Originators predict more outsourcing and consolidation in 2021

Managing costs and creating operational efficiencies are foremost on the minds of the mortgage lenders, with the ongoing pandemic creating pressure on their profit margins.

Outsourcing was the leading choice for producing those efficiencies, by 41% of those surveyed for Altisource Portfolio Solution’s latest the State of the Originations Industry report.

That edged out using more technology and digital services to reduce the need for staff, cited by 39% of the respondents to the survey of 200 people conducted between Aug. 17 and Aug. 29, 2020. Those shares were unchanged compared with the previous year’s survey.

“With costs rising and revenues down in many cases due to the pandemic, it makes sense. Rather than spending time and money hiring and training full-time staff, service providers can support and strengthen an originator’s workforce by handling a portion of the lender’s volume,” the report said. “In this way, an originator can avoid the typical hiring/firing cycles that significantly distract an organization from closing more loans.”

When asked what they predict for the mortgage business over the next two-to-three years, 80% of the respondents — up from 79% the previous year — said originators will outsource more to third-party vendors to better deal with market fluctuation, especially as total volume is expected to shrink due to lower refinance activity.

That was the third most-cited prediction, with the No. 1 being that growing costs will drive smaller lenders out of the business or into merging with other lenders. That was cited by 84% of respondents, up four percentage points from the previous year’s survey.

Sandwiched between those two choices was the return of private money into the mortgage securitization market, predicted by 82% of the respondents. That share was unchanged from the previous year, but it was the most cited answer for that period.

Ranked fourth among the predictions cited by the respondents was the likelihood of a market crash in the next 24 months, at 68%, while fifth, at 64%, was a new option for the latest survey, nonbanks will dominate the originations business over the next two-to-three years.

Prior surveys gave respondents the option that big banks will come back in and dominate the mortgage business; in the previous year’s survey, that was the second most cited response at 81%.

Regulatory constraints was the most-cited challenge in today’s mortgage market, by 27% of respondents. This was followed by technology at 24%; staff retention, 21%; margin compression — which is why many lenders are worried about costs — 19%; capacity, 10%; and other, 1%

When asked to rank the initiatives that are most important in differentiating their individual business compared with their competition, technology enhancements edged out customer service, 21% to 20%. Pricing was third at 19%, followed by marketing at 11%, quickest timeline at 10% and artificial intelligence at 9%.

In terms of what makes mortgage products more attractive to consumers, 38% said improved customer experience was key. Lower loan costs was cited by 23%, followed by fully digital closings at 22% and fasting closings at 18%.

“While the road ahead is still unclear, as always, mortgage companies that are ready for whatever comes will have the best chance of thriving in the market,” Brian Simon, president of three Altisource subsidiaries including the Lenders One cooperative, said in a press release.

Source: nationalmortgagenews.com

Florida’s Most Expensive Home Is a $140M Oceanfront Mansion in Palm Beach

A once-vacant oceanfront lot in Palm Beach, FL, that sold for $37 million in 2017 now boasts a brand-new home.

And given the locale, it’s no surprise that the finished product is now Florida’s most expensive home. Listed for a whopping $140 million, the mansion has toppled the long reign of the $115 million Ziff family compound in nearby Manalapan, FL.

Construction recently finished on the residence on N. County Road, and the result is a two-story masterpiece, with clean lines and an abundance of glass.

At just over 21,000 square feet, the price per square foot on the mansion is a hefty $6,646.

For comparison’s sake, the median listing price per square foot is currently $835 in the city of Palm Beach.

Beach at property in Palm Beach, FL
Beach at property in Palm Beach, FL










Outdoor space
Outdoor space






The home sits on 2.25 acres of land, with 150 feet of direct beachfront on the part of the coastline known as the North End’s Billionaires’ Row.



Outside, there are mature trees, plenty of parking for guests, and a four-car garage.













Inside, there are nine bedrooms, 12 full bathrooms, and seven half-bathrooms. All feature high-end finishes, along with contemporary stylings. At least one bathroom has a sauna.

Several of the bedrooms lead right out onto outdoor spaces.

Living space
Living space


Living space
Living space


Living space
Living space


The layout is open, with several well-defined living spaces designed for the utmost in relaxation.



Dining area
Dining area


In addition to the eat-in kitchen, there’s a pantry nearby, with plenty of storage.

For dining, the home provides several choices. The waterfall kitchen island has seating for at least five, and there’s another sit-down dining area, as well as a formal dining room.

Exercise room
Exercise room




Game room
Game room


For entertainment, a buyer can work up a sweat in the exercise room, watch a movie in the media room or outside in the outdoor theater, read a book in the library, or enjoy a drink at one of the many bars.

Outdoor space
Outdoor space


Outdoor space
Outdoor space


Outdoor space
Outdoor space






As for outdoor living, several floor-to-ceiling, impact-resistant glass doors open to create a seamless flow between the indoors and outdoors.

There’s also oodles of outdoor space to hear the waves crash on the sand while sitting on a deck, relaxing in the hot tub, or sunning by the pool.









There’s no need to leave the property to go to a spa or salon, given the number of amenities in the home.

According to published reports, before he became president, Donald Trump sold the land along with two other parcels to the Russian billionaire Dmitry Rybolovlev in 2008.

After his purchase, Rybolovlev razed a house of Trump’s on one of the lots in 2016.

Public records show that a Rybolovlev trust sold the land where the Sunshine State’s most expensive house now sits in October 2017, reportedly to a homebuilding company.

The broker Lawrence Moens, of Lawrence A. Moens Associates, holds the listing.







Living space
Living space




Living space
Living space


Living space
Living space



Watch: Maryland’s Most Expensive Property Includes Several Historic Buildings

  • For more photos and details, check out the full listing.
  • Homes for sale in Palm Beach, FL
  • Learn more about Palm Beach, FL

Source: realtor.com

Ua-low mortgage rates are likely to stick around, thanks to the Fed – Yahoo Finance


