time to think about it. The job is in high demand these days and it doesn’t require a college degree, saves lives and is never boring. The average starting salary is $38,000 and the national average pay is about $48,000, which isn’t super high but the job usually has good medical benefits.

In most states it takes about four to six weeks to get certified and then several months of on-the-job training. New hires are paid while they are trained.

Yes, there is certainly stress involved, but agencies have services to help employees deal with that. And not every call is a life-or-death situation; there are plenty of non-emergency situations such as stolen cars or lost dogs.

St. Johns County in Florida is just one of hundreds of agencies across the country looking to hire so-called “heroes in headsets.” It’s offering a starting salary of $41,000, which is boosted with overtime. There’s also a bonus of $2,000 for completing the certification.

“There has been a need for 911 professionals for as long as I can remember,” said April Heinze, Operations Director for 911 and Public Safety Answering Point at NENA, the National Emergency Number Association. That need has become much greater with COVID-19, which discouraged many from working in office settings or high-contact jobs like public safety. Thus the pool of potential employees has gotten smaller. “You’re starting to see more and more municipalities offering signing bonuses to encourage people to apply.”

For the right person, a job in emergency communications can become a rewarding career. As with healthcare, working in public safety is a chance to help people in need.

“When you go home at the end of your day you think about all of the people you helped. You may have saved lives that day. You are able to do a large amount of good on a daily basis,” Heinze said. Her organization represents tens of thousands of 911 first responders.

Here’s a link to 911-operator openings in each state. This isn’t comprehensive, however, so check the municipalities near you about openings, which are sometimes described as emergency dispatcher or 911 dispatcher.

How to Become a 911 Operator

First, be 18 and have a high school diploma or GED. The hiring process involves pre-employment testing and interviews. Most states have training requirements of four to six weeks in person or online. After that, employees train on the job for six to 12 months. Expect a drug screening.

Pros of Being a 911 Operator

The pros of being a 911 operator include good medical benefits, paid vacation time, job satisfaction especially if you like to help people and a lively workplace. It’s a job that’s rarely boring.

Good Benefits

The most common employers are police departments, public safety departments, fire stations, and emergency management call centers. Aside from a few nonprofit organizations, most of these agencies are operated by municipalities.

“In many cases there are many really good benefits. Some localities still have great retirement benefits. You typically get decent sick time and vacation time and can earn other types of time off as well,” Heinze said. “There’s opportunity for overtime and holiday pay. You get paid holidays off and may end up getting double time if you work on a holiday.”

Job Satisfaction

There’s no going home wondering if you made a difference in the world. “You have a great sense of self worth. You are able to do some fantastic things in your day,” Heinze said. “You make a difference in many people’s lives in one day’s time on a weekly and monthly and annual basis.”

Exciting Work

Along with the above tasks, emergency dispatchers must analyze situations and consider what more could be happening. Heinze pointed to a scenario in which a caller complains that her neighbor’s dog is barking incessantly. The 911 dispatcher has to figure out whether the dog’s owner could have had a medical emergency or there could be a break-in taking place.

Major Multitasking

This can be a pro or a con depending on the person. For some, emergency communications work might seem overwhelming. But for people who have a passion for operating on all cylinders, a 911 call taker offers a wide variety of work.

Once you are fully trained in emergency communications, you’ll take calls, dispatch emergency responders and check data and background records all at one time, said Heinze.

Cons of Being a 911 Operator

The cons are stressful work and long hiring process then after that on-the-job training and shadowing an experienced dispatcher. As you can imagine, the hiring personnel want to make sure that 911 operators can handle the pressure of hearing and helping people in distress.

Stress

Clearly, this isn’t an easy job. It’s very hard to take numerous calls that include trauma and crimes in process. Heinze said many municipalities have peer support groups, mentors and outside counseling to help dispatchers cope with the stress.

Long Hiring Process

This is not a job you can apply for and expect to start two weeks later. Heinze estimates it can take up to three months to be hired.

The pre-employment testing process includes several interviews, aptitude tests, a psychological evaluation and lengthy background checks. Some agencies go a step further, asking applicants who make it to the final stage of hiring to shadow someone on the job to make sure it’s something they want to do.

What Makes a Good Emergency Dispatcher?

The most important characteristic for an emergency dispatcher is the ability to be calm in stressful situations. A good emergency dispatcher has good communication skills and is personable. Typing is a required skill, as is empathy.

Here are more details on the skills employers will look for:

  • Customer service. If you’re good at customer service, you will likely make a good emergency call-taker.
  • Typing abilities. Most 911 dispatchers need to type between 30 to 45 words per minute without error.
  • Communication skills. Not only are you communicating with people in distress, you must be able to calmly talk with a wide variety of people. “You have to handle calls from every different generation, from a child caller to the elderly, someone with a mental disorder, intoxicated people, deaf or hard of hearing people,” Heinze said.
  • Empathy. It’s good to have a calming voice and provide an empathetic ear that’s ready to help.

These skills will give you a good foundation for your training, where you will learn about:

  • Telecommunications
  • Critical incident stress
  • Suicide intervention
  • Emergency medical dispatch
  • Advanced First Aid/CPR/AED
  • Hazardous materials
  • Domestic violence
  • Terrorism

Frequently Asked Questions (FAQs) About the 911 Operator Profession

We’ve rounded up answers to some of the most common questions about being a 911 dispatcher.

How Do I Become a 911 Operator?

Applicants must be 18 and have a high school diploma, GED or college degree to apply for 911 operator positions, and then go through a series of tests and interviews. Once you are hired, most states have training requirements of four to six weeks in a classroom or online setting. After that, employees will train on the job for six to 12 months.

What Are the Pros and Cons of Being a 911 Operator?

Pros include job satisfaction, good work benefits and an exciting, meaningful job. Cons are high stress, up to a three-month hiring process and major multitasking.

How Stressful Is It to Be a 911 Operator?

Yes, it can be stressful taking calls from people in life threatening situations. Agencies provide counseling, peer support groups and mentor support to help emergency dispatchers deal with stress.

Is a 911 Operator a Good Job?

It is a good job if it you are the kind of person who can remain calm in an emergency and you like to help people. Average starting pay is $38,000 for a meaningful career. In addition to the salary, most 911 operators work for a government agency with retirement benefits, sick time and paid vacation. There is also potential for overtime pay and the chance to advance to a higher salary.

Katherine Snow Smith is a freelance editor and reporter in North Carolina and Florida. She is author of Rules for the Southern Rulebreaker: Missteps & Lessons Learned.

Source: thepennyhoarder.com

Guide to Dental Loans

Finding out you need dental work can be scary — and scary expensive. Still, the pain and the price could get even worse if you put off getting care. And sometimes delaying just isn’t an option.

If you don’t have enough money stashed away in your emergency fund, and your insurance won’t cover all your costs, you may want to chew on the pros and cons of taking out a dental loan.

What Are Dental Loans?

Medical financing loans are personal loans that are used to pay for a variety of medical expenses, including dental work and related expenses.

Whether you’re feeling overwhelmed by the upfront cost of a root canal or crown, or you expect to pay a substantial amount over time for braces, aligners, or implants, a dental loan can be a quick and convenient way to get the financing you need.

With a dental loan, you can borrow money to pay for your care, then make monthly payments until the loan balance is paid off.

