protect Archives - Hanover Mortgages

May 8, 2021

Cash Management Account – What It Is, Pros & Cons of Saving This Way

A cash management account is a type of financial account that combines many of the features of checking, savings, and investment accounts into one product.

You get the safety and interest-earning capability of a savings account, the flexibility of a checking account, and the ability to buy and sell securities with an investment account.

Cash management accounts are typically offered by nonbank financial companies, such as brokerage companies. Although each cash management account will differ in its specific terms and features, they share a number of characteristics.

How Do Cash Management Accounts Work?

Cash management accounts combine many of the features of different financial accounts, so it can be hard to understand exactly how they operate.

Store & Protect Large Amounts of Cash

Cash management accounts are designed for people who have a lot of cash to deposit. Like a savings account, they help you keep your money in one place and keep it safe.

The way that cash management accounts do this is through Federal Deposit Insurance Corporation (FDIC) insurance. The FDIC offers up to $250,000 per depositor, per account type, at covered banks. That means if your bank fails and is unable to return your money, the FDIC will reimburse you for up to $250,000 in lost money.

Cash management accounts often have much higher insurance limits. For example, SoFi Money cash management account offers coverage for up to $1.50 million. That’s because SoFi automatically splits your deposits between six different banks, handling all of the management of these accounts on your behalf. You only ever have to work with SoFi when you want to access your money or make a deposit.

Use Your Money When You Need It

Cash management accounts also give you the flexibility of a checking account. Most offer checkbooks or debit cards you can use to make payments or withdrawals from your cash management account.

Depending on the account provider you choose, you may be able to completely replace a checking account with a cash management account. If you get a debit card, checkbook, and the option to make bill payments using your account funds, you’re covered for all of your checking account needs.

Earn Interest

Cash management accounts are able to pay interest like savings accounts do. Most offer interest rates on par with the best savings accounts in the market.

Cash management accounts pay these high rates because they are mostly offered by online financial companies. By avoiding the need to operate physical locations, online companies save a lot of money on overhead costs. That lets them pass more interest on to their customers.

Low Fees

Another benefit of cash management accounts being offered by online financial companies is they have lower fees than traditional bank accounts do. Many have no monthly maintenance fees at all, leaving you free to worry about using your money instead of fees.

Invest Your Funds

Many cash management accounts are offered by investment companies or brokerages. Although they’re usually separate from your brokerage account, it’s easy to link the two accounts. In some cases, there is no separation.

You can submit purchase orders for investments and have the funds deducted from your cash management account. Similarly, proceeds from any sales you make get deposited directly to the account.

This makes your cash management account the hub of your financial life and keeps managing your money easy. You’ll have just one account to monitor with all of your income and expenses flowing through it.

How Does a Cash Management Account Differ From a Checking or Savings Account?

Cash management accounts are neither checking nor savings accounts. They work like a mix of the two, offering the interest of a savings account with the flexibility of a checking account. For day-to-day use, you won’t notice much difference between a cash management account and a traditional bank account.

The big difference is behind the scenes. The company that offers your cash management account opens checking or savings accounts on your behalf at its partner banks. It then handles the management of these accounts for you, moving money in and out of those accounts as needed.

Essential Features of a Cash Management Account

If you’re thinking about opening a cash management account, these are the factors you should compare when looking at your options.

Ease of Access

Cash management accounts are meant to give you the flexibility of a checking account. That means it should be easy to access your money when you need it.

Look for accounts that make it easy to use your money. That includes providing a checkbook, debit card, and online bill payment.

For accounts that offer a debit card, don’t forget to look at the restrictions. Some cash management accounts limit the amount you can withdraw in a day.

You’ll also want to make sure the debit card works on the ATM network you prefer. Some cash management accounts reimburse ATM fees, leaving you free to use any ATM you come across.

Fees

With any financial account, you should keep an eye on the fees you’ll have to pay. There’s no reason to pay a fee when you don’t have to.

Before opening a cash management account, check to see if it has any monthly maintenance fees or minimum balances. Also take a moment to look for other fees might wind up paying, such out-of-network ATM fees.