3 ‘Strong Buy’ Stocks With 8% Dividend Yield

Let’s talk portfolio defense. After last week’s social flash mob market manipulation, that’s a topic that should not be ignored. Now, this is not to say that the markets are collapsing. After 2% losses to close out last week’s Friday session, this week’s trading kicked off with a positive tone, as the S&P 500 rose 1.5% and the Nasdaq climbed 2.5%. The underlying bullish factors – a more stable political scene, steadily progressing COVID vaccination programs – are still in play, even if they are not quite as strong as investors had hoped. While increased volatility could stay with us for a while, it’s time to consider defensive stocks. And that will bring us to dividends. By providing a steady income stream, no matter what the market conditions, a reliable dividend stock provides a pad for your investment portfolio when the share stop appreciating. With this in mind, we’ve used the TipRanks database to pull up three dividend stocks yielding 8%. That’s not all they offer, however. Each of these stocks has scored enough praise from the Street to earn a “Strong Buy” consensus rating. New Residential Investment (NRZ) We’ll start by looking into the REIT sector, real estate investment trusts. These companies have long been known for dividends that are both high-yield and reliable – as a result of company compliance with tax rules, that require REITs to return a certain percentage of profits directly to shareholders. NRZ, a mid-size company with a market cap of $3.9 billion, holds a diverse portfolio of residential mortgages, original loans, and mortgage loan servicing rights. The company is based in New York City. NRZ holds a $20 billion investment portfolio, which has yielded $3.4 billion in dividends since the company’s inception. The portfolio has proven resilient in the face of the corona crisis, and after a difficult first quarter last year, NRZ saw rising gains in Q2 and Q3. The third quarter, the last reported, showed GAAP income of $77 million, or 19 cents per share. While down year-over-year, this EPS was a strong turnaround from the 21-cent loss reported in the prior quarter. The rising income has put NRZ in a position to increase the dividend. The Q3 payment was 15 cents per common share; the Q4 dividend was bumped up to 20 cents per common share. At this rate, the dividend annualizes to 80 cents and yields an impressive 8.5%. In another move to return profits to investors, the company announced in November that it had approved $100 million in stock repurchases. BTIG analyst Eric Hagen is impressed with New Residential – especially by the company’s sound balance sheet and liquidity. “[We] like the opportunity to potentially build some capital through retained earnings while maintaining a competitive payout. We think the dividend increase highlights the strengthening liquidity position the company sees itself having right now… we expect NRZ has been able to release capital as it’s sourced roughly $1 billion of securitized debt for its MSR portfolio through two separate deals since September,” Hagen opined. In line with his comments, Hagen rates NRZ a Buy, and his $11 price target implies an upside of 17% for the year ahead. (To watch Hagen’s track record, click here) It’s not often that the analysts all agree on a stock, so when it does happen, take note. NRZ’s Strong Buy consensus rating is based on a unanimous 7 Buys. The stock’s $11.25 average price target suggests ~20% upside from the current share price of $9.44. (See NRZ stock analysis on TipRanks) Saratoga Investment Corporation (SAR) With the next stock, we move to the investment management sector. Saratoga specializes in mid-market debt, appreciation, and equity investments, and holds over $546 million in assets under management. Saratoga’s portfolio is wide ranging, and includes industrials, software, waste disposal, and home security, among others. Saratoga saw a slow – but steady – rebound from the corona crisis. The company’s revenues fell in 1Q20, and have been slowly increasing since. The fiscal Q3 report, released early in January, showed $14.3 million at the top line. In pre-tax adjusted terms, Saratoga’s net investment income of 50 cents per share beat the 47-cent forecast by 6%. They say that slow and steady wins the race, and Saratoga has shown investors a generally steady hand over the past year. The stock has rebounded 163% from its post-corona crash low last March. And the dividend, which the company cut back in CYQ2, has been raised twice since then. The current dividend, at 42 cents per common share, was declared last month for payment on February 10. The annualized payment of $1.68 gives a yield of 8.1%. Analyst Mickey Schleien, of Ladenburg Thalmann, takes a bullish view of Saratoga, writing, “We believe SAR’s portfolio is relatively defensive with a focus on software, IT services, education services, and the CLO… SAR’s CLO continues to be current and performing, and the company is seeking to refinance/upsize it which we believe could provide upside to our forecast.” The analyst continued, “Our model anticipates SAR employing cash and SBA debentures to fund net portfolio growth. We believe the Board will continue to increase the dividend considering the portfolio’s performance, the existence of undistributed taxable income, and the economic benefit of the Covid-19 vaccination program.” To this end, Schleien rates SAR a Buy along with a $25 price target. This figure implies a 20% upside from current levels. (To watch Schleien’s track record, click here) Wall Street’s analysts agree with Schleien on this stock – the 3 other reviews on record are Buys, and the analyst consensus rating is a Strong Buy. Saratoga’s shares are trading for $20.87, and carry an average price target of $25.50, suggesting an upside of 22% for the next 12 months. (See SAR stock analysis on TipRanks) Hercules Capital (HTGC) Last but not least is Hercules Capital, a venture capital company. Hercules offers financing support to small, early-stage client companies with scientific bent; Hercules’ clients are in life sciences, technology, and financial SaaS. Since getting started in 2003, Hercules has invested over $11 billion in more than 500 companies. The quality of Hercules’ portfolio is clear from the company’s recent performance. The stock has bounced back fully from the corona crisis of last winter, rebounding 140% from its low point reached last April. Earnings have also recovered; for the first nine months of 2020, HTGC posted net investment income of $115 million, or 11% higher than the same period of 2019. For dividend investors, the key point here is that the net investment income covered the distribution – in fact, it totaled 106% of the base distribution payout. The company was confident enough to boost the distribution with a 2-cent supplemental payment. The combined payout gives a $1.28 annualized payment per common share, and a yield of 8.7%. In another sign of confidence, Hercules completed a $100 million investment grade bond offering in November, raising capital for debt pay-downs, new investments, and corporate purposes. The bonds were offered in two tranches, each of $50 million, and the notes are due in March of 2026. Covering the stock for Piper Sandler, analyst Crispin Love sees plenty to love in HTGC. “We continue to believe that HTGC’s focus on fast growing technology and life sciences companies sets the company up well in the current environment. In addition, Hercules is not dependent on a COVID recovery as it does not have investments in “at-risk” sectors. Hercules also has a strong liquidity position, which should allow the company to act quickly when it finds attractive investment opportunities,” Love commented. All of the above convinced Love to rate HTGC an Outperform (i.e. Buy). In addition to the call, he set a $16 price target, suggesting 9% upside potential. (To watch Love’s track record, click here) Recent share appreciation has pushed Hercules’ stock right up to the average price target of $15.21, leaving just ~4% upside from the trading price of $14.67. Wall Street doesn’t seem to mind, however, as the analyst consensus rating is a unanimous Strong Buy, based on 6 recent Buy-side reviews. (See HTGC stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Source: finance.yahoo.com

Slowing mortgage forbearance improvement sets up recovery challenges

With the first round of CARES Act-related forbearance periods approaching their 12-month expiration, millions of distressed borrowers will need further measures in order to become current on their loans, according to Black Knight.

The latest Mortgage Monitor showed a delinquency rate of 6.08% in December, up from 3.4% a year ago. Seriously delinquent mortgages — those late in payment by 90 days or more — totaled 3.43 million by 2020’s end, down from the year’s post-housing crash era high of 3.6 million.

The forbearance program gave about 6.7 million distressed borrowers an “essential lifeline” during the pandemic, Ben Graboske, president of data and analytics at Black Knight, said in the report. Of those distressed borrowers, over 1 million are still in active forbearance from before the pandemic shutdowns while 4.9 million entered coronavirus-related forbearance starting in March 2020.

Among the 4.9 million, 2.3 million removed themselves from forbearance and are performing, 590,000 are paid off, 186,000 are in active loss mitigation, and 64,000 are delinquent. However, 1.478 million extended their forbearance term and 254,000 are on their original term. Most plans carry a 12-month limit and an inflection point for the industry quickly approaches.

“The various moratoriums, which have kept foreclosure actions at bay over the past 10 months, may be lulling us into a false sense of security about the scope of the post-forbearance problem we will need to confront come the end of March,” Graboske said. “This clearly shows the industry-wide need for post-forbearance waterfalls to determine borrower need and readiness while foreclosure moratoriums are still in place.”