How Do Dental Loans Work?

Dental loans are usually unsecured personal loans, which means you don’t have to put up collateral to secure the loan. Approval for a loan for dental work will be based on your creditworthiness.

If you qualify, you’ll receive a lump sum of money that’s to be repaid in monthly installments consisting of principal and interest. Since dental loans typically have fixed interest rates, your payments should be the same amount each month throughout the repayment period.

What Can Dental Loans Be Used For?

You typically can use a personal loan to pay for just about anything as long as it’s legal and within the terms of your loan agreement. For example, you can use a personal loan to pay for wedding expenses, home improvements, or legal fees.

Costs related to your dental care are included in common uses for personal loans. These might include treatment — even for expensive elective or cosmetic procedures that may not be covered completely or at all by dental insurance, over-the-counter or prescription medications you might require, transportation. You can even use the funds for the milkshake and soup you might need after your procedure.

Here are approximate costs for some common procedures that could be paid for with a dental loan:

Porcelain Crown

The cost of a crown can vary based on the materials used to make it, as well as the size, shape, and location of the tooth that’s being replaced. Costs for an all-porcelain crown can range from $800 to $3,000. Dental insurance may cover some of that expense, unless the crown is strictly for cosmetic purposes.

Whitening

A basic teeth cleaning may be covered by dental insurance as part of your annual exam. But an in-office teeth bleaching (which can cost $300 to $500 or more) or a laser whitening (which averages $1,000), likely won’t be covered by insurance.

Root Canal

The cost of a root canal could range from about $700 to $1,800 if you don’t have dental insurance. The cost can depend on several factors, including which tooth is being worked on and if the work is done by a specialist. Insurance may take the cost down to between $200 and $1,500.

Aligners

Teeth aligners can be pretty pricey no matter which type you buy, but if you go with an in-office treatment, you can expect to pay between $2,500 and $8,000. At-home brands range from about $1,200 to $3,300. Your insurance provider may pay for some of those costs, but you should check your coverage before ordering.

Veneers

Veneers can range from $470 to $2,000 per tooth, depending on the type and how much prep work is involved. The cost generally is not covered by dental insurance.

Typical Dental Loan Application Process

Your dentist may offer an in-house financing plan to help with costs — especially if he or she specializes in cosmetic procedures. Or the practice may partner with a lender who provides these types of loans. You aren’t obligated to use your dentist’s financing plan, but you may want to check out what the practice is offering. You also can go online to compare dental loan offers from traditional and online lenders.

Compare Offers: Choosing the Right Loan

When you start shopping for loans for dental work, you can go to individual lenders’ websites to see what they have to offer or use a comparison site to conveniently check out multiple lenders.

Getting prequalified with a few different lenders can help you get the clearest idea of what’s available and what’s best for your needs. Lenders typically use a soft credit pull during the prequalification process, so it won’t affect your credit score.

Here are a few things to watch for as you shop for financing:

Annual Percentage Rate

A loan’s annual percentage rate (APR) tells you the amount of interest you can expect to pay on your loan over the course of one year, including any fees or charges you might incur. Because it gives you a complete picture of the cost of the loan (as opposed to just looking at the interest rate), the APR can be a useful tool for comparing various loan offers.

Recommended: APR vs. Interest Rate

Fees

Fees can add up quickly, and they can add to the cost of your loan. Some common fees to look out for could include an application fee, origination fee, late payment fee, returned payment fee, and a prepayment penalty. Low-fee or fee-free loans may save you money over the life of the loan.

Loan Amounts

Some lenders may have loan minimums that require you to borrow more than you need. Before you go loan shopping, you may want to get dental procedure cost estimates to get an idea of how much you’ll have to borrow. Then you can look for lenders who are willing to lend that amount.

Loan Terms

Another important factor to consider is the loan term, or how long you’ll be given to repay the money you’ve borrowed. Of course, you’ll want to find a loan term that feels comfortable (a longer-term can equal lower payments). But a longer-term also could increase the amount you pay in interest over the life of the loan. You may want to think about how the loan length could affect your future financial goals.

Eligibility Requirements

Before you settle on a particular personal loan for dental work, you may want to check out the lender’s eligibility requirements. In the process of checking your personal loan rate, most sites will review your credit scores, credit history, income, and other personal financial information to determine whether you qualify for a particular interest rate or other loan terms.

Many lenders will accept a fair credit score (a FICO® Score of 580 to 669 is considered fair), but a good FICO Score (670 to 739) could qualify you for a more favorable interest rate and other terms. If you have a poor score (lower than 580), lenders may consider you to be a high lending risk, which could affect your eligibility. You may be able to find a loan, but the interest rate will likely be more expensive.

Approval and Funding Timeline

If you can’t get your treatment until you can pay for it — and you need it soon — a quick approval time and rapid funding also could be an important considerations. One of the major pluses of using an online lender can be the convenience and fast application time. If you have all your information ready, it can be easy to apply using an online form. And if you qualify, the money generally can be available within a few days.

Customer Service

Does the lender have a reputation for good customer service? You may want to check into how various lenders deal with consumer questions and problems. At the same time, you can see if there are any perks to building a relationship with a lender that might benefit you in the future.

Applying for a Dental Loan

If you find a lender and loan terms you like, and you’re ready to apply, your next step will be to complete a formal application. You can expect to be asked to verify your identity, income, and current address, and it can make things easier if you gather up the necessary documents ahead of time. You’ll probably need your driver’s license, Social Security number, recent pay stubs and/or bank statements, and a utility bill or some other proof of address.

Once you apply, most lenders will do a hard credit check, which may cause your credit score to drop by a few points temporarily. The lender will evaluate your ability to repay the loan and, if you qualify, your loan will be funded.

Pros and Cons of Dental Loans

Whether you need money for a one-time emergency procedure or for a series of treatments that could add up to a big expense, a dental loan may be an option worth considering. Here are some pros and cons that could help you decide if a personal loan makes sense for your situation:

Pros

Convenient Online Comparison

Applying for a personal loan online can be convenient and quick. Many lenders offer personal loans that can be used for dental treatment, so you can shop for the loan amount and terms that best suit your needs.You may be able to get your approval within a few hours (maybe even a few minutes) and you could receive your money within a few days.

Competitive Terms

If you have a solid credit history, a stable income, and fair or better credit scores, you may qualify for a competitive interest rate and a repayment period you feel comfortable with. (The interest rate on a dental loan is typically lower than the interest rate on a credit card.)

Fixed Payments

With a dental loan, borrowers typically receive a lump sum of money that is repaid in fixed monthly payments. This can make it easier to budget and manage your payments.

Cons

Fees and Penalties

Some dental treatment loans come with fees and penalties that can drive up the overall cost of borrowing. You may be able to keep your costs down, though, by finding a low- or no-fee loan.

Alternatives May Cost Less

If you can qualify for a credit card with a low or 0% promotional rate for purchases, it may be a less expensive way to borrow money — at least for a while. Zero-interest credit cards charge no interest during an introductory period, which typically lasts from six to 18 months. Paying the balance in full within the promotional period is essential to making the most of an offer like this.

Fixed Payments

Having a fixed monthly payment can make budgeting easier, but it doesn’t provide flexibility if you can’t make that payment for some reason. A different financing option, such as a credit card, might offer more adaptable minimum monthly payments.