Interest Rates

Cash management accounts are able to pay interest rates on par with the best savings accounts on the market, but that doesn’t mean they all pay the same rate. Compare the interest rates each account offers. Some will vary with your account balance, while others will be the same regardless of how much you deposit.

If it doesn’t cost you anything and you won’t lose any features that you need, opt for the account with the higher interest rate.

FDIC Insurance Limits

Cash management accounts let you protect your money by splitting your balance among multiple banks. This gives you more than the standard $250,000 insurance offered by the FDIC.

If you have a large balance to deposit to your cash management account, check to see how much of it will be insured by the accounts you’re considering. Some cash management accounts offer more protection than others.

If you’re worried about keeping large sums of cash, look for an account that offers enough insurance to protect your full balance.

Pros of Cash Management Accounts

There are a few reasons you should consider opening a cash management account.

They Make Money Management Simple. With a cash management account, you don’t need a checking or savings account. Many cash management accounts also link to your brokerage account. That makes it easy to keep all of your money in one place for easy management.
They Provide Protection. Cash management accounts keep your money safe with FDIC insurance, which is something investment accounts and money market funds cannot do.
They Have Higher Interest Rates Than Checking Accounts. You’ll earn more interest than you would from a checking account while maintaining the same level of flexibility with your funds.

Cons of Cash Management Accounts

Cash management accounts aren’t without their flaws, and you should be aware of them before opening one.

They Don’t Offer the Best Returns. Many investments, such as stocks, bonds, and mutual funds. offer great returns. There are also certificates of deposit (CDs) and some savings accounts that offer better rates than cash management accounts.
Face-to-Face Customer Service Might Not Be Available. Most cash management accounts are offered by online financial companies. If you need help, you have to call customer support or participate in an online chat. This can be difficult for people who prefer getting help in person or for complicated situations.
You Might Not Get All of the Features You Need. Cash management accounts are meant to combine the features of checking and savings accounts, but some cannot fully replace those dedicated accounts. For example, you might not have the option to make online bill payments from a cash management account, even though that’s a standard feature of checking accounts.

Who Needs a Cash Management Account?

Cash management accounts are a good choice for a few different groups of people.

The first group is people who have a large amount of cash they want to keep liquid but protected. If you have a few hundred thousand dollars you need to have easy access to, you don’t want to tie it up in investments. You also don’t want it sitting in a checking account, slowly losing value to inflation.

And if you exceed the $250,000 FDIC insurance limit, you’ll have to split it between multiple banks if you want all of your money to be insured.

Cash management accounts let you earn a reasonable rate of interest on your cash while maintaining its FDIC protection. You also don’t have to worry about splitting your money between multiple banks.

Cash management accounts are also great for people who want simplicity. All your money is in one place. You don’t have to maintain a separate checking and savings account. If you get your cash management account from the same company you use for your brokerage account, you can keep all of your finances in one place.

Anyone who likes online banking can make good use of a cash management account. If you’re already accustomed to doing your banking through a computer or phone rather than in-person, you’re ready to start using a cash management account.

Where Can I Get a Cash Management Account?

You can get a cash management account from a number of companies.

The first place you should look is your brokerage company. Why not keep all of your money in one place? Many financial firms offer cash management accounts, and your brokerage may even offer perks for customers who maintain a large balance, so using your brokerage for your cash management needs can help you reach balance thresholds.

If your brokerage doesn’t offer a cash management account, you have plenty of alternatives. Many robo-advisors and online investing platforms offer cash management accounts.

For example, Robinhood offers a cash management account you can link to your brokerage account. SoFi Money and Betterment offer both cash management and checking account options.

Alternatives to a Cash Management Account

If you don’t think a cash management account is right for you, you have other options.

If you’re considering a cash management account because you want to combine the features of a checking and savings account, a money market account can help you do that.

Most banks offer money market accounts, which provide the interest rates of a savings account with the check-writing capabilities of a checking account.

The downside is your ability to make withdrawals from the account is limited to six transactions per month. Money market accounts also have higher fees and minimums than cash management accounts.

If you want a cash management account for the safety and returns they offer, you can open a CD. CDs pay more interest than savings accounts and are fully insured by the FDIC up to the $250,000 limit.

The only drawback is you have to commit your deposit to the account for a set period of time. If you make an early withdrawal, you have to pay a fee.