The rate of those exiting forbearance slowed recently, pointing to a higher share of forborne borrowers under distress. At the current pace, without any additional government extensions, over 600,000 seriously delinquent borrowers would roll off forbearance protections on March 31 and leave 2.5 million in active plans.

Bans on foreclosure held December’s rate at 0.33% — the lowest recorded percentage since the end of 2005 — dropping it from the year-ago rate of 0.46%. A total of 7,100 borrowers started the foreclosure process compared to 4,400 in November and 39,500 in December 2019. Industry experts anticipate loss mitigation programs to be installed to avoid consumers losing their homes en masse.

“We don’t currently expect huge swaths of foreclosures, we think that the workout process and the improvement in the economy will help a significant number of households,” Doug Duncan, SVP and chief economist at Fannie Mae, said in an interview. “We learned a lot from experimenting in the 2009 period after the global financial crisis. We still have the knowledge of those workout programs and different ones were successful for different households.”

Source: nationalmortgagenews.com

Say What? Home-Buying Lingo You Should Know

Need a crash course on real estate terms? This glossary will get you started.

DTI, PMI, LTV … TBH, it can be hard to keep all this stuff straight. This lexicon of real estate terms and acronyms will help you speak the language like a pro.

Appraisal management company (AMC): An institution operated independently of a lender that, once notified by a lender, orders a home appraisal.

Appraisal: An informed, impartial and well-documented opinion of the value of a home, prepared by a licensed and certified appraiser and based on data about comparable homes in the area, as well as the appraiser’s own walkthrough.

Approved for short sale: A term that indicates that a homeowner’s bank has approved a reduced listing price on a home, and the home is ready for resale.

American Society of Home Inspectors (ASHI): A not-for-profit professional association that sets and promotes standards for property inspections and provides educational opportunities to its members. (i.e., Look for this accreditation or something similar when shopping for a home inspector.)

Attorney state: A state in which a real estate attorney is responsible for closing.

Back-end ratio: One of two debt-to-income ratios that a lender analyzes to determine a borrower’s eligibility for a home loan. The ratio compares the borrower’s monthly debt payments (proposed housing expenses, plus student loan, car payment, credit card debt, maintenance or child support and installment loans) to gross income.

Buyers market: Market conditions that exist when homes for sale outnumber buyers. Homes sit on the market a long time, and prices drop.

Cancellation of escrow: A situation in which a buyer backs out of a home purchase.

Capacity: The amount of money a home buyer can afford to borrow.

Cash-value policy: A homeowners insurance policy that pays the replacement cost of a home, minus depreciation, should damage occur.

Closing: A one- to two-hour meeting during which ownership of a home is transferred from seller to buyer. A closing is usually attended by the buyer, the seller, both real estate agents and the lender.

Closing costs: Fees associated with the purchase of a home that are due at the end of the sales transaction. Fees may include the appraisal, the home inspection, a title search, a pest inspection and more. Buyers should budget for an amount that is 1% to 3% of the home’s purchase price.

Closing disclosure (CD): A five-page document sent to the buyer three days before closing. This document spells out all the terms of the loan: the amount, the interest rate, the monthly payment, mortgage insurance, the monthly escrow amount and all closing costs.

Closing escrow: The final and official transfer of property from seller to buyer and delivery of appropriate paperwork to each party. Closing of escrow is the responsibility of the escrow agent.

Comparative market analysis (CMA): An in-depth analysis, prepared by a real estate agent, that determines the estimated value of a home based on recently sold homes of similar condition, size, features and age that are located in the same area.

Compliance agreement: A document signed by the buyer at closing, in which they agree to cooperate if the lender needs to fix any mistakes in the loan documents.

Comps: Or comparable sales, are homes in a given area that have sold within the past six months that a real estate agent uses to determine a home’s value.

Condo insurance: Homeowners insurance that covers personal property and the interior of a condo unit should damage occur.

Contingencies: Conditions written into a home purchase contract that protect the buyer should issues arise with financing, the home inspection, etc.

Conventional 97: A home loan that requires a down payment equivalent to 3% of the home’s purchase price. Private mortgage insurance, which is required, can be canceled when the owner reaches 80% equity.

Conventional loan: A home loan not guaranteed by a government agency, such as the FHA or the VA.

Days on market (DOM): The number of days a property listing is considered active.

Depository institutions: Banks, savings and loans, and credit unions. These institutions underwrite as well as set home loan pricing in-house.

Down payment: A certain portion of the home’s purchase price that a buyer must pay. A minimum requirement is often dictated by the loan type.

Debt-to-income ratio (DTI): A ratio that compares a home buyer’s expenses to gross income.

Earnest money: A security deposit made by the buyer to assure the seller of his or her intent to purchase.

Equity: A percentage of the home’s value owned by the homeowner.

Escrow account: An account required by a lender and funded by a buyer’s mortgage payment to pay the buyer’s homeowners insurance and property taxes.

Escrow agent: A neutral third-party officer who holds all paperwork and funding in trust until all parties in the transaction fulfill their obligations as part of the transfer of property ownership.

Escrow state: A state in which an escrow agent is responsible for closing.

Fannie Mae: A government-sponsored enterprise chartered in 1938 to help ensure a reliable and affordable supply of mortgage funds throughout the country.

Federal Reserve: The central bank of the United States, established in 1913 to provide the nation with a safer, more flexible and more stable monetary and financial system.

Federal Housing Administration (FHA): A government agency created by the National Housing Act of 1934 that insures loans made by private lenders.

FHA 203(k): A rehabilitation loan backed by the federal government that permits home buyers to finance money into a mortgage to repair, improve or upgrade a home.

Foreclosure: A property repossessed by a bank when the owner fails to make mortgage payments.

Freddie Mac: A government agency chartered by Congress in 1970 to provide a constant source of mortgage funding for the nation’s housing markets.

Funding fee: A fee that protects the lender from loss and also funds the loan program itself. Examples include the VA funding fee and the FHA funding fee.

Gentrification: The process of rehabilitation and renewal that occurs in an urban area as the demographic changes. Rents and property values increase, culture changes and lower-income residents are often displaced.

Guaranteed replacement coverage: Homeowners insurance that covers what it would cost to replace property based on today’s prices, not original purchase price, should damage occur.

Homeowners association (HOA): The governing body of a housing development, condo or townhome complex that sets rules and regulations and charges dues and special assessments used to maintain common areas and cover unexpected expenses respectively.

Home equity line of credit (HELOC): A revolving line of credit with an adjustable interest rate. Like a credit card, this line of credit has a limit. There is a specified time during which money can be drawn. Payment in full is due at the end of the draw period.

Home equity loan: A lump-sum loan that allows the homeowner to use the equity in their home as collateral. The loan places a lien against the property and reduces home equity.

Home inspection: A nondestructive visual look at the systems in a building. Inspection occurs when the home is under contract or in escrow.

Homeowners insurance: A policy that protects the structure of the home, its contents, injury to others and living expenses should damage occur.

Housing ratio: One of two debt-to-income ratios that a lender analyzes to determine a borrower’s eligibility for a home loan. The ratio compares total housing cost (principal, homeowners insurance, taxes and private mortgage insurance) to gross income.