Pros and Cons of Dental Loans

Pros Cons
Easy to compare lenders online. Some dental loans have fees and penalties that can increase the overall cost.
Terms are competitive and interest rates are generally lower than on credit cards. Alternatives like credit cards with a 0% interest introductory rate may be less expensive.
Fixed monthly payments can make it easy to budget for the expense. Fixed payments don’t allow for budget shortfalls.

Alternatives to Personal Loans

If you can’t afford the dental work you need, there are options besides dental loans that you might want to check out. A few to consider include:

Credit Cards

If you already have a low-interest credit card, you may want to compare the interest you’d pay if you used that card vs. the cost of a dental loan. Or you might want to consider the pros and cons of applying for a low or 0% introductory-rate credit card — if you think you can pay off the balance during the designated promotional period. If you end up using a high percentage of your available credit, however, your credit score could be negatively affected.

Dental Office Financing

Your dentist may offer some type of in-house financing to patients who can’t afford the treatments they want or need. The practice might partner with a lender that offers loans for dental procedures, for example, or the dental office might suggest a medical credit card with a low or 0% introductory rate. These offers may be worth reviewing and comparing to similar options, as long as you’re clear on all the repayment terms.

Grants

There are grant programs aimed at helping seniors, adults and children living in low-income households, and those who have special needs. The Dental Lifeline Network is a nonprofit organization that provides access to dental care for people who can’t afford it. Some dentists also may offer partial grants to attract new patients who need extensive and expensive treatment.

Explore Personal and Dental Loans with SoFi

A dental loan can be a quick and convenient solution if you need cash to pay for an unexpected dental procedure or an elective treatment you’ve been thinking about for a while (like braces, aligners or implants). Whether you’re considering an expensive cosmetic procedure or you need a crown or root canal ASAP, SoFi may offer a personal loan rate that works for your unique financial situation.

There are no fees with SoFi Personal Loans, and borrowers have access to customer support seven days a week. The application can be completed online, and you can check your rate in just one minute.

Take the pain out of dental costs and check your rates on a personal loan from SoFi

FAQ

What credit score do you need for dental implant loans?

Many lenders will offer a dental loan to a borrower with a fair credit score. (A FICO Score of 580 to 669 is considered fair). But a good FICO Score (670 to 739) could improve your interest rate and other terms. If you have a poor score (lower than 580), lenders may consider you to be a higher risk, which could affect your eligibility.

Can you get your teeth fixed with no money?

You may be able to find a research clinic or university dental program that provides free services to volunteer patients who need care. And some dental practices may occasionally offer free care to low-income patients. There are also grants that could help cover costs.

Can you put dental work on a credit card?

Yes, you can use a regular credit card or a medical credit card to pay for dental work. But if you come close to using up the balance on your card, it could affect your credit utilization ratio, which can have a negative impact on your credit scores.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Should I File a Home Insurance Claim? Pros, Cons, When It Makes Sense

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You love the big cherry tree in your home’s front yard. Each spring, it explodes in a riot of bright pink flowers. Each summer, it drops sour fruit that perks up nicely in a sugary pie. 

Until it doesn’t. One summer day, your family comes home to find one of the cherry tree’s limbs in your living room, felled by a strong thunderstorm. The damage is extensive: two broken windows, a caved-in window sill, and serious water and impact damage to the living room floor and furniture.  

Once the initial shock wears off, you prepare to file a home insurance claim. But then, you start to ask questions. What if your insurance company denies the water damage portion of the claim? What if my home insurance premiums spike? How much will I have to pay out of pocket due to your policy’s high deductible? Should I even file this claim? 


Should I File a Home Insurance Claim?

The fact that a seemingly serious event like a tree falling through your house is such a close call teaches us an important lesson about homeowners insurance: It’s not always in your best interest to file a claim. Even when they cause short-term financial pain, some incidents aren’t worth filing over. 


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Plus, standard homeowners insurance policies exclude certain types of incidents that can cause serious financial stress for homeowners, such as floods and earthquakes. You need separate insurance policies if your home is at risk of these uncovered perils.

Pros & Cons of Filing a Homeowners Insurance Claim

If you’re considering filing a homeowners insurance claim, you’re probably facing a hefty bill for cleanup and repairs or a long list of damaged items to replace. Or perhaps you’re staring down a lawsuit brought by a guest or worker who sustained serious injuries on your property.  

In any case, you need to figure out whether it makes sense to go through with your claim — and fast. That means objectively assessing the pros and cons of doing so.

Pros of Filing a Home Insurance Claim

Depending on the circumstances, filing a home insurance claim has significant financial benefits.

  1. It Helps You Pay for Repairs. If your claim is approved, you can use the payout to offset the cost of repairs and restore your home to its previous condition. Without this financial assistance, you might find yourself cutting corners or making ill-advised financial moves to cover the cost, such as dipping into your 401(k). 
  2. It Helps You Replace Damaged or Stolen Goods. Your homeowners insurance policy could help offset the cost of replacing possessions damaged in a naturally occurring incident like a storm or fire. If your home was burglarized or vandalized, the proceeds could cover the cost of replacing stolen property as well. Depending on your policy, you could receive the items’ actual cash value or replacement cost, which is the cost of buying them new.
  3. Repairs Help Maintain Your Home’s Value. Homebuyers don’t pay top dollar for properties with fire-damaged siding, broken windows, or gaping holes in the roof. Your home insurance payout helps restore your home’s value with minimal out-of-pocket cost.

Cons of Filing a Home Insurance Claim

Filing a claim on your homeowners insurance policy isn’t always a slam dunk. The claims process has some hidden and not-so-hidden pitfalls that could leave you worse off than when you began.

  1. Your Insurance Premium May Go Up. Although this isn’t guaranteed, your homeowners insurance rates could rise after you file your claim. Exactly how much depends on the type of claim you file, the size of the claim, and your previous claims history. Generally, liability claims bump premiums more than claims related to fire, vandalism, or natural disasters.
  2. Too Many Claims Mean Your Policy May Not Be Renewed. A rate increase is unwelcome but manageable. A canceled policy is far more serious. If insurers see you as riskier than the typical homeowner, you could have trouble getting coverage on your own. Your lender might need to step in and take out a policy on your behalf — often at a much higher premium than your old policy.
  3. If You Get a Claim-Free Discount, You Could Lose It. Once you file a home insurance claim, your claims history is no longer spotless. That matters because many home insurance companies offer claim-free discounts for homeowners who never file claims.

When You SHOULD File a Home Insurance Claim

So, you’re thinking about filing a home insurance claim. How can you be sure you’re making the right call?

Use these tests to assess your would-be claim. The more that apply to you, the stronger your position.

Repair or Replacement Costs More Than Your Deductible

This is the first test your would-be claim must pass. If it doesn’t, there’s no point in filing a claim.

Your deductible is the amount you must pay out of pocket before your home insurance kicks in. Your policy documents should clearly specify this amount. It’s either expressed as a flat dollar amount or a percentage of the policy’s total coverage amount.

Dollar amount deductibles typically range from $500 to $2,500, with $1,000 being a common value. Some policies have more than one deductible, depending on the type of property damage. Separate “wind and hail” deductibles are common, for example — and often higher than the standard deductible.