If returns are your primary concern, you should open an investment account instead. You won’t have the safety of FDIC insurance, but you can earn far more money by investing your cash in stocks, bonds, or mutual funds.

Final Word

Cash management accounts offer safety, simplicity, and a solid return on your cash. They’re a great choice for anyone who wants to make managing their money easier, but they don’t have all of the features of dedicated checking and savings accounts.

If you’re looking to store and protect a large sum of cash, whether in anticipation of putting a down payment on a home or keeping it as an emergency fund, a cash management account could be a great option that provides you with the best features of checking, savings, and investment accounts all in one place.

Source: moneycrashers.com

May 7, 2021

IRS offers new COVID-19 flexibility for employee healthcare benefits – Lexington Law

Disclosure regarding Lexington Law’s editorial content.

As COVID-19 swept the globe and the country, it put stress on all types of supply chains and industries. It has also put stress on the financial and health situations of many Americans.

If you’re looking back to whenever your last healthcare benefits enrollment period was and grimacing at the choices you made, you’re in luck—you might have the chance to change them. In addition to extending the tax deadline for 2020, the IRS has issued a rule modification in light of the pandemic that might allow you to change your elections mid-year instead of waiting for the next open enrollment period.

Find out more about these changes and what they might mean
for you here.

Key Points

You may be able to switch to a different healthcare
plan if your employer allows it.
You may be able to drop employer-sponsored
coverage if your employer allows it.
You may be able to change contributions to a
flexible spending account (FSA) if your employer allows it.
Employers may voluntarily extend the grace
period for using 2019 FSA funds.

A Potential Mid-Year Open-Enrollment Period

The IRS rule change allows mid-year enrollment in a
different plan that your employer offers. This means employees may be able to
make new elections to better use their income and protect themselves against healthcare
expenses.

However, employers are being given the choice of whether
they want to offer these options. The answers to the questions below all depend
on whether your employer elects to allow changes.

Can I drop my healthcare insurance altogether?

Yes, you can elect to end healthcare insurance coverage through your employer. The caveat is that you must replace that coverage with a qualifying plan through the health insurance marketplace, a spouse’s benefits or another option.

Can I switch healthcare plans?

If the employer allows it, yes, you can switch healthcare
plans outside of the normal open enrollment. This is true even for people who
have not had a qualifying event such as a job loss or a change in marital
status.

Can I get health insurance if I didn’t have it before?

Yes, if your employer allows an open enrollment period mid-year, you can elect benefits even if you previously declined them. This allows more people to get insurance that they may now want or need in light of the pandemic.

If I change plans, will I lose what I’ve paid toward my out-of-pocket deductible?

It’s probable that changing plans will reset all
benefits-related counters. That includes deductibles and out-of-pocket
expenses. If you’re considering making a change, weigh how much you’ve already
contributed toward your deductible and out-of-pocket maximum. In some cases, it
might be more financially beneficial to stick with the plan you have if you’re
close to or have already met your maximum.

Changes to FSAs

The IRS also provides a rule change that addresses flexible spending accounts. Again, these changes are dependent upon the employer choosing to participate.

If the employer does choose to participate, employees can make mid-year changes to their FSA elections. For example, you might have elected not to fund an FSA or to fund it very minimally. But in light of the health crisis, you may now want to put more money into your account to cover medical expenses. You may be able to do so.

Alternatively, perhaps your spouse lost his or her job due to COVID-19, and you’d previously elected to fund your FSA with a large amount. You might now need that money to pay for non-FSA-approved expenses. You may be able to elect to reduce your contributions.

Changes to Dependent Care Assistance Programs

The same rule change applies to section 125 cafeteria
plans used to help cover the cost of childcare programs. If your employer
allows it, you can elect to increase or decrease the contributions you’re
making to these programs.

For example, you might have previously elected to contribute enough money to pay for your children’s daycare expenses. This allows you to pay those costs with pretax dollars.

However, during the pandemic, your daycare might have closed, leaving your kids at home with you. Those contributed dollars are going nowhere and you risk losing them. If your employer allows it, you can change your contribution to stop adding money into your cafeteria plan. You can then use those funds to cover expenses related to your children being home.