In escrow: A period of time (30 days or longer) after a buyer has made an offer on a home and a seller has accepted. During this time, the home is inspected and appraised, and the title searched for liens, etc.

Jumbo loan: A loan amount that exceeds the Fannie Mae/Freddie Mac limit, which is generally $425,100 in most parts of the U.S.

Listing price: The price of a home, as set by the seller.

Loan estimate: A three-page document sent to an applicant three days after they apply for a home loan. The document includes loan terms, monthly payment and closing costs.

Loan-to-value ratio (LTV): The amount of the loan divided by the price of the house. Lenders reward lower LTV ratios.

Market value coverage: Homeowners insurance that covers the amount the home would go for on the market, not the cost to repair, should damage occur.

Mechanic’s lien: A hold against a property, filed in the county recorder’s office by someone who’s done work on a home and not been paid. If the homeowner refuses to pay, the lien allows a foreclosure action.

Mortgage broker: A licensed professional who works on behalf of the buyer to secure financing through a bank or other lending institution.

Mortgage companies: Lenders who underwrite loans in-house and fund loans from a line of credit before selling them off to a loan buyer.

Mortgage interest deduction: Mortgage interest paid in a year subtracted from annual gross salary.

Mortgage interest rate: The price of borrowing money. The base rate is set by the Federal Reserve and then customized per borrower, based on credit score, down payment, property type and points the buyer pays to lower the rate.

Multiple listing service (MLS): A database where real estate agents list properties for sale.

Origination fee: A fee, charged by a broker or lender, to initiate and complete the home loan application process.

Piggyback loan: A combination of loans bundled to avoid private mortgage Insurance. One loan covers 80% of the home’s value, another loan covers 10% to 15% of the home’s value, and the buyer contributes the remainder.

Principal, interest, property taxes and homeowners insurance (PITI): The components of a monthly mortgage payment.

Private mortgage insurance (PMI): A fee charged to borrowers who make a down payment that is less than 20% of the home’s value. The fee, 0.3% to 1.5% of the yearly loan amount, can be canceled in certain circumstances when the borrower reaches 20% equity.

Points: Prepaid interest owed at closing, with one point representing 1% of the loan. Paying points, which are tax deductible, will lower the monthly mortgage payment.

Pre-approval: A thorough assessment of a borrower’s income, assets and other data to determine a loan amount they would qualify for. A real estate agent will request a pre-approval or pre-qualification letter before showing a buyer a home.

Pre-qualification: A basic assessment of income, assets and credit score to determine what, if any, loan programs a borrower might qualify for. A real estate agent will request a pre-approval or pre-qualification letter before showing a buyer a home.

Property tax exemption: A reduction in taxes based on specific criteria, such as installation of a renewable energy system or rehabilitation of a historic home.

Round table closing: All parties (the buyer, the seller, the real estate agents and maybe the lender) meet at a specified time to sign paperwork, pay fees and finalize the transfer of homeownership.

Sellers market: Market conditions that exist when buyers outnumber homes for sale. Bidding wars are common.

Short sale: The sale of a home by an owner who owes more on the home than it’s worth (i.e., “underwater” or “upside down”). The owner’s bank must approve a lower listing price before the home can be sold.

Special assessment: A fee charged by a condo complex HOA when cash on reserve is not enough to cover unexpected expenses.

Tax lien: The government’s legal claim against property when the homeowner neglects or fails to pay a tax debt.

Third-party review required: Verbiage included in a home listing to indicate that the lender has not yet approved the home for short sale. The seller must submit the buyer’s offer to the lender for approval.

Title insurance: Insurance that protects the buyer and lender should an individual or entity step forward with a claim that was attached to the property before the seller transferred legal ownership of the property or “title” to the buyer.

Transfer stamps: The form in which transfer taxes are paid by the home buyer. Stamps can also serve as proof of transfer tax payment.

Transfer taxes: Fees imposed by the state, county or municipality on transfer of title.

Under contract: A period of time (30 days or longer) after a buyer has made an offer on a home and a seller has accepted. During this time, the home is inspected and appraised, and the title is searched for liens, etc.

Underwater or upside down: A situation in which a homeowner owes more for a property than it’s worth.

Underwriting: A process a lender follows to assess a home loan applicant’s income, assets and credit, and the risk involved in offering the applicant a mortgage.

VA home loan: A home loan partially guaranteed by the United States Department of Veteran Affairs and offered by private lenders, such as banks and mortgage companies.

VantageScore: A credit scoring model lenders use to make lending decisions. A borrower’s score is based on bill-paying habits, debt balances, age, variety of credit accounts and number of inquiries on credit reports.

Walkthrough: A buyer’s final inspection of a home before closing.

Water certificate: A document that certifies that a water account has been paid in full. The seller must produce this certificate at closing.


Source: zillow.com

What Does Comprehensive Auto Insurance Cover?

Nearly all states require car owners to carry auto insurance. Where auto insurance is mandatory, drivers must carry liability policies that compensate victims harmed by their actions behind the wheel for medical expenses and property damage.

Some states require additional coverages, such as personal injury protection — another layer of medical coverage for the insured party and passengers in their vehicle — and uninsured/underinsured motorist coverage, which compensates the policyholder for expenses that would normally be covered by another motorist’s nonexistent or inadequate auto insurance policy.

No states require two other common types of auto insurance coverage: collision coverage and comprehensive coverage. But that doesn’t mean these coverages lack value. Both can reduce the net cost of major repairs to newer, relatively valuable vehicles.

Of course, both forms of protection come with a tangible cost: higher auto insurance premiums. That raises the stakes for drivers uncertain about whether optional car insurance coverage is right for them.

This cost-benefit analysis is particularly uncertain for those considering adding comprehensive coverage, which isn’t as widely understood as collision coverage. The first step to determining whether comprehensive coverage makes sense for you, then, is to understand what it is, what it does and does not cover, and how much it could add to your total auto insurance costs.

Comprehensive Coverage: What It Is and What It Covers

Comprehensive auto insurance coverage pays for repair and replacement costs associated with vehicle damage not caused by rollovers or collisions with other vehicles or stationary objects. Incidents that may result in damage covered by a comprehensive policy include but aren’t limited to:

  • Wildlife Collisions. Collision coverage doesn’t extend to collisions with nonhuman animals. Given the amount of carnage deer and other large animals cause on America’s roadways, that’s a notable oversight. Comprehensive coverage includes such damage to your vehicle.
  • Other Animal-Related Damage. Stationary vehicles are vulnerable to damage by animals as well. I personally learned this the hard way after discovering that a mouse or squirrel had chewed through my seldom-used vehicle’s plant-based engine harness, causing more than $2,000 in entirely preventable damage. Raccoons, bears, and other large pests have been known to ransack unsecured vehicles, too.
  • Noncollision Damage Caused by Objects. This is a broad and fairly ill-defined damage category that can include windshield, paint, and body damage caused by rocks, asphalt chunks, branches, and other nonliving objects. Such damage can occur while the vehicle is in motion — say, a truck kicks up a rock on the highway — or stationary, as in if a dead branch falls on the parked car’s roof.
  • Weather-Related Damage. Comprehensive coverage pays for damage associated with a wide range of weather-related perils, including straight-line wind, tornado, hail, and standing water — although not all comprehensive policies cover weather-related water damage. Comprehensive policies may cover tangentially weather-related damage as well, such as a municipal snowplow strafing a parked car with sharp, high-velocity debris.
  • Damage Caused by Fire or Explosion (With Possible Exceptions). If a fire spreads to your vehicle or the vehicle is damaged in an explosion, your comprehensive policy is likely to cover the cost of repairing or replacing it. This includes fire or explosion damage that occurs in the course of civil unrest or terrorist attacks. However, such damage that occurs in more extreme — and less likely — scenarios, such as a nuclear attack or conventional airstrike, may not be covered.
  • Theft of the Vehicle. Comprehensive coverage typically compensates owners for costs related to the theft of their vehicle.
  • Vandalism. Comprehensive coverage also kicks in for human-caused vehicle damage (vandalism), such as scratched paint, dents, slashed tires, broken glass, and the like. This coverage remains valid during periods of civil unrest.

