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Does a Will Override a Trust? | SmartAsset.com

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Wills are an essential part of estate planning, leaving instructions for how to distribute your assets and possessions after you die. Trusts are a common tool in estate planning as well, serving as a way to manage assets both before and after your death. If your will conflicts with a trust that you have set up, the trust will typically prevail. This is because, in most cases, the assets in a trust don’t technically belong to your estate any longer. They are legally owned by the trust itself, so the terms of your will don’t affect them. For help with estate planning, consider working with a financial advisor.

Will Definition

A last will and testament is a legal document that directs how to distribute your assets after your death. Among other issues, a will establishes:

  • Who will take possession of your cash, investments, belongings and other property
  • How to pay any remaining debts or obligations
  • Any long term or ongoing plans that you would like to make
  • The care and distribution of any real estate you own

Wills are an essential part of estate planning. When you die, everything that you own is collectively known as your estate, which then gets distributed among your heirs.

If you leave a will, your estate is distributed according to your wishes and that process is overseen by someone you select, known as the executor. If you die without a will, known as dying intestate, your estate is distributed according to the inheritance law of your jurisdiction. That process is overseen by someone appointed by the probate court, known as an administrator.

Under typical circumstances a will is managed through and by probate courts. Your executor will file your will with the court which in turn oversees the entire process of settling your affairs and distributing the estate’s assets. For most estates, the probate process is largely a formality. The court makes sure that your will is legal, that your estate pays its debts and that your executor has the access they need to distribute your assets.

The same process occurs if you die without a will. In that case, the probate court appoints an administrator and the court then ensures that the administrator distributes your assets according to the local inheritance laws.

Trust Definition

A trust is a legal entity created to hold, manage and oversee property. Every trust has four main components:

  • Contributor – The person who created the trust and contributed assets to it
  • Assets – The cash, property and other assets owned by the trust
  • Trustee – The individual or firm that manages the trust’s assets
  • Beneficiary – The person or persons who receive assets from the trust

When you create a trust, you put assets in its name. Once you do that the assets belong to the trust itself, not you. This is the same as with any other property transfer. The trust is a legal entity capable of owning assets, paying taxes and making distributions, so once you put something in its name that property legally belongs to the trust itself, not you.

In creating a trust, you also establish its terms. You name the trustees and the beneficiaries, and set out the terms for how the trustees should manage the trust and its assets. This includes instructions for what assets the beneficiaries will receive, along with how and when. For instance, you can leave instructions for your trustee to distribute your funds equally among your children after you die.

Can a Will Override a Trust?

There are two main circumstances in which a will can conflict with a trust. First, a will might give instructions that conflict with the terms of a trust that already exists. For example, your will might include language that leaves the family home to your children, while earlier in life you placed that house in a trust for tax purposes. Second, a will might give instructions that conflict with the terms of a trust that doesn’t exist yet, or which hasn’t yet received its assets. For example, your will might include language that distributes your investments among your children, while another section of the will might include language that places your investments in a family trust.

In the first case, the terms of the will have no authority. A will cannot override a trust that already exists, nor can it distribute or manage property already held in an existing trust. If a trust exists and holds its assets, those assets belong to the trust itself. They are not part of your estate and, as a result, are not subject to the terms of your will.

If your will gives instructions that conflict with the terms of a trust, your will’s terms will apply to the assets in your estate and the trust’s instructions will apply to the assets in the trust. The designated beneficiaries will receive their assets according to the terms of the trust.

In the second case, your will is not actually conflicting with any existing trust. Instead, it is internally contradictory and will be resolved according to local inheritance law. You can leave instructions in your will to put assets in trust. This can apply to a trust that already exists, where your will puts assets into a trust that you created earlier. It can also apply to a testamentary trust, where your will instructs the executor to create a new trust and put assets into it.

In both cases, these assets belong to your estate when you die. This means that the terms of your will govern how those assets are distributed. If one section of your will conflicts with the section of your will which creates or contributes to the trust, then the issue is that your will is internally contradictory. The trust itself is not in question, just the will.

In that case the probate court and your executor will have to determine the exact nature of the internal conflict in your will. They will then resolve that conflict according to state and local inheritance law.

Your will still cannot supersede how an existing trust manages its assets. But conflicts in your will can prevent new assets from being added to the trust. This is why, if you plan on making or managing a trust, it’s wise to have a lawyer help you write these documents.

When Should You Use a Will vs. a Trust?

Wills and trusts are, generally, the two most significant vehicles for estate planning. Broadly speaking, if you are looking to leave assets to your heirs, you will likely use one or both of these. While a full exploration of the subject is beyond the scope of this article, there are some good rules for when you should use a will vs. a trust. Wills and trusts are not mutually exclusive; their control over specific property is. Any given asset can either be put in trust or distributed by a will – but not both. However, you can manage your estate in general by putting some assets into a trust and distributing others through a will.

Wills – Good for mid-sized estates, simple transfers and instructions

In general, wills have the benefit of simplicity.

While wills do not have the tax and probate benefits of a trust, the truth is that these concerns are frequently overstated. The federal estate tax only applies to large estates, beginning at $12.92 million at time of writing. And the probate process can take some time, but it typically is only lengthy and complex for particularly large or contentious estates. If you have an ordinary scope of assets, the odds are good that neither taxes nor probate will be a burden for your heirs.

Yet, at the same time, wills are one-shot instruments. This makes good for making simple distributions and leaving direct instructions. But once the terms of the will have been carried out, the estate is closed.