Healthcare Coverage for COVID-19

The Coronavirus Aid, Relief and Economic Security Act instituted some exemptions to help ensure high-deductible plans and other insurance plans covered more services related to COVID-19. For example, the plan includes a specific exemption for telehealth services to help allow insurance providers to cover necessary telehealth treatments and appointments.

The IRS rule change allows those exemptions to be applied
retroactively up to January 1, 2020. That means if you sought telehealth or
other COVID-19-related care in the past months, you may be able to have those
claims adjudicated by your insurance plan at this time.

Reach Out to Your Employer’s Benefits Office

Understanding benefits and how they can impact your entire financial life can be difficult. Start by reaching out to your employer’s HR or benefits office to understand whether they’re going to offer the option for mid-year elections and whether they can provide information about how the options work.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

May 7, 2021

IRS offers new COVID-19 flexibility for employee healthcare benefits

Disclosure regarding Lexington Law’s editorial content.

As COVID-19 swept the globe and the country, it put stress on all types of supply chains and industries. It has also put stress on the financial and health situations of many Americans.

Find out more about these changes and what they might mean
for you here.

Key Points

You may be able to switch to a different healthcare
plan if your employer allows it.
You may be able to drop employer-sponsored
coverage if your employer allows it.
You may be able to change contributions to a
flexible spending account (FSA) if your employer allows it.
Employers may voluntarily extend the grace
period for using 2019 FSA funds.

A Potential Mid-Year Open-Enrollment Period

However, employers are being given the choice of whether
they want to offer these options. The answers to the questions below all depend
on whether your employer elects to allow changes.

Can I drop my healthcare insurance altogether?

Can I switch healthcare plans?

Can I get health insurance if I didn’t have it before?

If I change plans, will I lose what I’ve paid toward my out-of-pocket deductible?

Changes to FSAs

The IRS also provides a rule change that addresses flexible spending accounts. Again, these changes are dependent upon the employer choosing to participate.

Changes to Dependent Care Assistance Programs

For example, you might have previously elected to contribute enough money to pay for your children’s daycare expenses. This allows you to pay those costs with pretax dollars.

Healthcare Coverage for COVID-19

Reach Out to Your Employer’s Benefits Office

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Source: lexingtonlaw.com

May 7, 2021

Ally Bank Review | The Simple Dollar

As traditional banks struggle with customer frustration over hidden fees and insultingly low interest rates, Ally Bank has positioned itself as the antidote to these problems.

Savings APY

0.50%

1Y CD Rate

0.55%

J.D. Power Rating

853/1,000

SimpleScore

4.2 / 5.0

SimpleScore Ally Bank 4.2

Savings APY 5

1Y CD APY 5

Customer Satisfaction 4

Mobile App 3

Products 4

By and large, it has succeeded, becoming one of the best all-around options for online banking today and The Simple Dollar’s pick for the best all-around savings account for 2018.

Ally, previously known as GMAC Bank, launched in 2009. It was rebranded after parent company GMAC — the financial arm of General Motors — received billions in bailout money from the U.S. government during the subprime mortgage crisis.

Despite its rocky beginnings, Ally Bank has grown and flourished. It now has more than a million customers, likely due to its appealing blend of competitive interest rates and low, clearly disclosed fees.

Ally Bank at a Glance

If you’re just looking for basic checking or savings products, Ally has a particularly strong lineup. Here are the products and services you’ll find:

Savings: Ally offers two main options: an online savings account and a money market account.
Checking: There’s just one checking option, but it’s a good one: no-fee interest checking.
CDs: Choose from three account options: the High-Yield CD, with seven terms ranging from three months to five years; the Raise Your Rate CD, with a two- or four-year term; or the 11-month No Penalty CD.
IRA savings and CDs: Ally offers an IRA online savings account, or you can choose an IRA High-Yield CD or an IRA Raise Your Rate CD.
IRA plans: Traditional, Roth, and SEP IRAs are available, too.

Ally also has a sizeable auto loans business, but you can’t apply for financing online — it’s only available at select dealers, including GM, Chrysler, and Maserati. It also has a business financing division, but only for sizeable transactions of more than $15 million. There are no mortgages, personal loans, business checking or savings accounts, credit cards, or non-IRA investment accounts.