What Comprehensive Coverage Doesn’t Cover

Comprehensive car insurance is not comprehensive in the traditional sense of the term. It doesn’t protect drivers against liability for injury or property damage to others, nor for collision-related injury to their own bodies or vehicles.

More specifically, policyholders should not expect comprehensive coverage to kick in for damage, injury, or liability resulting from:

  • Collision With Another Vehicle. Damage resulting from a vehicle-on-vehicle collision is the province of collision coverage, not comprehensive. Medical and liability expenses arising out of vehicle-on-vehicle collisions are covered by liability, bodily injury, personal injury protection, or uninsured/underinsured motorist coverages, depending on the nature of the collision and the other individuals involved.
  • Single-Car Crash or Rollover. Damage caused by a single-vehicle crash or rollover is also the province of collision coverage. Common scenarios not covered by comprehensive coverage include running into a ditch, striking a tree or boulder, or hitting a lamppost.
  • Certain Types of Noncollision Damage Caused by Negligence or Poor Maintenance. Negligence or inattentiveness may absolve your insurer from its responsibility to compensate you for damage that would normally be recompensed by a comprehensive policy. For example, leaving your car window wide open during a hurricane or your passenger door ajar at a campsite with an open bag of snacks on the seat will probably leave you on the hook for the inevitable damages.
  • General Wear and Tear. The concept of “wear and tear” is open to interpretation, but the general rule is that repair work or part replacements that become necessary due to vehicle age and use are not covered by comprehensive insurance. You shouldn’t expect your insurer to cover the cost of replacing the brake pads on a 10-year-old car with 100,000 miles on the odometer, even if you wait until after a heavy thunderstorm to get the work done.
  • Damage Due to Your Participation in Criminal Activity. Don’t expect your insurer to cover damage sustained while fleeing police, for example.
  • Certain Custom or Aftermarket Equipment. Not all comprehensive policies cover custom or aftermarket car parts, such as spoilers or speakers installed after purchase. Some policies cap coverage on damage to such parts, even if they’re much more valuable than the cap.

To reiterate, comprehensive coverage doesn’t extend to medical or liability expenses incurred as a result of incidents where the comprehensive policy does cover vehicle damage. For example, your comprehensive policy won’t pay for a passenger’s medical bills after a car-on-deer collision, nor the civil damages you might have to pay if they successfully sue you.

Comprehensive Coverage Costs: Factors Affecting Comprehensive Premiums

How much should you expect to pay for comprehensive auto insurance coverage? That depends on the value of the covered vehicle, your comprehensive policy’s deductible, and other important factors.

  • Vehicle Value. The greater a vehicle’s value, the more damage it can sustain (in dollar terms) before being considered a total loss. It therefore costs more to add comprehensive coverage to a high-value vehicle’s insurance policy, all else being equal. Collision coverage also costs more on high-value vehicles.
  • Vehicle Make and Model. Vehicle make and model — especially the former — bear directly on repair costs. Generally, premium vehicles of all types and mid- to high-end foreign makes cost more to repair than domestic and economy cars — that is, comprehensive coverage on your BMW will probably cost you more than an otherwise identical policy on your neighbor’s Ford, even if the cars are worth about the same.
  • Prevalence of Potential Hazards in Your Home ZIP Code. Your home ZIP code’s relative risk is a significant factor in how much you pay for car insurance in general and comprehensive coverage in particular. Areas with frequent damaging weather events and high rates of property crime are more expensive than tranquil, low-crime places.
  • Vulnerability to Potential Hazards. Even if you live in a high-risk area, you have some control over your car’s vulnerability to hazards that might trigger comprehensive claims. For example, you can lower your premiums by garaging your car overnight rather than parking it on the street, and by using an anti-theft device.
  • Comprehensive Policy Deductible. Raising your policy’s deductible is probably the easiest way to quickly reduce your comprehensive premiums without changing vehicles or purchasing an anti-theft device. Of course, a higher deductible means higher out-of-pocket costs should you need to file a claim.
  • Claim History. Unfairly or not, insurers prefer policyholders who don’t file claims. Many give policyholders a mulligan — that is, they don’t raise rates after the first claim in a rolling period, typically five years. But if you’ve filed multiple claims in the recent past, you can bet that you’ll pay more for your coverage.

When It Makes Sense to Add Comprehensive Coverage

So, should you add comprehensive coverage to your auto insurance policy? Is ensuring that you’re not paying out of pocket for major repairs not covered by other car insurance coverages worth the added premium expense? In these common scenarios, the answer may be yes.

  • Your Auto Lender or Lessor Requires It. Auto lenders and lessors generally require customers to carry comprehensive coverage as a condition of financing until the loan or lease term ends. Often, this required coverage includes a relatively low maximum deductible — $500 is common. This is a significant added cost of buying or leasing new cars instead of used. And, notably, it’s the only situation in which comprehensive coverage is not optional.
  • The Vehicle Is Relatively Valuable. The more valuable your vehicle is, the more sensible it is in purely financial terms to add comprehensive coverage. You wouldn’t want a single telephone pole or tree to crush — literally — a substantial fraction of your total net worth, would you?
  • The Vehicle Is High-Risk. By the same token, the utility of comprehensive coverage increases with relative risk. If you overnight-park your late-model car on the street in a high-crime, disaster-prone area, your chances of eventually incurring vehicle damage covered by comprehensive insurance are relatively high.
  • You’d Rather Pay Higher Monthly or Annual Premiums Than Face a Major Out-of-Pocket Expense. Ultimately, your cash flow might have the last word here. If you’d rather pay higher monthly or annual premiums to avoid even the possibility of incurring a hefty, surprise out-of-pocket expense, comprehensive coverage makes some sense. Of course, you can also forgo comprehensive coverage and divert the premium difference into your emergency fund, which exists in part to cover such unexpected expenses. But you might not trust yourself to keep your emergency fund topped up, in which case you’re right back to wishing you had comprehensive coverage.

Final Word

If one of your priorities as a responsible driver is to save as much money as possible on car insurance, adding comprehensive coverage might not seem like a great idea. All else being equal, a policy that includes comprehensive coverage is more expensive than one that doesn’t.