If your home sustained significant damage or loss, your claim value should easily exceed your deductible. For example, if you expect repairs to cost $20,000 and your deductible is $2,000, your insurance company covers $18,000 — 90% of the total cost.

On the other hand, if you expect repairs to cost $3,000, your insurance company only covers $1,000 — 33% of the total cost. That’s a closer call because filing a claim could result in higher home insurance premiums that eventually offset your payout. 

The Event Is Covered by Your Policy

Your homeowners insurance company isn’t obligated to provide reimbursement for every type of damage or loss to your home. In fact, while your policy covers a lot, it probably excludes specific events, known as exclusions.

Common exclusions include but aren’t limited to:

  • Earthquake
  • Flood
  • Damage and liability issues caused by poor maintenance 
  • Insect infestations
  • Mold
  • Personal property losses and liability issues caused by power outages or power surges
  • Intentional damage caused by a resident
  • Damage caused by war or nuclear fallout
  • Injuries caused by aggressive dogs
  • Issues related to or caused by home-based businesses
  • Costs related to building code violations

You may need to purchase separate insurance policies to cover some of these perils. For example, your lender may require you to carry flood insurance if you live in a recognized flood zone. 

Other add-on policies are optional but often a good idea. For example, if you run a business out of your home, you should consider carrying business insurance to protect against inventory or equipment losses or damage to your workspace.

You’ve Suffered Significant Loss or Damage

Often, it’s not a close call. If your home is seriously damaged or destroyed in an event that’s covered by your policy, you absolutely should file a homeowners insurance claim. Otherwise, you’ll be on the hook for tens or hundreds of thousands of dollars in repair or replacement costs.

If you have any doubts about the extent of the damage to your home, get a few repair quotes from building contractors in your area. You can also talk to your insurance agent or ask your home insurance company to send out an insurance claims adjuster before you file.

You Haven’t Made a Claim in the Past 5 Years

Approved homeowners insurance claims typically remain on your insurance record for five years after they’re made. 

This record is known as the Comprehensive Loss Underwriting Exchange (CLUE) database. When you make a claim, your insurer checks its own records and the CLUE database to see whether you’ve made any other claims in the past five years.

If you have made a claim in the past five years, expect your insurance premiums to spike after your second claim is approved. 

For fire, theft, and general liability claims, the increase could amount to 50% or more of your previous premium. A weather-related claim won’t increase your premium quite as much, but you’ll still notice a jump.


When You Should NOT File a Home Insurance Claim

It’s not always worth it to file a home insurance claim. 

Certain situations, such as minor damage that costs less to repair than your insurance deductible, all but rule out a claim. Others, such as an active claim history, bring an elevated risk of a denied claim.

If any of these situations apply to you, think twice about filing a home insurance claim.

Repair or Replacement Costs Less Than Your Deductible

If the damage or loss is relatively minor, your deductible could be too high to bother filing a claim. There’s no point in filing a claim — and potentially increasing your policy premiums — if you won’t even receive a payout.

Even if it’s a close call, be mindful of the potential for your premiums to go up after a successful claim. A claim worth $20,000 probably makes sense, but a claim worth $3,000 or $4,000 might actually set you back.

Damage Was Caused by Lack of Maintenance or Normal Wear & Tear

An event that appears to be covered by your policy might not be if the insurance adjuster can argue that it was caused by neglect, poor maintenance, or even normal wear and tear.

For example, let’s say your home loses heat during the winter, causing a water pipe to burst in your ceiling. Homeowners insurance policies generally cover this type of event — if the burst pipe was in good condition to begin with. If the pipe was already heavily corroded, your insurer might blame you for not replacing it sooner. They could deny the claim altogether.

The Event Isn’t Covered by Your Policy

It’s often quite easy to figure out whether a particular event is eligible for home insurance coverage. If your home collapses in an earthquake and your policy specifically rules out claims for earthquake damage, you’re out of luck. Hopefully, you have earthquake insurance.

But closer calls are more common than you’d think. If your resident termite colony worsens an existing foundation issue that eventually spurs a costly repair, your insurer could argue that the entire claim falls under the insect damage exclusion. 

When in doubt, it’s worthwhile to begin the claims process anyway. If you don’t like what the insurance adjuster has to say, you can drop the claim without increasing your insurance rates. 

Or you can hire a public adjuster — an independent insurance adjuster who can make a stronger case to your insurance company. Public adjusters usually work on contingency, so they only get paid if your claim is successful.

You’ve Made Multiple Claims in the Past 5 Years

The more homeowners insurance claims you make in a five-year period, the more your insurance rates increase after a successful new claim. 

Make too many claims in too short a period, and your insurance company could drop you altogether. If you’re unable to find replacement coverage, your lender could take out a policy on your behalf. Expect this lender policy to cost a lot more than your old policy.

All that said, you shouldn’t automatically rule out a new homeowners insurance claim just because you recently got an insurance payout or two. If your home is seriously damaged or destroyed by a covered event, it’s probably still worth it to file. Just be ready to pay higher premiums on the back end.


Final Word

Some say the best way to save money on homeowners insurance is not to file a claim at all. There’s a grain of truth to that, but don’t take it too literally. 

If your home is seriously damaged in an event that’s covered by your policy, a home insurance claim is absolutely warranted. Taking the time to file could save you tens or hundreds of thousands of dollars in out-of-pocket expenses, keeping you on track to reach your long-term financial goals.

Still, it’s always a good idea to take stock of the situation before filing a claim. If your home sustains damage due to an event not covered by your policy or the cost of repairs doesn’t exceed your policy’s deductible, a claim isn’t in the cards. And even if filing a claim would be profitable on paper, it’s worth considering the long-term costs — in the form of higher premiums for years to come.

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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com

Guide to Cross-Collateralized Loans

One type of loan that isn’t often discussed is cross-collateralized, also known as cross-collateral loans, which is a type of secured loan. If someone is looking to take out multiple loans through the same financial institution, it’s important that they understand what cross-collateralization is and when it can happen.

So, what is a cross-collateralized loan? Keep reading to find out.

What Is Cross-Collateralization?

Cross-collateralization involves a borrower using an asset they already used as collateral on a loan as collateral again for a second loan. Collateral is an asset that acts as a loan guarantee. If the borrower fails to make their loan payments, the lender has the option to seize the collateral or to force the sale of the collateral to recoup its losses.

In short, cross-collateralization involves using the same collateral for one loan to serve as collateral for another loan at the same time.

Recommended: Using Collateral on a Personal Loan

How Does Cross-Collateralization Work?

The way that cross-collateralization works is that the same form of collateral is used to back more than one loan. The collateral used needs to guarantee the loan value. For example, if someone takes out an auto loan, the car (which equates to the value of the loan) is used as collateral. For cross-collateralization to work, that car also needs to be worth the same or more than the value of the second loan.

A common example of cross-collateralization is a second mortgage. If someone takes out a second mortgage on their home, the home is going to be used as collateral for both the primary mortgage used to purchase the home and the new second mortgage.

While cross-collateralization can involve using the same type of asset against one another, it doesn’t have to happen this way. For example, a lender can use a borrower’s car as collateral for a new loan that isn’t an auto loan, even though the car is already being used as collateral for the auto loan.

When Is Cross-Collateralization Used?