The result is that wills are often a good choice when you want to leave someone an asset in its entirety, such as leaving an amount of cash or a home to one single heir. They are also good for small and mid-sized estates, as a trust would impose additional costs and complications in order to solve tax and probate issues that these estates likely will not have. Finally, wills are good for leaving instructions beyond the scope of assets, such as arranging for the care of minor children and pets.

Trusts – Good for larger estates, ongoing wishes and contestation

In general, trusts have the benefit of third-party management.

When you put money into a trust you legally hand it over to a third party. This creates costs and complications that a will does not have. The trust will require instructions and terms, and you will need to pay for a trustee to oversee the trust’s assets.

This same process, however, means that your estate moves out of your name. You can do this before death, through a living trust, after death, through a testamentary trust, or in totality, through what is known as a pour-over will. This last is a will which bequeaths all of your property to a trust, so there is no risk of accidentally leaving any assets to the probate process.

Moving assets out of your name makes trusts good for estates that are large enough to trigger tax and probate concerns, such as if your estate is worth more than $13 million at time of writing. They are also good for people who want to leave ongoing instructions after they die, for example, if you would like to ensure that a piece of property remains in the family without being sold. Finally, trusts are good for people who anticipate contested issues, as the trust will avoid the probate process that opens the door for heirs and debtors to challenge the estate.

When you’re trying to decide whether to leave assets in a will or a trust, a good rule of thumb is this:

Wills are a good choice when you have a simple transfer to make. If you want to leave someone money or property to own outright, and you are not a multimillionaire, a will may be your best option. Trusts are a good choice when you have a large or complex issue of inheritance. If your estate is worth several million dollars, or you want to ensure that your assets are transferred and managed in a specific way, a trust may be your best option.

Bottom Line

A will cannot override the terms of an existing trust. Once assets belong to a trust, they are not part of your estate and your will has no authority over them. However, if your will has terms to put assets into a trust, internal contradictions can prevent that transfer from taking place.

Estate Planning Tips

  • Depending on your estate and your wishes, writing your will can be a complicated process. Make sure you take the time to educate yourself about the intricacies of the process before you get started.
  • A financial advisor can help you with estate planning. Finding a financial advisor doesn’t need to be hard.  SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/courtneyk, ©iStock.com/monkeybusinessimages, ©iStock.com/fizkes

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

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Source: smartasset.com

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It’s the stuff of nightmares: You’re footing the bill for an important dinner, only to be quietly told by the server that your card has been declined. That’s one possible outcome of attempting to charge above your card’s credit limit.

Credit card issuers determine your credit limit when you apply for a card, basing their decision on your personal financial information including income, other debts and payment history.

Sometimes, though, an extra-expensive month or unanticipated major purchase means you risk going over your credit limit. (Having a low credit limit to begin with also puts you at risk of exceeding it.)

But depending on the terms of your card, you may be able to charge above your credit limit — although by just how much is unclear. And even if the charge goes through, you may face other consequences.

Here’s what happens when you go over your credit card’s credit limit.

🤓Nerdy Tip

A credit limit is the amount you can charge to your credit card during any given billing cycle. With most cards, once you pay your credit card bill — even if you make a payment that’s lower than the total due — you can charge up to the credit limit again during the next billing cycle. Over time, the card issuer may adjust that limit if there are changes to your income level or spending. You may also be eligible for a credit limit increase just by requesting one.

A declined charge or over-limit fee

If you attempt to charge beyond your credit limit, it’s possible your credit card will be declined at the point of purchase, which can make for an embarrassing moment. But that’s not always the outcome.

Some credit card issuers will allow you to go over your credit limit at their discretion or if you opt in to the ability to do so. Capital One, for example, won’t charge you a fee for over-limit purchases when you opt in to this service, while Chase may let you opt in but in some cases will charge a fee. However, the amount that you’re approved to go over isn’t predictable, and this isn’t an open invitation to keep adding charges to your account. The issuer may put other limits on your account until you make a payment. (See below.)

The Credit Card Act of 2009 put some rules in place to curb over-limit fees, and these fees have become rare. In any case, card issuers can’t approve an over-the-limit purchase — and charge a fee for it — unless the cardholder opts in to allow it.

A higher minimum payment or more immediate due date

Even if an issuer allows you to exceed your credit limit, the company may increase the minimum payment due by the amount you charged above your credit limit. This means the over-limit charges must be paid at the end of that billing cycle, and you can’t carry that as part of your credit card balance.

You might also be on the hook to immediately repay the excess amount (or even the total balance due), without the ability to wait until the bill arrives as usual.

🤓Nerdy Tip

Note that charge cards work differently from traditional credit cards. A charge card has no set spending limit, so there’s generally no credit ceiling to “exceed.” However, unlike with credit cards, a charge card requires you to pay your bill in full each month. You typically can’t carry a balance.

A pause on more charges

Some issuers will stop you from putting additional charges on your card until you make a payment that puts your account back below its limit. This can also include other transactions like cash advances or balance transfers.

Changes to your card’s terms

Issuers reserve the right to change some of your card’s terms at any time, including the credit limit and interest rate. They may also close your account.

A decrease in your credit scores

One factor that’s part of calculating your credit scores is your credit utilization ratio, which is the amount of your total credit limit that you charge. In general, we recommend charging no more than 30% of your limit (and less is even better). Exceeding your credit limit or maintaining high balances can lower your credit scores over time.