But your auto insurance premium is just one among several recurring costs of car ownership. There’s also fuel, parking, registration taxes and fees, scheduled and routine maintenance, and repairs. As your car ages, this last category is likely to assume an ever-greater share of the pie, and you could come to appreciate the money-saving potential of comprehensive coverage. Your decision to spring for this particular type of optional insurance could prove fortuitous — eventually.

Source: moneycrashers.com

19 Wealth-Building Lessons From the Latest Financial Crises

They say that those who do not learn from history are doomed to repeat it. The bad news is that the last 50 years have seen 5 major financial, market, or economic crises. The good news is that each crisis has lessons that you can apply today to help you build more wealth and feel more secure about your future.

Each of the following 5 crises left their mark on how people save and invest and provide lessons on protecting and building wealth even in troubled times.

Keep reading to see how people in previous generations managed in those times and what we can learn from them.

After World War II, the United States had the fastest-growing, most productive economy in the world. But several factors contributed to the economy’s decline into the 1970s and the economic malaise that came to be called “stagflation.”

Definition: Stagflation is a combination of conflicting economic factors — slow economic growth and high unemployment (typical of a weak economy) combined with rising prices (which more typically happen during good economic times).

Stagflation was a double whammy for the average person.

Inflation started to pick up in the U.S. at the end of the 1960s, in part because the government was pumping money into the economy to support the Vietnam War. Then, in 1973 the price of oil zoomed up after the Organization of Petroleum Exporting Countries (OPEC) levied an oil embargo on the U.S.

Because oil prices are passed on through most goods and services, the result was double-digit inflation. This came at a time of persistently high unemployment.

Stagflation reduced the buying power of every dollar people earned and saved, just like inflation does.

That is why just holding cash is not an adequate retirement strategy. You need your savings returns to keep pace — and preferably outpace — inflation in order to retain your buying power and quality of life.

Running scenarios for inflation against your long-term financial plans is really important.

While many economists think that we will continue to see low inflation (largely due to federal monetary policy), it is important to consider that over the last 40 years, inflation has ranged from a high of 14.8% in 1980 to a low of -2.1% in 2009.

Use the NewRetirement Planner to run scenarios and even get a Monte Carlo analysis (running more than 1,000 scenarios) to make sure your finances are prepared for any inflationary scenario.

For most of the 20th century, employers offered loyal employees pensions for a lifetime of service. Among the many changes in U.S. culture and society that took place from the mid-60s to the 2000s, employers stopped offering pensions and employees took the deal. That shift was accelerated by the stagflation’s drag on the economy.

As a result, you are now considered extremely lucky if you have a pension because pensions take a lot of the guesswork out of planning for future retirement security.

If you don’t have a pension, you are especially in need of a comprehensive retirement plan. You ideally save money, make good financial decisions and figure out how to turn your assets into income and make it last as long as you do. The NewRetirement Planner makes that process easy.

You may be wary of being over-invested in the stock market, especially when it whipsaws from lows to highs and back again over a few months. However, in the 1970s many people were over-invested in bonds, and that was bad for their retirement.

During the stagflation crisis, real interest rates were extremely low. (The real interest rate is the nominal rate of return on a bond minus the value lost to inflation.) This made returns on government bonds — a staple of an average retiree’s wealth at the time as well as the backbone of most company-sponsored pensions — incapable of protecting retirees’ buying power.

When you are retired, you need to be appropriately diversified. Appropriate investments in both stocks and bonds — as well as other asset classes — can reduce the risk that any one investment tanks your portfolio.

On Monday, October 19, 1987, stock markets around the world experienced a sudden unexplained drop in prices. The Dow Jones Industrial Average (DJIA) fell nearly 23%, which is nearly twice the percent drop of the next biggest crash — that on March 16, 2020 caused by the coronavirus pandemic.

Though many culprits were blamed for the crash, none have been definitively proven to be the cause. The U.S. Federal Reserve Bank under Alan Greenspan vowed to be the lender of last resort to make sure the stock market crash didn’t become a financial crisis, and a big change was made to government regulations that allowed exchanges to temporarily halt panic selling.

Lots of people lost lots of money on Oct. 19, 1987, Black Monday. Spooked by the market crash, people rushed to sell stocks, trying to stem their losses, making the markets fall farther and faster. It turns out that with the panic selling, they were making a big mistake — selling at a loss.

During a crash, you do not want to react quickly and emotionally. You want to sit tight and wait for the recovery. Don’t sell at a loss because the real lesson from history is that markets have always recovered.

Five years after the 1987 crash, a person who was invested in an S&P500 index fund would have seen their portfolio nearly double. And that portfolio today (assuming only asset growth and no addition from dividends) would be worth fourteen times more today than it was then.

Don’t sell, sit tight!

No one predicted the ’87 crash, and people still aren’t exactly sure why it happened. This highlights the point that you can’t predict when to ideally buy and sell.

Have a long term plan and stick to it no matter what the market happens to be doing on any given day, month or year.

Consider creating an investment policy statement to help you make good rational decisions about investments.

Warren Buffett, the most famous investor on the planet, famously said, “when other people are greedy, be fearful. When other people are fearful, be greedy.”

Prices are low in a downturn. It is often a time to buy, not sell.

Growth in the stock market eventually led to what Alan Greenspan notoriously called “irrational exuberance.” By the end of the 1990s, companies were adding “Dotcom” to their names just to increase their share prices.

Then in March of 2000, the Nasdaq Index that tracks the technology-heavy exchange started a decline that didn’t end until October 2002.

The internet not only created companies that people wanted to invest in, but it also created online brokers that allowed more people to trade in stocks. Online brokerages like E*TRADE made it seem like you could bet on your favorite companies, and in 1999 everyone was a winner.

This allowed many investors to be speculators and left some people exposed to individual companies that they may or may not have known very much about.

A couple of the key lessons coming out of the dot com crash (and earlier stock market boom and bust cycles) include:

  1. Diversification: It is usually more prudent be diversified and own index or mutual funds rather than individual companies.
  2. Adopt a Long Term View: It is almost always a good idea to adopt a long term attitude toward investments. Buy index funds at regular time periods and don’t watch the daily highs and lows.
  3. Daytrading is Perilous: Research indicates that even seasoned investment analysts can’t do better than the returns on an index fund over the long haul. Daytrading might be fun, but it isn’t the surest way to build wealth.

The dot com bubble was caused by an over-investment in technology companies. Everyone wanted to own Netscape, Yahoo, Ask Jeeves, and a host of other dot com entities.

(Don’t recognize a couple of those companies? Yep! Two of those three failed miserably along with many others.)

But, you know what? If you were an investor who was not trying to buy into the dot com craze and was diversified in other industries, you probably took only a small hit in this crash. And, you were well recovered within a year.

Diversifying holdings across a variety of sectors and companies is almost always a good idea.

A lot of companies that saw huge valuations during the dot com bubble were without a business model. They did not have a solid defensible plan for making money.

It sounds crazy, but it is true. When you are investing in a company, you ideally know something about what that company does and how they will grow your money.

Know what you are investing in and buy quality.

From 2002 to 2008, house prices zoomed upward until people thought the return on the equity in their homes would rise forever. That bubble burst when the subprime mortgage market in the U.S. failed and caused a cascade of bankruptcies that threatened to take down the global financial system.

Home prices fell dramatically and didn’t recover for a decade.