It’s more common to come across cross-collateralization in practice at credit unions and auto lenders. Unlike banks, credit unions are owned by the members of the credit union. To help protect this group against various losses, credit unions often use cross-collateralization to gain some extra security. Credit unions tend to have more favorable loan terms than larger financial institutions and banks, and members may secure those better terms by agreeing to cross-collateralization.

An example of this would be if a credit union member wants to finance their car through their credit union. Fast forward six months, and they want to take out an unsecured loan with a low-interest rate. The reason the credit union can offer an unsecured loan to the member at such a great rate is because they are actually securing the loan with the existing collateral from the member’s car loan.

The lender is legally obligated to disclose cross-collateralization, and the borrower must consent. It’s important to ask about cross-collateralization practices when taking out a new loan, however. A lender could include a clause in the loan agreement allowing it to cross-collateralize any collateral you used on any loan with that lender, and the wording in such a clause can vary by lender.

Once a form of collateral is being used to secure multiple loans, the borrower can’t sell that collateral. This means that a borrower who thinks their vehicle is securing only their auto loan may be unable to sell the vehicle if it is acting as collateral for another loan, whether or not the lender informed them verbally that cross-collateralization was happening.

How Can You Get Out of Cross-Collateral Loans?

Getting out of a cross-collateralized loan without paying it off in full can be very difficult. And it may not be as simple as transferring the loan to another lender. It’s usually quite challenging and expensive to move a cross-collateral loan to another lender, which can leave a borrower stuck with whatever rates and terms were offered to them when they took out the loan. That’s why it’s a really good idea to read the fine print of any loan agreements before signing and confirming whether a bank or credit union plans to start a cross-collateral loan.

Pros and Cons of Cross-Collateral Loan

Pros Cons
Typically easy to qualify for Larger risk of losing collateral
Potentially low cost Tied to just one lender
Allows borrowers to leverage existing assets Unfavorable terms may unchangeable without a change in lender

There are some major advantages and disadvantages associated with cross-collateral loans that are worth taking into consideration before signing any loan documents.

Benefits

Some of the benefits of a cross-collateral loan include:

•   Ease of qualification. Because cross-collateral loans are secured, they can be easier to qualify for than unsecured loans, for which the lender takes on more risk. Applicants with low credit scores may find it easier to qualify for this type of loan than some others.

•   Lower cost. General cross-collateral loans tend to be less expensive than unsecured loans. This type of loan tends to come with lower interest rates, which could equal savings over the life of the loan, and longer repayment terms, which could lower monthly payments but increase total interest cost.

•   Allows borrowers to leverage existing assets. Cross-collateral loans use an asset that is already trapped in an existing loan, and allows the borrower to get more value out of it by using it to ensure more loans.

Drawbacks

There are some serious downsides associated with cross-collateral loans that are worth thinking carefully about.

•   Larger risk. If the borrower isn’t able to repay their debts, the lender can seize the asset acting as collateral.

•   Tied to just one lender. With a cross-collateral loan, multiple of the borrower’s assets are being financed through one lender which can make it hard and expensive to ever switch to a lender offering more favorable terms.

•   Unfavorable terms. Collateralized loans, especially cross-collateral loans, can have stricter terms to meet in order to protect the lenders on subsequent loans.

Cross-Collateralization and Bankruptcy

Cross-collateralization can become particularly complex during bankruptcy. For example, a borrower of a cross-collateral loan (using their car as collateral) who files for Chapter 7 bankruptcy will be required to either reaffirm the debt or surrender their car. If they choose to reaffirm the debt and that loan is with a financial institution that has secured other sources of debt to the car, then they will need to pay off all of those debts in order to keep their car. Don’t forget, that borrower may not even be aware that some of their loans were cross-collateralized.

How cross-collateralization affects bankruptcy depends on the type of bankruptcy filed. Anyone dealing with cross-collateralization complications during bankruptcy may find that consulting a bankruptcy attorney will help them determine what their next steps should be.

Recommended: Getting Approved for a Personal Loan After Bankruptcy

Applying for SoFi’s Personal Loans

For someone looking for an alternative to a cross-collateralized loan with their existing bank or credit union, taking out an unsecured personal loan through a different financial institution may be one option to consider. Personal loans can be used to finance a variety of purchases, with the exception of higher education expenses and home purchases, typically.

SoFi Personal Loans offer fixed rates, no fees, and a variety of repayment terms.

Check your rate on a personal loan from SoFi

FAQ

Is cross-collateralization legal?

Yes, cross-collateralization is legal. Many banks and credit unions practice cross-collateralization.

Who can and can’t cross-collateralize?

Borrowers who already have a secured loan at a financial institution may qualify for cross-collateralization. Lenders don’t always inform borrowers verbally that they are participating in cross-collateralization, so it’s worth confirming whether or not this is happening before taking on a second loan through the same lender.

Can you get out of cross-collateralization?

A major downside of cross-collateralized loans is that once a borrower has multiple sources of debt through the same lender that are cross-collateral loans, it can be difficult to move them to another lender. Paying off the loan is usually the best option for getting out of this type of loan.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Can I Pay off a Personal Loan Early?

Perhaps you’ve gotten a raise or a bonus, and you want to pay off the remaining balance on a personal loan. Is that possible? The short answer is “yes” and, in many cases, it can be a wise decision.

But if there’s a prepayment penalty, then this loan payoff may be more costly than you’d expect. Learning how a prepayment penalty might affect your payoff amount can be helpful in making the decision whether or not to pay off a personal loan early. And if you’re gathering information about a personal loan early payoff without incurring a prepayment penalty, you do have some options.

Is It Possible to Pay Off a Personal Loan Early?

It’s unlikely that a lender would refuse an early loan payoff, so yes, you can pay off a personal loan early. What you have to calculate, though, is whether it’s financially advantageous to do so. If a personal loan early payoff triggers a prepayment penalty, it might not make financial sense to do so.

Overview of Prepayment Penalties

It may sound strange that a lender would include this kind of penalty in a loan agreement in the first place.

Some lenders may, though, to ensure you’ll pay a certain amount of interest before the loan is paid off. It is an extra fee that, when charged, helps lenders recoup more money from borrowers.

You can find out if you’d be charged with a prepayment penalty by looking at the loan agreement you signed with the lender.

If you have one, the penalty could be in effect for the entire loan term or for a portion of it, depending upon how it’s defined in the loan agreement.

Does Paying off a Personal Loan Early Affect Your Credit Score?

Personal loans are a type of installment debt. In the calculation of your credit score, your payment history on installment debt is taken into account. If you’ve made regular, on-time payments, your credit score will likely be positively affected while you’re making payments during the loan’s term.

However, once an installment loan is paid off, it’s marked as closed on your credit report — “in good standing” if you made the payments on time — and will eventually be removed from your credit report after about 10 years. Paying off the personal loan early might cause it to drop off of your credit report a few earlier than it would have and no longer help your credit score.

If I Pay Off a Personal Loan Early, Does My Interest Rate Decrease?

Since a personal loan is an installment loan with a fixed end date, if you pay off a personal loan early, you won’t pay less interest. You won’t owe any interest anymore because the loan will be paid in full.

Recommended: What are the average personal loan rates?

Advantages of Paying off a Personal Loan Early

There are definitely some advantages to personal loan early payoff. One obvious benefit is that you could save on interest over the life of the loan. A $10,000 loan at 8% for 5 years (60 monthly payments) would accrue $2,166.50 in total interest. If you could pay an extra $50 each month, you could pay the loan off 14 months early and save $518.42 in interest.