An issuer opting to close your account can also affect your scores because losing an account can lower the average age of your accounts and decrease your overall credit limit, making it that much easier to max out other credit cards later.

Ways to avoid going over your credit limit

  • Set up alerts: Adjust your account preferences on the issuer’s website or app so you’ll receive a text or email when your card balance reaches a certain amount. You can also get alerts when your payment deadline is close or when a charge over a certain amount is made on your card.

  • Make small payments throughout the month: You don’t have to wait until the due date to make one big payment. Making multiple smaller payments throughout the month can help you maintain a smaller balance and lower the risk of going over the limit.

  • Ask for a credit limit increase: A low credit limit may not match what you need from your credit card. You can call the number on the back of your card to see whether you’d be eligible for a credit limit increase.

  • Open another credit card: If your current issuer declined your limit increase request, applying for an additional credit card may be the solution. It’ll raise your total credit limit and give you another card to fall back on for unexpected expenses. Just be extra careful because managing multiple credit cards can get more complicated.

Source: nerdwallet.com

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How to File for Student Loan Bankruptcy – MintLife Blog

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credit score significantly. Depending if you file for chapter 7 or chapter 13, bankruptcy will stay on your credit report for seven to 10 years. You should also be aware that when you file for bankruptcy, all of your financial information becomes available to the public. The court may also decide on how and when you can spend your money, as well as who you must repay first.

Something else that you can try instead of filing for bankruptcy is checking if you are eligible for an income-driven repayment plan. This allows you to repay your student loan debt at an affordable monthly rate based on your income. Another option is to see if you are eligible for a forbearance. A forbearance puts a temporary hold on your loan payments if you are approved. To get approved you must show that you have some kind of outstanding medical expense or financial obligation. You can also get approved for military or AmeriCorps service. One thing to consider with a forbearance is that your loans still build interest when you don’t pay them.

Next, you can check to see if you meet the requirements for Public Student Loan Forgiveness (PSLF). To qualify you must have made at least 120 qualifying monthly loan payments under a qualified plan while working full-time for a qualified employer.

Some last things to consider before you decide to file are the costs and time it takes to get your loans discharged. Getting student loans discharged is very uncommon, so you will want to be certain you will qualify before you try. If you plan on filing, you should be ready for filing fees and attorney fees — attorney fees average over $1,400 and filing fees are typically around $300. This can be a lot, especially for someone who is looking to file for bankruptcy. That is why it is important to fully understand where you stand with your finances. Many people do not realize what it costs to file for bankruptcy. For some people this is a burden that damages their finances even more. This is why you must be certain that you can do things like pay your rent and buy groceries after filing. If this is too much, then you might want to consider other options.

How to Demonstrate Undue Hardship

Proving that your student loans will cause you undue hardship is not an easy task. You will have to demonstrate that paying back your student loans will cause a significant negative effect on you and those who depend on you.

There is no set way to determine or ask someone to demonstrate undue hardship. Courts have the discretion of what methods they use to determine your hardships. A common method used by many courts to prove undue hardship is the Brunner test. To prove undue hardship, you must meet all three factors of the test:

  • Poverty – You can’t afford to pay your loans with your present earnings and spendings, and maintain a minimal standard of living afterwards.
  • Persistence – Your present financial struggles will carry on for a considerable amount of time while you repay your loans.
  • Good Faith – You have made efforts in good faith to repay your loans and arranged for an affordable payment plan

Some courts use a different method of testing for undue hardship known as the Totality of Circumstances Test. For this test the court will review all of your applicable financial assets, future earnings, and expenses. Based on what they find they might rule for undue hardship. This test is different from others because it looks at all aspects that could have an effect on the person, rather than just one or two factors.

Filing for Student Loan Bankruptcy

Discharging your loans comes at the end of bankruptcy, and you might run into some tough questions along the way. There are a few things you can do to help you understand and complete the process.

1. Talk to a Financial Advisor or Lawyer

As mentioned, getting your loans discharged can be very challenging, especially for someone who is unfamiliar with the process. This is why you will want to seek assistance from a bankruptcy lawyer who is practiced and has been in these situations before. Their professional knowledge will be very useful when it comes to filling out the correct forms and procedures.

2. File for the Correct Type of Bankruptcy

When you try to discharge your student loans, you will first have to file for bankruptcy for either chapter 7 or chapter 13. Chapter 7 might discharge your loans if they deem you unable to pay because of undue hardship. Chapter 13 bankruptcy will not get rid of your loans, rather restructure the payments so they are affordable.

Chapter 7

  • You must show the court that you cannot afford the cost of your loans.
  • If you are eligible, all loans can be cleared and you will no longer be personally liable.
  • You must meet with and be questioned by your appointed trustee and creditors.
  • This process can take 4 to 6 months, but can completely discharge your loans.

Chapter 13

  • You can prove that you can repay some of your debts, but finishing your current payments will cause undue hardship.
  • Rather than being discharged, loans are restructured. You will hold onto assets and debts will be discharged after the case.
  • You must create a payment plan for the court and all creditors to view.
  • Payment plans can take 3 to 5 years.

3. Start the Adversary Process

An adversary proceeding is a lawsuit filed in bankruptcy and basically means that you are making a complaint in court. This is required for bankruptcy because your complaint is your inability to pay your student loans. When you file this proceeding you will need to have proof that you cannot make your loan payments due to undue hardships. This means verifying your income and proving that dependents rely on you, making it impossible to pay your loans.