Owning a home is one of the smartest financial decisions you will make, in most cases. However, when the housing bubble burst, many people lost their homes to foreclosure, or they walked away from underwater mortgages.

Homeownership among 55- to 64-year-olds fell from 82 percent in 2004 to 75 percent in 2017.

Interestingly, however, people who were already retired felt almost no effect on their rate of homeownership. That might be because in 2008 people who were born before 1943 had paid off their mortgages by the time the housing bubble burst.

If credit is too easy in a market, then it will cause asset prices to be overly high. Because almost anyone and everyone could get access to credit – a mortgage — it inflated housing prices beyond rational values.

Many people got in trouble in the housing bubble because they borrowed too much money to buy a home that was more expensive than they could reasonably afford.

Experts suggest that your monthly housing costs — mortgage payment (or rent), property taxes and homeowners insurance — should not exceed 30% of your take home pay.

The housing bubble was the second bubble crisis in 10 years, and it won’t be our last. Bubbles, you see, are a clear result of human nature.

As Warren Buffet explains, “People start being interested in something because it’s going up, not because they understand it or anything else. But the guy next door, who they know is dumber than they are, is getting rich and they aren’t. And their spouse is saying can’t you figure it out, too? It is so contagious. So that’s a permanent part of the system.”

So, how do you protect yourself from bubbles? The most important thing you can do is to understand your goals, your risks, and have a long-term, defensible plan.

The housing bubble brought attention to the fact that housing is often your MOST valuable asset and usually a stable one.

It is also an asset that can be used to help fund retirement. Use the NewRetirement Planner to explore ways to use home equity as part of your overall retirement plan.

The bursting of the housing bubble was followed rapidly by the Great Recession, starting in 2008.

From May 2008 to March 2009, the value of the S&P500 got cut in half.

The Great Recession had a materially negative impact on people who were nearing retirement. Research shows that the Great Recession delayed retirement for those who didn’t lose their jobs, and those who did lose their jobs likely tapped retirement savings to cover the shock to their budgets.

For people close to retirement age, this was a difficult time, but according to the Employee Benefit Research Institute (EBRI), people in those difficult circumstances tend to cut back their spending and rely on Social Security, annuity and pension income rather than sell investments at a loss and spend down their savings.

Not sure you could bridge through a stock market downturn? Perhaps you could turn to emergency money.

You need to be invested. You need some money invested in the stock market in order to outpace inflation. However, you don’t need all of your money invested in the stock market.

The real trick to being able to weather a recession is to keep money you need in the short term in cash and money that you won’t tap till later can be in riskier investment vehicles like stocks and funds.

Explore a retirement bucket strategy for your short and long term financial needs.

Passive investing is the strategy of buying and holding investments for long periods of time — rather than buying and selling frequently to try to beat the market.

Passive investing is the right strategy for most of us for longer-term money needs.

There will always be another bubble. And speculation seems to be part of who we are. The growth that bubbles and speculation fuel can actually be great.

Today trading on Robinhood is all the rage, and cryptocurrencies like bitcoin continually repeat a boom-and-bust cycle.

The stock market is doing well despite the extreme financial distress in many American households.

Keep an eye out! The next bubble is always floating around!

When you retire, investment returns are still a factor, but the more important concern may be how to turn your assets into reliable income.

Explore 18 retirement income ideas.

The COVID-19 pandemic, the recession it produced and the gyrations in stock markets have created a lot of uncertainty and anxiety for people saving for retirement. 

This time isn’t different from the other times, though we have become a little smarter because of the lessons we’ve learned from history. The most important lesson is, “stay calm and carry on.” Don’t liquidate your stocks because you’re afraid it’s the end of the world. Pay down your debts as much as you can, and live within your means.

If you follow these rules derived from the lessons of history, you’ll be Okay. 

Source: newretirement.com

Is the Stock Market in a Dangerous Bubble?

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Investing in stocks can be emotionally draining. You’re obviously nervous when stocks are falling, but when times are good — and they’ve been very good lately — you’re worried the fat lady is warming up in the wings.

The later scenario is where we find ourselves today. By virtually any historical measure, valuations are stretched, stocks are overvalued, the markets are frothy and speculation is running rampant.

There’s no question stocks are expensive. The problem? They could easily get more expensive before the bottom drops out. Bubbles can run for months, even years, before they finally pop.

So what’s an investor to do? That’s what this week’s “Money!” podcast is about: deciding whether we’re experiencing a dangerous market bubble and, if so, what we should be doing about it.

As usual, my co-host will be financial journalist Miranda Marquit and our producer, sound effects guy and participant is Aaron Freeman.

Sit back, relax and listen to this week’s “Money!” podcast:

Not familiar with podcasts?

A podcast is basically a radio show you can listen to anytime, either by downloading it to your smartphone or other device, or by listening online.

They’re totally free. They can be any length (ours are typically about a half-hour), feature any number of people and cover any topic you can possibly think of. You can listen at home, in the car, while jogging or, if you’re like me, when riding your bike.

You can listen to our latest podcasts here or download them to your phone from any number of places, including Apple, Spotify, RadioPublic, Stitcher and RSS.

If you haven’t listened to a podcast yet, give it a try, then subscribe to ours. You’ll be glad you did!

Show notes

Want more information? Here’s what other financial experts have predicted for this year:

About me

I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Save Money on Back to “School” Supplies in 2020

This school season, families across the country are moving to remote learning. You may find yourself in this situation by choice — or not.

No matter the reason your kids are taking part in virtual education, of course you want to do everything you can to make sure they’re successful in this new school year.

One way, as parents, we can do this is to make sure our kids have all the tools they need. And even though this school year looks different than anything we’ve seen before, there are still some tried and true ways to save money on back to school supplies — even as your shopping list evolves from “Crayola crayons” to “cheap laptops.” Here’s how to get all your distance learning supplies without breaking the bank.

Good news, penny pinchers! You don’t have to buy an expensive laptop for your child to excel at distance learning.

Build a Budget-Friendly Learning Space

If you can, create an area in your home where your child can complete his or her studies. It could be the desk in their room, a table in the den, or even a place in the basement. Nothing fancy. Just let your child help decorate with a few small touches they’re excited about — even things you already have at home.

It doesn’t matter as much where you set this up as much as that you do. (Of course, you’ll want to set up shop somewhere close to you if you have a child in elementary school who needs help with the lessons. If you have a college student home from campus, they’ll probably want to be as far away from you as possible …)

In their little space, your kids will then be able to sit down and have everything they need, right at their fingertips. It also provides them the opportunity to “go to school” but heading to that designated spot. You might even encourage them to keep their school projects in their backpack and tote it back and forth from their bedroom to their “classroom” to create a little separation between home and “school.”

Of course, not all families have the space for this. If that’s you, create a school “box” (even an old lunch box for their art supplies!) that has everything your child needs so that each day, when they begin their schoolwork, they have all their essential distance learning materials right there ready to go.

Chromebook vs Laptop for Distance Learning

If your school provides students with a laptop for home use, you do not need to make any investments here. But if you’re not that lucky and you don’t have an old business laptop collecting dust somewhere, you’ll need to buy your student a device, and that can be a big ticket item. You might be wondering if you need to buy your kid an expensive laptop.