Not owing that debt anymore can be a psychological comfort, potentially lowering bill-paying stress. If you’re able to make that money available for something else each month — maybe creating an emergency fund or adding to your retirement account — it might even turn into a financial gain.

If you no longer owe the personal loan debt, you’ll essentially be lowering your debt-to-income ratio, which could positively affect your credit score.

Disadvantages of Paying off a Personal Loan Early

If your personal loan agreement includes a prepayment penalty, paying off your personal loan early might not be financially advantageous. Some prepayment penalty clauses are for specific time frames in the loan’s term, e.g., during the first year. If you pay off the loan during the penalty time frame, it could cost you just as much money as it might if you had just paid regular principal and interest payments over the life of the loan.

You might be thinking of a personal loan early payoff so you can put your money to work somewhere else. But if the interest rate on the personal loan is relatively low, it might make financial sense to put your extra money toward higher-interest debt, or to contribute enough to an employer-sponsored retirement plan so you can get the employer match, if one is offered. If you don’t have an emergency fund yet, you might also consider starting one with a bit of extra money each month until it’s at a comfortable level.

Another thing to consider is whether paying off your personal loan early will hurt your credit. As mentioned above, making regular, on-time payments to an installment loan like a personal loan can have a positive effect on your credit score. But when the loan is paid off, and marked as such on your credit report, it’s not as much help.

Advantages of early personal loan payoff Disadvantages of early personal loan payoff
Interest savings over the life of the loan Possible prepayment penalty
Could alleviate debt-related stress Extra money could be better used in another financial tool
Lowering your debt-to-income ratio Removing a positive payment history on the loan early could negatively affect your credit
More cushion in your monthly budget Taking money from another budget category might leave an unintentional financial gap

Things To Ask Yourself Before Paying off a Personal Loan Early

Everyone’s financial situation is different. Priorities that are important to you might be less so to someone else. Considering how a personal loan early payoff might affect you can be a good way to start making the decision.

Will Paying off a Personal Loan Early Put Me at Risk?

There can be some drawbacks to paying off a personal loan early — some that might be considered risks.

If you’re thinking of putting extra money toward a personal loan balance, but you don’t have any money set aside in an emergency fund, that’s a financial risk. If you encounter an expensive, necessary financial need without the means to pay for it, you might be tempted to use high-interest debt like a credit card.

If you consider it risky to pay more than you need to for something, then paying a prepayment penalty could be considered a financial risk. If paying a loan early will cost you extra money, you might think about where that money could be better spent.

Will Paying off a Personal Loan Early Improve My Debt-To-Income Ratio?

Lowering your debt-to-income ratio can have a positive effect on your credit score, and paying off a loan will accomplish this. But you might weigh that positive against any potential negative effect that might come with paying off your personal loan early, such as not having a positive payment history included on your credit score after your loan is closed.

Does Paying off a Personal Loan Early Have Clear Benefits?

There are absolutely clear benefits to paying off a personal loan early. Saving money in interest charges over the life of the loan is at the top of the list, as long as any savings is not offset by a prepayment penalty.

Having more money in your monthly budget — since you wouldn’t have that loan payment due each month — might lower your financial stress.

Types of Prepayment Penalties

If and how a prepayment penalty is charged on a personal loan will be stipulated in the loan agreement. Reviewing this document carefully is a good way to find out if the penalty could be charged and how your lender would calculate it.

If you can’t find the information in the loan agreement, asking your lender for the specifics of a prepayment penalty and for them to point out where it is in the loan agreement is another way to be certain you have the right information to make a decision.

There are a few different ways a lender might calculate a prepayment penalty fee.

Interest costs

In this case, the lender would base the fee on the interest you would have paid if you had made regular payments over the total term. So, if you paid your loan off one year early, the penalty might be 12 months’ worth of interest.

Percentage of your remaining balance

This is a common way for prepayment penalties to work on mortgages, for example, and you’d be charged a percentage of what you still owe on your loan.

Flat fee

Under this scenario, you’d have to pay a predetermined flat fee for your penalty. So, whether you still owed $9,000 on your personal loan or $900, you’d have to pay the same penalty.

Avoiding Prepayment Penalties

Finding out whether a prospective lender charges a prepayment penalty — and not using that lender if it does — is at the top of the list of ways to avoid a prepayment penalty.

If you’ve already taken out a loan that includes a prepayment penalty, there are some options.

First, you could simply decide not to pay the loan off early. This means you’ll need to continue to make regular payments on the loan rather than paying off the balance sooner, but this will allow you to avoid the prepayment penalty fee.

You could also talk to the lender and ask if the prepayment penalty could be waived, but there is no guarantee that this strategy will succeed.

If your prepayment penalty is not applicable throughout the entire term of the loan, you could wait until it expires before paying off your remaining balance.

Another strategy is calculating the amount of remaining interest owed on your personal loan and comparing that to the prepayment penalty. You may find that paying the loan off early, even if you do have to pay the prepayment penalty, would save money over continuing to make regular payments.

Types of Personal Loans

In general, there are two types of personal loans — secured and unsecured. Secured loans are backed by collateral, which is an asset of value owned by the loan applicant, such as a vehicle, real estate, or an investment account. Unsecured personal loans, on the other hand, are backed only by the borrower’s creditworthiness, with no asset attached to the loan.

You might hear unsecured personal loans referred to as signature loans, good faith loans, or character loans. Typically, these are installment loans the borrower repays at a certain interest rate over a predetermined period of time.

Personal Loan Uses

Acceptable uses of personal loan funds cover a wide range, including, but not limited to:

•   Consolidation of high-interest debt.

•   Medical expenses not covered by health insurance.

•   Home renovation or repair projects.

•   Wedding expenses.

While there are benefits to borrowing a personal loan, it might not always be the right financial move for everyone. Personal loans offer a lot of flexibility, but they are still a form of debt, so it’s a good idea to weigh the pros and cons before signing a personal loan agreement.

Awarded Best Personal Loan of 2022 by NerdWallet.
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Personal Loans at SoFi

If you’re looking for an unsecured personal loan with no prepayment penalties, a personal loan from SoFi might fit your financial need. There are no application fees, no origination fees, and no hidden fees attached to unsecured personal loans with SoFi.

A SoFi Personal Loan can be used to consolidate credit card debt, make home improvements, pay for relocation costs, repair your vehicle, make a major personal purchase and more.

The Takeaway

If you’re in a secure enough financial position to be able to pay off your personal loan early, that’s terrific. But before you do, it’s a good idea to calculate whether it’s a good financial decision or not. A prepayment penalty could take a bite out of any savings you might see on interest costs.

Comparing interest rates for a personal loan, along with lenders’ fees and other charges, including prepayment penalties, is a good way to find the lender that meets your financial needs.

Ready to explore SoFi personal loans? Check your rate in just one minute.

FAQ

Is it good to repay a personal loan early?

Paying off a personal loan early can be a good financial decision, as long as any prepayment penalty charge doesn’t cost more than you might pay in interest.

If I pay off a personal loan early do I pay less interest?

Paying off a personal loan early doesn’t affect the interest rate you’ve been paying up until that point. It would mean, however, that the total amount of interest you’d pay over the life of the loan would be less than anticipated.