So can you file for bankruptcy on student loans? The answer is yes, but you should look into other options first and establish an affordable payment plan. Now that you know what it takes to discharge your student loans this way, and you understand the difficulty and costs that come with proving undue hardship, you can take your next steps. Use a debt-to-income ratio tool to help you plan your payments by determining your ability to afford and pay a loan.

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Source: mint.intuit.com

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When mapping out both your short- and long-term financial goals, life insurance should often be a key consideration. That is because the proceeds from life insurance can help to ensure that those your loved ones will be protected financially in case of the unexpected.
But, just like any other important planning concept, there is not just a one-size-fits-all solution when it comes to choosing a life insurance policy. Rather, the plan should include the proper type and amount of coverage to fit your specific and unique needs.
Before you commit to purchase a life insurance policy, you should also ensure that the insurance carrier that you’re buying the policy through is secure and stable financially and that it also has a good, positive reputation for paying out its claims promptly. One insurance company that can help you in determining these factors is Progressive.

The History of Progressive Insurance Company


Progressive has been in the business of offering insurance coverage for approximately 80 years. The company was initially formed back in 1937, when its founders, Joseph Lewis and Jack Green, began the Progressive Mutual Insurance Company, to provide vehicle owners with protection and security.
Ever since its very beginning, Progressive has taken a unique approach to offering its insurance coverage. For example, the company was the first insurer to allow its policy holders to pay for their auto premiums in monthly installments rather than annually.
Over the years, the company has grown and expanded exponentially, and it has also added more coverage products and services to best fit the needs of its policy holders. The company also moved out of its mutual status and became a publicly traded entity in 1951. And, by 1994, Progressive had surpassed $2 billion in written premiums.
Progressive makes it relatively easy to do business with them by offering online claims reporting, as well as the ability for its policy holders to log in and update their policy information, make premium payments, and more.
Today, Progressive Insurance Company is focused on its core values, along with diversity and social responsibility. The company also has a wide array of honors and recognition to its credit, such as being listed on Advertising Age magazine’s annual list of the world’s most influential and creative thinkers, being recognized by Training Magazine on its Training Top 125 list, and being ranked as the #1 car insurance website by Keynote Competitive Research. Progressive is headquartered in the Cleveland, Ohio suburb of Mayfield Village.

Progressive Life Insurance Review

Today, Progressive has written more than $18 billion in auto insurance premiums. The company continues to come up with innovative ways to give its customers attractive policies and quality service for meeting their needs.
The company runs well-recognized television commercials, featuring the character Flo, who is the Progressive Messenger, touting the many benefits of its coverage, and its ease of using the price quote system to help with finding the right coverage and price.

Insurer Ratings and Better Business Bureau (BBB) Grade

Based on its financial backing and track record, Progressive is considered to be a stable insurance company. When it comes to life insurance, though, this insurer does not provide the policies directly.
Although Progressive is not an accredited company via the Better Business Bureau (BBB), the company has been given an overall grade of A- by the BBB. This is on a grade scale of A+ through F. Efinancial has been an accredited company of the Better Business Bureau since June 1, 2000. This company has been given a grade of A+ by the BBB.
Over the past three years, Progressive has closed out 1,697 customer complaints via the Better Business Bureau, of which 153 have been closed out in the past 12 months. Of the nearly 1,700 complaints, 1,180 had to do with problems with products and/or services, 424 were related to billing and/or collection issues, 57 were with regard to advertising and/or sales issues, 22 were referred to guarantee / warranty issues, and the remaining 14 had to do with the company’s delivery issues.
During the past three years, Efinancial has closed out just five total customer complaints. Two of these have been closed out within the past 12 months. Of the five total complaints, three were regarding advertising and sales issues, and the other two had to do with problems with the company’s products and services.

Life Insurance Products Offered By Progressive

In providing life insurance coverage to its customers, Progressive partners with the company Efinancial. So in the life insurance arena, Progressive does not underwrite the coverage for its customers, but rather just promotes the policies and acts as the conduit for marketing and getting the information to the customer.
There are a variety of different policies to choose from – including both term and permanent plans. With term life insurance, there is death benefit coverage provided, but no cash value or savings build up. This can help to keep the premium more affordable.
As the name suggests, term life insurance is offered for a set term or period, such as 10, 15, 20, or even 30 years. During this time, the coverage will typically remain level, and the premium that is charged will also not go up. Often, insureds are allowed to convert their term life insurance coverage over into a permanent life insurance policy without having to take a medical exam or even provide any additional evidence of insurability.
There are also many different types of permanent life insurance options offered through Progressive / Efinancial. These include whole life and universal life insurance plans. Permanent life insurance provides death benefit protection, as well as a cash value component.
The funds that are in the cash value can grow and compound on a tax deferred basis. This means there is no tax due on the growth of these assets unless or until they are withdrawn. The money from a permanent life insurance policy’s cash value can typically be used for any need or want for the policy holder, such as taking a vacation, paying off debts, supplementing retirement income, or even paying for a child’s or a grandchild’s future college education costs.
The life insurance policy quotes that are provided by Progressive Insurance also include final expense coverage. Final expense life insurance is typically geared towards those who are between the ages of 50 and 85, and the death benefit is usually in the range of $2,000 to $25,000. These plans are often purchased with the intent of having the proceeds pay for the insured’s funeral and other final expenses – which today can range upwards of $10,000.
In many cases, there is no medical exam required to qualify for a final expense life insurance policy – and, once you have been qualified for a plan, the premium cannot be raised, nor can the coverage be canceled (provided that the premium is paid). Final expense life insurance coverage is also often referred to simply as funeral insurance or burial insurance.
There are many different types of life insurance plans that may be acquired through Progressive – so finding the one that best fits in with your needs and with your budget is possible. However, that being said, there can be many advantages and drawbacks to consider when moving forward with life insurance through Progressive Insurance Company. First, although Progressive is not the actual underwriter of the policy, the company does provide customers with web support via the Progressive website.
Also, clients and potential clients can obtain life insurance quotes round the clock by going online to the Progressive insurance website – and, these quotes are provided from some different companies, so that site visitors can immediately compare benefits and costs on the spot.
While buying life insurance through Progressive may be convenient in some ways, it can also make things more difficult, as the company is not considered to be a specialist in the life insurance niche.
Also, should the time come to file a claim on a life insurance policy, the beneficiary will need to contact the actual insurance company – not Progressive – to file a claim and collect the benefits. (The online claims processing services that are offered via the Progressive website are only for auto insurance claims, not for life insurance).
Therefore, it will still be important to check out the actual insurance company that is chosen to determine whether or not it offers additional services that may be important to you, such as grief counseling, assistance with special needs trusts, and overall financial planning.