Fortunately, I’m here to say that most kids DO NOT need a full-blown laptop. (Nor do they need the latest Macbook Pro or whatever’s trendy in retina display or touch screen technology or the fastest processor available, no matter what they tell you.) They can do their remote learning and complete any assignment all through a simple Chromebook.

A Chromebook only allows your student the ability to connect to the Internet. It looks like a laptop but does not have software programs and apps like a regular laptop. Instead, there are online “in the cloud” versions of software (for things like word processing) that allow your child to do anything you can do on a laptop, but on a much less robust machine.

For this reason, they’re a more affordable option for parents. You can often find them for less than $300 through most retailers, and there are a lot of laptop deals out there right now because the demand is so high.

Chromebooks run Google’s Chrome OS (operating system) — hence the name — and are sold by many electronics companies, so you’ll see lots of options, such as:

  • HP Chromebook
  • Acer Chromebook
  • Samsung Chromebook
  • Lenovo Ideapad
  • Dell Chromebook

Don’t stress about finding the perfect one. They all do the same thing. The one feature I suggest paying attention to is battery life — the longer, the better so the teacher doesn’t go dark in the middle of a lesson plan.

If your older child for some reason needs more than what a Chromebook allows, consider buying a used, cheap Windows laptop. Check your local classifieds, online neighborhood groups, and Facebook groups for leads on a refurbished laptop. Ask friends and family — even your employer — if they have a cheap laptop they’d be willing to sell or let you borrow.

Negotiate for a Cheaper Internet Bill

Your Internet connection is one resource you should not overlook.

The worst thing that could happen is your child is in the middle of taking a test or an important lesson when the connection buffers or goes down.

Your provider will have options — you’ll probably need one that can handle many devices online at the same time — and may offer pricing bundles that fit your budget. And as always, don’t be afraid to negotiate for a cheaper Internet bill!

Save on the New Must-Have for 2020: Blue Blocking Glasses

Your child is going to spend a lot of time looking at a computer screen — probably not one with the biggest screen size. That can lead to tired eyes. After extended screen time, your child may have blurred vision, be tired, or end up with red eyes.

One way to help combat eye strain is through the use of blue blocking glasses, which help block the blue lights that are emitted from the screen.

In addition to using the glasses, encourage your child to take several breaks throughout the days to lessen the strain and give the eyes some much needed rest.

Sunshine Is Free!

Ensure your child has proper lighting for reading. If their “classroom” is in a well-lit space, you may not need anything more.

But if you don’t have very good lighting, get a table lamp to add to your student’s desk or table. You may want to consider purchasing an LED lamp because that can compensate for the reduced amount of natural lighting that is helpful for learning. The good news with this purchase is at least that LED lights last forever.

How to Save Money on School Clothes

Distance learning or not, most kids want to be seen in “the right” clothes when they hit a certain age. Instead of spending a bunch of money on brand-name, brand-new clothes, use up a gift card from their favorite brand that’s been sitting around or try some “vintage” items at consignment shops. A lot of popular brands have outlet stores where you can get great deals, too. (Just watch out that you don’t buy more than what you need!)

And maybe your kids will take a page from so many parents’ clothing playbook these days: Business up top, pajamas on the bottom. That’s half as many clothing items to buy — those jeans can be expensive! 😉

How to Save on the Standard School Supplies List

Just because your child is doing virtual learning this year doesn’t mean you can skip your standard fall school shopping trip for office supplies.

Make sure they have these school essentials:

  • Pencils
  • Paper
  • Spiral notebooks
  • Markers
  • Binders
  • Folders
  • Crayons
  • Scissors
  • Ruler
  • Highlighters

There may be other requirements, such as colored pencils or glue sticks. If you’re not sure what you need, review your child’s school supply list (for regular, in-person attendance) and get the same things for your student this year.

I love a good dollar store and go shopping at Dollar Tree and Dollar General year-round — back to school time included! If you don’t have one near you and are pressed for time (do you know a parent who isn’t?!), don’t worry. Many stores run back-to-school sales on the basics, and you might get an even better deal at a big box store like Walmart or Target by combining the sale price with a coupon or the store’s loyalty program or app.

Stay Sane With Dollar Store Organizers

Make sure you have tubs, bins and storage containers to keep track of all those supplies.

Use paper sorters to separate the work by subject. Use pencil cups to sort markers, pencils, and art supplies.

You can find great, cheap options at a thrift store, dollar store, or garage sale — or maybe you can even make some containers using upcycled items from around the house. (Bonus: Making your own storage containers can be a craft project to keep the kids occupied before all the e-learning begins.)

Save Money on Additional School Supplies for Virtual Learning

External Hard Drive

Computers crash. It happens. Having an external drive allows your child to back up their work so they never lose anything at all. (These are also great for backing up all your family’s digital photos.) Watch for deals or coupons at your local big box electronics retailer. Check membership clubs like Costco for good prices, and consider applying any Amazon store credit you’ve built up toward your hard drive purchase.


A white board is a very helpful tool for learning. It can be used for your child to track their work or can be used for daily lessons.

If you plan to add it to a wall, use command strips so you an easily take it down — both to move it around the house and to allow your student to have next to them as they work out that complicated math problem. And there’s nothing worse than hunting for a dry erase marker when you need one, so buy a pack now to save frustration and money later.


Your child needs to keep track of his or her daily work, and that’s where a planner helps. They will be able to write down the work that needs to be done and any upcoming assignments.

A planner is also excellent for letting your child cross off items when they’re done. There is nothing more satisfying than scratching through that big project they worked hard to complete! Save money by creating one page of a planner tailored to your child’s school needs and making photocopies for the following days/weeks.

Webcam Cover

Many Chromebooks and laptops are equipped with a webcam. If yours is not, you will need to get one.

One thing I would also recommend getting for your webcam (whether built in or not) is something to cover the camera when not in use. I don’t mean to alarm you, but there are some scary people who know how to hack these cameras and could spy on your child. A simple piece of black paper or cardboard clipped over the camera using clothespins should do the trick.

Headphones or Earbuds

One simple way to stay focused when learning is to drown out any noises. Wearing earbuds or headphones will allow your child to focus 100% on the lesson being taught. As with the computer, you don’t need to spend a lot of money on name brand options to get the job done here.


Touchpads are great, but they can be more difficult for small children to use (or even your big kid). Getting a mouse ensures they can navigate the platform they are using for their online learning. A wireless mouse can eat through batteries, so if you’re concerned about that expense, look for one with a cord you plug into the computer.


Breaks are important for kids. Using a timer can help.

When your child is getting tired of learning, he or she can glance at the timer in front of them and see they have only five more minutes until they get to close their computer or put down the pencil. Use an old stopwatch or egg timer, or if your student is set up at the kitchen table, turn on the timer on the oven or microwave.

Saving Money on Back to School Supplies in 2020

Yes, you’ll need to make some additional investments this year for your child to be successful with remote learning. But as a parent, education is the best gift you can give them. And as a fellow penny pincher, you now know you don’t need to break the bank doing it.

What other money-saving hacks are you using during this time of remote learning? Please share in the comments below!

Source: pennypinchinmom.com