Does paying off a personal loan early hurt your credit?

Because making regular, on-time payments on an installment loan such as a personal loan is a positive record on your credit report, removing that history early can have a slight negative affect on your credit.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Source: sofi.com

Conventional Mortgage Loan – What It Is & Different Types for Your Home

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Dig Deeper

Additional Resources

The mortgage industry is rife with jargon and acronyms, from LTV to DTI ratios. One term you’ll hear sooner or later is “conventional mortgage loan.”

It sounds boring, but it couldn’t be more important. Unless you’re a veteran, live in a rural area, or have poor credit, there’s a good chance you’ll need to apply for a conventional mortgage loan when buying your next house.

Which means you should know how conventional mortgages differ from other loan types.


What Is a Conventional Mortgage Loan?

A conventional loan is any mortgage loan not issued or guaranteed by the Federal Housing Administration (FHA), Department of Veterans’ Affairs (VA), or U.S. Department of Agriculture (USDA). 


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Most conventional loans are backed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). These government-sponsored enterprises guarantee the loans against default, which lowers the cost for borrowers by lowering the risk for lenders.

As a general rule, stronger borrowers tend to use these private conventional loans rather than FHA loans. The exception concerns well-qualified borrowers who qualify for subsidized VA or USDA loans due to prior military service or rural location.


How a Conventional Mortgage Loan Works

In a typical conventional loan scenario, you call up your local bank or credit union to take out a mortgage. After asking you some basic questions, the loan officer proposes a few different loan programs that fit your credit history, income, loan amount, and other borrowing needs. 

These loan programs come from Fannie Mae or Freddie Mac. Each has specific underwriting requirements.

After choosing a loan option, you provide the lender with a filing cabinet’s worth of documents. Your file gets passed from the loan officer to a loan processor and then on to an underwriter who reviews the file. 

After many additional requests for information and documents, the underwriter signs off on the file and clears it to close. You then spend hours signing a mountain of paperwork at closing. When you’re finished, you own a new home and a massive hand cramp.  

But just because the quasi-governmental entities Fannie Mae and Freddie Mac back the loans doesn’t mean they issue them. Private lenders issue conventional loans, and usually sell them on the secondary market right after the loan closes. So even though you borrowed your loan from Friendly Neighborhood Bank, it immediately transfers to a giant corporation like Wells Fargo or Chase. You pay them for the next 15 to 30 years, not your neighborhood bank. 

Most banks aren’t in the business of holding loans long-term because they don’t have the money to do so. They just want to earn the points and fees they charge for originating loans — then sell them off, rinse, and repeat. 

That’s why lenders all follow the same loan programs from Fannie and Freddie: so they can sell predictable, guaranteed loans on the secondary market. 


Conventional Loan Requirements

Conventional loans come in many loan programs, and each has its own specific requirements.

Still, all loan programs measure those requirements with a handful of the same criteria. You should understand these concepts before shopping around for a mortgage loan. 

Credit Score

Each loan program comes with a minimum credit score. Generally speaking, you need a credit score of at least 620 to qualify for a conventional loan. But even if your score exceeds the loan program minimum, weaker credit scores mean more scrutiny from underwriters and greater odds that they decline your loan. 

Mortgage lenders use the middle of the scores from the three main credit bureaus. The higher your credit score, the more — and better — loan programs you qualify for. That means lower interest rates, fees, down payments, and loan requirements. 

So as you save up a down payment and prepare to take out a mortgage, work on improving your credit rating too.  

Down Payment

If you have excellent credit, you can qualify for a conventional loan with a down payment as low as 3% of the purchase price. If you have weaker credit, or you’re buying a second home or investment property, plan on putting down 20% or more when buying a home.

In lender lingo, bankers talk about loan-to-value ratios (LTV) when describing loans and down payments. That’s the percentage of the property’s value that the lender approves you to borrow.

Each loan program comes with its own maximum LTV. For example, Fannie Mae’s HomeReady program offers up to 97% LTV for qualified borrowers. The remaining 3% comes from your down payment. 

Debt-to-Income Ratio (DTI)

Your income also determines how much you can borrow. 

Lenders allow you to borrow up to a maximum debt-to-income ratio: the percentage of your income that goes toward your mortgage payment and other debts. Specifically, they calculate two different DTI ratios: a front-end ratio and a back-end ratio.

The front-end ratio only features your housing-related costs. These include the principal and interest payment for your mortgage, property taxes, homeowners insurance, and condo- or homeowners association fees if applicable. To calculate the ratio, you take the sum of those housing expenses and divide them over your gross income. Conventional loans typically allow a maximum front-end ratio of 28%. 

Your back-end ratio includes not just your housing costs, but also all your other debt obligations. That includes car payments, student loans, credit card minimum payments, and any other debts you owe each month. Conventional loans typically allow a back-end ratio up to 36%. 

For example, if you earn $5,000 per month before taxes, expect your lender to cap your monthly payment at $1,400, including all housing expenses. Your monthly payment plus all your other debt payments couldn’t exceed $1,800. 

The lender then works backward from that value to determine the maximum loan amount you can borrow, based on the interest rate you qualify for. 

Loan Limits

In 2022, “conforming” loans allow up to $647,200 for single-family homes in most of the U.S. However, Fannie Mae and Freddie Mac allow up to $970,800 in areas with a high cost of living. 

Properties with two to four units come with higher conforming loan limits:

Units Standard Limit Limit in High CoL Areas
1 $647,200 $970,800
2 $828,700 $1,243,050
3 $1,001,650 $1,502,475
4 $1,244,850 $1,867,275

You can still borrow conventional mortgages above those amounts, but they count as “jumbo” loans — more on the distinction between conforming and non-conforming loans shortly.

Private Mortgage Insurance (PMI)

If you borrow more than 80% LTV, you have to pay extra each month for private mortgage insurance (PMI).

Private mortgage insurance covers the lender, not you. It protects them against losses due to you defaulting on your loan. For example, if you default on your payments and the lender forecloses, leaving them with a loss of $50,000, they file a PMI claim and the insurance company pays them to cover most or all of that loss. 

The good news is that you can apply to remove PMI from your monthly payment when you pay down your loan balance below 80% of the value of your home. 


Types of Conventional Loans

While there are many conventional loan programs, there are several broad categories that conventional loans fall into.

Conforming Loan

Conforming loans fit into Fannie Mae or Freddie Mac loan programs, and also fall within their loan limits outlined above.

All conforming loans are conventional loans. But conventional loans also include jumbo loans, which exceed the conforming loan size limits. 

Non-Conforming Loan

Not all conventional loans “conform” to Fannie or Freddie loan programs. The most common type of non-conforming — but still conventional — loan is jumbo loans.

Jumbo loans typically come with stricter requirements, especially for credit scores. They sometimes also charge higher interest rates. But lenders still buy and sell them on the secondary market.

Some banks do issue other types of conventional loans that don’t conform to Fannie or Freddie programs. In most cases, they keep these loans on their own books as portfolio loans, rather than selling them. 

That makes these loans unique to each bank, rather than conforming to a nationwide loan program. For example, the bank might offer its own “renovation-perm” loan for fixer-uppers. This type of loan allows for a draw schedule during an initial renovation period, then switches over to a longer-term “permanent” mortgage.