Other Products and Services Available

While you can get information and quotes on life insurance through Progressive, this insurer is not a life insurance company per se. Rather, the main product that is offered through Progressive is auto insurance.
In the auto insurance space, Progressive has an outstanding reputation – and the company will help you to not only obtain rates for its auto coverage but also quotes from other, competing for insurers so that you can compare and contrast which policy may be the best one for you.
Progressive offers much more than just insurance for your car. The company also offers policies for the following:

  • Motorcycles

  • Boats
  • Personal water crafts
  • Business vehicles
  • Snowmobiles
  • Segway HTs

Likewise, the company can also assist in finding home owner insurance coverage. Through its Homequote Explorer, Progressive offers quotes on homes, as well as for other structures and related needs, such as:

In the commercial insurance arena, Progressive offers quotes on coverage for commercial vehicles, trucks, vans, tow trucks, and dump trucks. And, to protect one’s business, the company also provides quotes for general liability, workers comp, contractors coverage, and professional liability insurance.

How to Get the Best Premium Rates Through Progressive Insurance Company

While you can obtain a variety of life insurance quotes through Progressive, it can often be best to work with an independent life insurance agent when seeking the best policy and premium rate for your needs. By working with someone who focuses on life insurance coverage, you can have your questions answered so that you know exactly what it is you are getting – and why the option was chosen may be the best alternative for you.
If you are ready to determine what type and amount of life insurance policy will be the best for you, we can help. We are an independent life insurance brokerage, working with many of the best life insurance carriers in the market place. We can assist you with getting all the important details that you need for making a well-informed purchase – all conveniently from your computer. You won’t even have to meet in person with a life insurance agent. If you are ready to move forward with the process, then all you need to do is just simply click here and fill out our form.
We understand that the purchase of life insurance can seem a bit challenging. There are so many different variables, policies, and insurance companies to choose from – and you want to make sure that you are heading in the right direction. But the good news is that this process can be done so much easier by working with an ally on your side who can point you in the right direction. So, contact us today – we’re here to help.

Source: goodfinancialcents.com

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Getting a mortgage is, by general consensus, the most treacherous part of buying a home. In a recent survey, 42% of home buyers said they found the mortgage experience “stressful,” and 32% found it “complicated.” Even lenders agree that it’s often a struggle.

“A lot can go wrong,” says Staci Titsworth, regional manager at PNC Mortgage in Pittsburgh.

If you’re out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.

Waiting until you can make a 20% down payment

A 20% down payment is the golden number when applying for a conventional home loan, since it enables you to avoid paying private mortgage insurance (PMI), an extra monthly fee of 0.3% to 1.15% of your total loan amount. But with mortgage rates where they are today—in a word, low—waiting for that magic 20% could be a huge mistake, since the more time passes, the higher mortgage rates and home prices may go!

All of which means it may be worth discussing your home-buying prospects with lenders right now. To get a ballpark figure of what you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

Meeting with only one mortgage lender

According to the Consumer Financial Protection Bureau, about half of U.S. home buyers only meet with one mortgage lender before signing up for a home loan. But these borrowers could be missing out in a big way. Why? Because lenders’ offers and interest rates vary, and even nabbing a slightly lower interest rate can save you big bucks over the long haul.

In fact, a borrower taking out a 30-year fixed rate conventional loan can get rates that vary by more than half a percent, the CFPB has found. So, getting an interest rate of 4.0% instead of 4.5% on a $200,000, 30-year fixed mortgage translates into savings of approximately $60 per month, or $3,500 over the first five years.

So to make sure you’re getting the best deal possible, meet with at least three mortgage lenders. You’ll want to start your search early (ideally, at least 60 days before you start seriously looking at homes). When you meet with each lender, get what’s called a good-faith estimate, which breaks down the terms of the mortgage, including the interest rate and fees, so that you can make an apples-to-apples comparison between offers.

Getting pre-qualified rather than pre-approved

Mortgage pre-qualification and mortgage pre-approval may sound alike, but they’re completely different. Pre-qualification entails a basic overview of a borrower’s ability to get a loan. You provide a mortgage lender with information—about your income, assets, debts, and credit—but you don’t need to produce any paperwork to back it up. In return, you’ll get a rough estimate of what size loan you can afford, but it’s by no means a guarantee that you’ll actually get approved for the loan when you go to buy a home.

Mortgage pre-approval, meanwhile, is an in-depth process that involves a lender running a credit check and verifying your income and assets. Then an underwriter does a preliminary review of your financial portfolio and, if all goes well, issues a letter of pre-approval—a written commitment for financing up to a certain loan amount.

Bottom line? If you’re serious about buying a house, you need to be pre-approved, since many sellers will accept offers only from pre-approved buyers, says Ray Rodriguez, New York City regional mortgage sales manager at TD Bank. Here’s how to start the process of mortgage pre-approval.

Moving money around

To get pre-approved, you have to show you have enough cash in reserves to afford the down payment. (Presenting your mortgage lender with bank statements is the easiest way to do this.) Nonetheless, your loan still needs to go through underwriting while you’re under contract for your loan to be approved. Because the underwriter will check to see that your finances have remained the same, the last thing you want to do is move money around while you’re in the process of buying a house. Shifting large amounts of money out or even into your accounts is a huge red flag, says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

So if you’re in contract for a home, your money should stay put.

Applying for new lines of credit

If you apply for a new credit card or request a credit limit increase a few months before closing, watch out: Credit inquiries ding your credit score by up to five points. So, don’t let the credit inquiries add up.

“Worse than the actual hit on your credit score is any pattern of trying to borrow more money all at once,” says Glenn Phillips, CEO of Lake Homes Realty. Translation: Applying for multiple lines of credit while you’re buying a house can make your mortgage lender think that you’re desperate for money—a signal that could change your mortgage terms or even get you denied altogether, even if you’ve got a closing date on the books.

Changing jobs

Mortgage lenders like to see at least two years of consistent income history when pre-approving a loan. Consequently, changing jobs while you’re under contract on a property can create a big issue in the eyes of an underwriter.

Your best bet? Try to wait until after you’ve closed on your house to change jobs. If you’re forced to switch before closing, you should alert your loan officer immediately. Depending on the lender, you may simply need to provide a written verification of employment from your new employer that states your job status and income, says Shashank Shekhar, the founder and CEO of Arcus Lending in San Jose, CA.

Source: realtor.com

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Mortgages are complicated and confusing, and second mortgages are doubly complicated and confusing.

A second mortgage can be an extremely useful tool for your wealth, or it can become a financial trap.
Before you head into the world of second mortgages, there are a couple of different things you should think about.
Read on for an overview of second mortgages and advice to help you determine whether or not you should consider a second mortgage.

What Is a Second Mortgage?

A second mortgage can be a valuable borrowing vehicle in certain circumstances. Here’s how you can benefit from a second mortgage.

How a Second Mortgage Works

A second mortgage is basically a loan using your home equity as collateral. If you own your home, whether you have a mortgage attached to the property or not, you may be able to secure a second loan by liberating your equity that has built up over the years.
Generally speaking, real estate increases in value, so while a typical mortgage can stretch out for up to 30 years, the principal owed on the house steadily falls while the value of the house appreciates.
To find out how much you can possibly qualify to borrow on your home you need to find out how much equity is in your home. This is calculated by estimating the market value of the property and subtracting the payments made towards your first loan so far.
For example, if your home is currently worth $250,000 but you have a first mortgage of $160,000 outstanding on the property, you have managed to amass $90,000 in equity.
Lenders may be willing to allow you to borrow anywhere from 60% to 80% of your equity, which works out to roughly $54,000 to $72,000.
One unique kind of second mortgage is a cash-out refinance. This replaces your old mortgage with a new mortgage. With the new mortgage, it’s slightly larger than the original amount. The larger mortgage will give you a one-time cash payment.

What are Second Mortgages Used For?

As you can see a second mortgage can really represent a sizable chunk of cash, but what are they used for? Well, you can use a second mortgage for anything from funding a child’s education to making repairs on your home.
If you are going to take on additional debt, it should be for something worthwhile. A vacation, however deserved, might be better to save for slowly, than to take on the cost of a home equity loan.
Another option can be to avoid Private Mortgage Insurance.  

While Private Mortgage Insurance may not seem like a big deal, it can cost you thousands of dollars over the course of your loan.

It’s almost always worth avoiding PMI if you can,

Getting a Second Mortgage

Now that you understand how a second mortgage mortgage works, we can continue with the process. If you’ve decided that you want to take out a second mortgage on your house, we can help you with the route you should take.

Use a Good Lender

It is an unfortunate truth that there are unscrupulous people and businesses in the world. One of the best options for making sure you are getting a good rate with your mortgage company is to shop around different mortgage lenders.
This is why, we recommend using LendingTree for your second mortgage. LendingTree will shop several different lenders for home equity loan rates and allow you to screen who you apply with. 
They are also able to work with you whether you choose a separate home equity loan or decide to do a cash out refinance mortgage. You can learn more in our LendingTree review.

  • Our Rating
  • BBB Rating A-
  • Best ForMultiple Lenders
  • Loans Available Home Equity, Refi, HELOC

Steps you Can Take to Get the Best Loan

If it’s been some years since you’ve taken out a mortgage, you might want to brush up on some of the lingo that you’ve going to see.