Fixed-Rate Loan

The name speaks for itself: loans with fixed interest rates are called fixed-rate mortgages.

Rather than fluctuating over time, the interest rate remains constant for the entire life of the loan. That leaves your monthly payments consistent for the whole loan term, not including any changes in property taxes or insurance premiums.

Adjustable-Rate Mortgages (ARMs)

As an alternative to fixed-interest loans, you can instead take out an adjustable-rate mortgage. After a tempting introductory period with a fixed low interest rate, the interest rate adjusts periodically based on some benchmark rate, such as the Fed funds rate.

When your adjustable rate goes up, you become an easy target for lenders to approach you later with offers to refinance your mortgage. When you refinance, you pay a second round of closing fees. Plus, because of the way mortgage loans are structured, you’ll pay a disproportionate amount of your loan’s total interest during the first few years after refinancing.


Pros & Cons of Conventional Home Loans

Like everything else in life, conventional loans have advantages and disadvantages. They offer lots of choice and relatively low interest, among other upsides, but can be less flexible in some important ways.

Pros of Conventional Home Loans

As you explore your options for taking out a mortgage loan, consider the following benefits to conventional loans.

  • Low Interest. Borrowers with strong credit can usually find the best deal among conventional loans.
  • Removable PMI. You can apply to remove PMI from your monthly mortgage payments as soon as you pay down your principal balance below 80% of your home’s value. In fact, it disappears automatically when you reach 78% of your original home valuation.
  • No Loan Limits. Higher-income borrowers can borrow money to buy expensive homes that exceed the limits on government-backed mortgages.
  • Second Homes & Investment Properties Allowed. You can borrow a conventional loan to buy a second home or an investment property. Those types of properties aren’t eligible for the FHA, VA, or USDA loan programs.
  • No Program-Specific Fees. Some government-backed loan programs charge fees, such as FHA’s up-front mortgage insurance premium fee.
  • More Loan Choices. Government-backed loan programs tend to be more restrictive. Conventional loans allow plenty of options among loan programs, at least for qualified borrowers with high credit scores.

Cons of Conventional Home Loans

Make sure you also understand the downsides of conventional loans however, before committing to one for the next few decades.

  • Less Flexibility on Credit. Conventional mortgages represent private markets at work, with no direct government subsidies. That makes them a great choice for people who qualify for loans on their own merits but infeasible for borrowers with bad credit. 
  • Less Flexibility on DTI. Likewise, conventional loans come with lower DTI limits than government loan programs. 
  • Less Flexibility on Bankruptcies & Foreclosures. Conventional lenders prohibit bankruptcies and foreclosures within a certain number of years. Government loan programs may allow them sooner. 

Conventional Mortgage vs. Government Loans

Government agency loans include FHA loans, VA loans, and USDA loans. All of these loans are taxpayer-subsidized and serve specific groups of people. 

If you fall into one of those groups, you should consider government-backed loans instead of conventional mortgages.

Conventional Loan vs. VA Loan

One of the perks of serving in the armed forces is that you qualify for a subsidized VA loan. If you qualify for a VA loan, it usually makes sense to take it. 

In particular, VA loans offer a famous 0% down payment option. They also come with no PMI, no prepayment penalty, and relatively lenient underwriting. Read more about the pros and cons of VA loans if you qualify for one. 

Conventional Loan vs. FHA Loan

The Federal Housing Administration created FHA loans to help lower-income, lower-credit Americans achieve homeownership. 

Most notably, FHA loans come with a generous 96.5% LTV for borrowers with credit scores as low as 580. That’s a 3.5% down payment. Even borrowers with credit scores between 500 to 579 qualify for just 10% down. 

However, even with taxpayer subsidies, FHA loans come with some downsides. The underwriting is stringent, and you can’t remove the mortgage insurance premium from your monthly payments, even after paying your loan balance below 80% of your home value.

Consider the pros and cons of FHA loans carefully before proceeding, but know that if you don’t qualify for conventional loans, you might not have any other borrowing options. 

Conventional Loan vs. USDA Loan

As you might have guessed, USDA loans are designed for rural communities. 

Like VA loans, USDA loans have a famous 0% down payment option. They also allow plenty of wiggle room for imperfect credit scores, and even borrowers with scores under 580 sometimes qualify. 

But they also come with geographical restrictions. You can only take out USDA loans in specific areas, generally far from big cities. Read up on USDA loans for more details.


Conventional Mortgage Loan FAQs

Mortgage loans are complex, and carry the weight of hundreds of thousands of dollars in getting your decision right. The most common questions about conventional loans include the following topics.

What Are the Interest Rates for Conventional Loan?

Interest rates change day to day based on both benchmark interest rates like the LIBOR and Fed funds rate. They can also change based on market conditions. 

Market fluctuations aside, your own qualifications also impact your quoted interest rate. If your credit score is 800, you pay far less in interest than an otherwise similar borrower with a credit score of 650. Your job stability and assets also impact your quoted rate. 

Finally, you can often secure a lower interest rate by negotiating. Shop around, find the best offers, and play lenders against one another to lock in the best rate.

What Documents Do You Need for a Conventional Loan?

At a minimum, you’ll need the following documents for a conventional loan:

  • Identification. This includes government-issued photo ID and possibly your Social Security card.
  • Proof of Income. For W2 employees, this typically means two months’ pay stubs and two years’ tax returns. Self-employed borrowers must submit detailed documentation from their business to prove their income. 
  • Proof of Assets. This includes your bank statements, brokerage account statements, retirement account statements, real estate ownership documents, and other documentation supporting your net worth.
  • Proof of Debt Balances. You may also need to provide statements from other creditors, such as credit cards or student loans.

This is just the start. Expect your underwriter to ask you for additional documentation before you close. 

What Credit Score Do You Need for a Conventional Loan?

At a bare minimum, you should have a credit score over 620. But expect more scrutiny if your score falls under 700 or if you have a previous bankruptcy or foreclosure on your record.

Improve your credit score as much as possible before applying for a mortgage loan.

How Much Is a Conventional Loan Down Payment?

Your down payment depends on the loan program. In turn, your options for loan programs depend on your credit history, income, and other factors such as the desired loan balance.

Expect to put down a minimum of 3%. More likely, you’ll need to put down 10 to 20%, and perhaps more still.

What Types of Property Can You Buy With a Conventional Loan?

You can use conventional loans to finance properties with up to four units. That includes not just primary residences but also second homes and investment properties. 

Do You Need an Appraisal for a Conventional Loan?

Yes, all conventional loans require an appraisal. The lender will order the appraisal report from an appraiser they know and trust, and the appraisal usually requires payment up front from you. 


Final Word

The higher your credit score, the more options you’ll have when you shop around for mortgages. 

If you qualify for a VA loan or USDA loan, they may offer a lower interest rate or fees. But when the choice comes down to FHA loans or conventional loans, you’ll likely find a better deal among the latter — if you qualify for them. 

Finally, price out both interest rates and closing costs when shopping around for the best mortgage. Don’t be afraid to negotiate on both. 

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

G. Brian Davis is a real estate investor, personal finance writer, and travel addict mildly obsessed with FIRE. He spends nine months of the year in Abu Dhabi, and splits the rest of the year between his hometown of Baltimore and traveling the world.

Source: moneycrashers.com