  1. Go to the bank: The obvious first place to start is with your bank or mortgage company that holds the FIRST mortgage. More than likely they will be happy to give you a second mortgage (assuming you have a decent credit score and history with the organization). It will almost make the payments on the second mortgage easier because you already write one check to the bank for your mortgage, so you won’t forget to write a second one (hopefully).
  2. Shop around: After you’ve talked with your current bank or mortgage company, you can continue to look around with other banks and lenders. More than likely you didn’t go with the first lender you quoted with the original mortgage, so why would you go with the first on your second mortgage? Once you’ve met with several different loan offers at various established, you can sit down and decide which one works best for you. There are a few things you should consider, aside from interest rates (although it’s the most important factor), before picking out a second mortgage.
  3. Look at the loan types: Are they fixed rate or adjustable? This is going to have a huge impact on the amount of interest that you pay over the course of your loan.
  4. Look at the fine print: Are there any balloon payments attached to the loan? Be sure to look at every aspect of the mortgage before you sign any paperwork. Otherwise, you could pay thousands of dollars that you didn’t expect to pay.

Pros and Cons of a Second Mortgage

Pros of a Second Mortgage

  • Deductible: The good news about a second mortgage is that mortgage interest of up to $100,000 of the principal for married couples and $50,000 for singles is deductible on your tax return as well. Although this is meant to be a combined mortgage interest on both your mortgage loans it is still a great deduction, especially if your first mortgage is closer to the end of its life and so has a relatively small portion of interest payments left.
  • Liquidation: Another (possible) pro of taking out a second mortgage is the ability to liquidate the equity in your home. If you are on the verge of bankruptcy and you need to get access to cash to pay off high-interest loans and back taxes, taking a home equity loan might not be a bad trade.

  • Low interest: The interest payable on a home equity loan is usually lower than other types of debt because it offers the lender the security of your house. Depending on your situation, this could be an excellent way to lower the amount of debt you have and save you money on monthly interests.

Cons of a Second Mortgage

Taking out a second mortgage is not without its drawbacks.

  • Your home is collateral: For instance, you need to remember that even though the loan does provide you with the cash you want it comes at the cost of putting your house up for grabs in the event you cannot make good on the loan. While we hope it never happens to anyone, it’s not uncommon for some financial tragedy to strike and for a person to lose their house because of a second mortgage.
  • Expense: A second mortgage is also not without its costs. You have to pay for an appraisal on your house, loan origination and other legal fees associated with an ordinary loan, so although there is a lower rate of interest, there are other costs to consider. If you don’t remember from when you first got a mortgage, the house appraisal and legal fees can add up to be quite a hefty bill. While this probably isn’t going to completely change your decision on a second mortgage, you should at least calculate it into the costs beforehand.

If you’re one that has a rough relationship managing debt, I would strongly have you reconsider taking out a second mortgage to pay off debt.
You first have to fix the root of the problem which is most likely – you. A second mortgage is not the answer for everyone so think about all the factors before making your final decision.
I hear a lot of stories of people who took out a second mortgage to pay off some debts. Sure, the lower interest rate can be very attractive. Why wouldn’t you want to pay lower rates?
Getting a second mortgage to pay off credit card debt or some other consumer debt is only a temporary band-aid.

Alternatives to a Second Mortgage

Figure

For those looking for extra capital to use for things such as home improvements or debt consolidation, a Home Equity Line of Credit (HELOC) is another option.
A HELOC allows you to borrow money against the equity you have accrued in your home. For example, if you bought your home for $300,000 but it is now worth $330,000, you could borrow $30,000 to use for things such as kitchen or bathroom improvements.
Borrowing funds is always a big decision and should only be taken with great consideration. But, a HELOC can be a great alternative to a second mortgage.
For those who are interested in learning more about a HELOC, Figure ncould be a good place to start. This new company is innovating the HELOC game with AI-based approval that streamlines the application and appraisal process.

Other Alternatives

Think of the second mortgage as an emergency lifeboat in this situation. Hopefully, you never need it, but you’ll be grateful for it if you do.
If you are staring at bankruptcy but don’t want to go with a second mortgage, but still looking for a good way to lower your interest amounts, you can always go with a personal loan.
If you prefer to go the way of a personal loan rather than a second mortgage here are some ideas on where to get a personal loan that is best for you, according to Good Financial Cents.
While this might seem like a smart strategy, one thing you never do is borrow against your home to pay off credit cards. I cringe every time I hear of someone pondering that.
That is a major no-no in my book. You are much better off getting a credit card with 0% APR on balance transfers to pay off the old cards. You save tons of money and honestly, it’s normally a lot easier.

Our Experience With a Second Mortgage

We recently took the plunge and built our dream home. Along the way, we learned a lot in the building process, especially when it comes to the mortgage loan process.
Our first home was bought while I was in Iraq, so I cashed in on my veteran status used the VA home loan. With our dream home, we were short the 20% down payment that we needed to avoid PMI (Private Mortgage Insurance).
While we could have used the VA loan again (for refinancing not for first time home purchases), it was actually cheaper to do the traditional loan process and take out a second mortgage.

Second Mortgages, Friend or Foe?

Because of all the risk associated with a second mortgage, they have gained an awful reputation among homeowners, but if done carefully, they can be an excellent tool.
Just like with every other part of your finances, a second mortgage isn’t something that should be done lightly.
Spend some time looking at your financial situation and weigh your options.

Source: goodfinancialcents.com

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What Happens When a Bill Goes to Collections? – MintLife Blog

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credit score. You will then be contacted by phone and in writing regarding the details of the charge-off.

In this guide, we’ll explore what happens when a bill goes to collections as well as what to expect during the payoff process. You can still redeem your credit score by paying down your debt as quickly as possible and staying diligent with your other accounts.

What Is a Collection? 

The original lenders—such as the credit card company, mortgage lender, or doctor’s office—turn to collection agencies when they no longer expect to receive your payment. Collection agencies either act as a middleman to retrieve the debt or purchase the debt from the lender for a fraction of the original amount. The lender then writes the amount off as a loss to their business and passes responsibility off to the agency. 

Collection agencies purchase your debt for a smaller percentage of the original amount since they take on the risk that the money will not be repaid. This percentage varies based on a series of details, including the age and type of debt. Often, the higher the risk the debt will not be repaid, the less the agency pays.

When does a bill go to collections? A lender will typically sell the debt between 30 and60 days of delinquency, though they may not tell you that this occurred until after the transfer. Medical bills will not be transferred until they reach 180 days of delinquency due to the National Consumer Assistance Plan.

Once a lender sells the debt to a collections agency, you will receive a phone call alerting you of the change. Within five days of the initial notice, you will receive a physical letter that outlines the amount owed and how to pay or dispute the bill. Agencies do not have the right to collect fees or interest on the amount, nor are they allowed to threaten or intimidate you to pay the bill. The debt collectors can continue to pursue the amount depending on your state’s statute of limitations. The length varies between three to ten years depending on the laws of your state.

How Can a Bill in Collections Affect My Credit?

Payment history is one of the top contributing factors to your credit report, accounting for over a third of your credit score. Lenders want to be able to see that you’ve managed your finances in the past. Missed and lapsed payments that have gone to collections could be seen as a sign of financial instability. The effect on your credit score comes down to how late the payment is, the amount due and the type of debt.

When unpaid bills are sold to collection agencies, the negative mark can stay on your credit score for up to seven years. The starting date is determined by the last time the bill was brought current. For example, notes on defaulted bills can remain on your credit for seven years after the last time you made a payment on the loan in question. 

It is important to look at your credit report on occasion to ensure these negative marks do not appear by accident. If the collections agency or lender made a mistake in reporting the information, you can dispute the debt to have your report updated or the note removed.

As we mentioned earlier, the National Consumer Assistance Plan keeps medical debt from appearing on your credit report before 180 days of delinquency. This allows patients to negotiate with their doctors and insurance companies, many of which will offer payment plans when the bill is too high to pay in full.

How to Handle Accounts in Collections

Understanding what happens when your debt goes to collections can be daunting. Remember that you must receive all the details in writing within five days of first receiving notice. Once this arrives, verify the details with your own payment history and accounts. Review the Fair Debt Collections Practice Act if you’re concerned your collection agency is overstepping their bounds. Collectors are not, for example, allowed to intimidate you or call at unreasonable hours.

If all information is confirmed, you can approach the payoff in several ways. Set up a payment plan with your collection agency by determining a practical timeline with your own finances. If you can afford $50 a month for the next year, speak to your agency about this option and request any agreement in writing before proceeding. Avoid giving your bank account number or setting up automatic debits with the collection agency and clearly state how you plan to pay off the amount.

Dispute any inconsistencies within 30 days of collections notification. Collections does not have the right to list the debt on your credit report during the investigation. The Consumer Financial Protection Bureau has prepared sample letters for disputing or requesting clarification from a collection agency.

Once you’ve done your due diligence of requesting a payment plan and paying down the debt to your ability, the statute of limitations laid out by your state determines how long a collection agency can pursue you. A collection agency can sue you for unpaid debt, but you may have a case to have the lawsuit dismissed with legal assistance if the debt is outside the statute of limitations.

If a bill goes to collections, you do have options. Keep yourself informed about your rights as you work with collections agencies and be sure to request all agreements in writing. You can also track your credit as you make a plan for paying down your debt. This allows you to regain control after a temporary moment of financial instability.

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    Debts, such as credit cards and student loans  Income and work history  Assets like stocks, bank accounts, and retirement funds  The down payment you expect to pay and where the funds are coming from (like savings, inheritance, or a gift)  The kind of home you are buying  After you have submitted the loan application, you … [Read more…]

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    It turns out defaulting on the mortgage isn’t as bad as some made it out, per a study from credit bureau TransUnion.

    The company noted that mortgage-only defaulters, those who stay current on other lines of credit while letting the mortgage slip away, perform better on new loans versus those with multiple delinquencies.

    In other words, those who are late on all types of loans continue to exhibit high rates of delinquency, whereas those who only skip their mortgage payments tend to keep other bills in check.

    For example:

    60+ days delinquency levels on a new auto loan:
    – 5.8 percent — mortgage-only delinquency
    – 13.1 percent — multiple delinquencies

    60+ days delinquency levels on a new credit card:
    – 11.4 percent — mortgage-only delinquency
    – 27.1 percent — multiple delinquencies

    So basically those who were late on everything from credit cards to auto loans and leases continue to make missteps, while those who simply can’t handle their mortgages stay on top of other bills.

    Perhaps these were the folks who thought they could afford a house during the peak years, while relying on interest-only home loans, option arms, and other payment-deferring home loan programs.

    The study also debunked, or at least did not find strong support for, the “excess liquidity theory,” which suggests consumers who stopped paying their mortgage have increased cash flow to use for other debts.

    “This recession was unique in that certain consumers who defaulted on mortgages would otherwise be good credit risks,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, in a release.

    “It appears their actions were driven more by difficult economic circumstances than by any inherent inability to manage debt.”

    Good luck trying to explain this to their subsequent mortgage lender or loan underwriter…

    Source: thetruthaboutmortgage.com