Just like any reputable bank, your deposits with Ally are insured up to Federal Deposit Insurance Corporation limits. Firewalls, SSL data encryption, and multi-factor authentication are among the security measures that keep your data safe while banking online. Ally also offers free Webroot anti-virus software to its customers — a nice touch.

Ally Online Savings

Ally’s Online Savings account is one of the best options in the industry when you consider the high interest rate and lack of fees. In fact, it’s such a strong option that The Simple Dollar named it the best all-around savings account for 2018. Here are the main account features:

No minimum deposit: You don’t need any certain amount to open your account, unlike some other banks that will require an initial deposit of $250, $500, or even $1,000 or more.
No account maintenance fees: You also won’t pay a monthly fee to keep your account open, regardless of your balance.
A very high interest rate: Your deposits will earn 0.50% APY currently.
Mobile check deposit: It’s as simple as snapping a photo of a check with your smartphone using Ally eCheck Deposit.
24/7 account access and customer service: Get the convenience of online banking or connect with a customer service agent regardless of the time.
Simple transfers: Move your money easily by scheduling transfers up to a year in advance, and link up to 20 external accounts to your Ally account.

The major benefit with Ally’s Online Savings is the interest rate, which is compounded daily. At 0.50% APY, it’s one of the most competitive rates in online banking. While this kind of interest certainly isn’t going to make you rich, it’s a lot better than the 0.01% (effective as of 10/14/2019. Interest rates are variable and subject to change) APY you might receive with Chase Savings℠, Bank of America, or another major brick-and-mortar bank.

Another big benefit is the generous number of external accounts you’re allowed to link up: 20. It’s common for other banks to limit you to three linked accounts, so this could be a big advantage for anyone who wants to move money between several accounts. You can also open, nickname, and link multiple savings accounts all in one go if you want to maintain separate accounts for separate savings goals.

Ally is also impressively clear about its fees. As I mentioned above, you won’t pay for monthly account maintenance. You also won’t pay for unlimited deposits, transfers to non-Ally accounts, incoming wires, online statements, postage-paid deposit envelopes, or cashier’s checks. (There are still some fees to note, but they are reasonable — they include $9 for overdrafts, $10 for excessive transactions, and $20 for outgoing wires.)

As for cons, there aren’t many. But if you’re used to depositing cash, that won’t be an option for you with Ally.

Ally Money Market Account

Ally also offers an outstanding money market account with a lot of the same features as its online savings account. For instance, there is no minimum deposit, there are no monthly maintenance fees, and you still have the option of mobile check deposits.

The major difference is that you’ll be getting a slightly lower interest rate, currently 0.50%, in exchange for a couple of nice conveniences. With the money market account, you’ll get a debit card and checks. And you can use your debit card at any ATM nationwide without paying steep fees: Ally won’t charge you, and it will reimburse any fees that other banks charge for using their ATMs.

Ally Interest Checking

Ally’s Interest Checking account is also a great all-around option, and ranks among The Simple Dollar’s best free checking accounts. Here are the highlights:

No maintenance fees or minimums: Some banks charge monthly maintenance fees or require you to have a certain balance to avoid them. Not so with Ally.
No ATM fees: Ally doesn’t charge you for ATM withdrawals, and it will reimburse you at the end of the month for any fees that other banks charge.
Mobile check deposit: It’s as simple as snapping a photo of a check with your smartphone using Ally eCheck Deposit.
Easy to pay other individuals: With the Popmoney feature, you can easily send money to anyone else who has a bank account as long as you know their email address or cell phone number.
Earn interest on your balance: Ally’s Interest Checking earns 0.10%–0.25%.

One of the biggest benefits of Ally’s Interest Checking is the lack of ATM fees. Considering you can expect to pay an average of $4.35 every time you get money from an out-of-network ATM, not having to plan ahead to avoid fees is a nice convenience.

Of course, the absence of monthly maintenance fees and minimums is also appreciated — my own bank requires me to keep a pretty substantial balance to avoid shelling out $11 each month. Checks are free with Ally, too.

There are still other fees, including 1% for foreign transactions, $9 for overdrafts, $15 to stop payment, and $20 for outgoing wires. These fees are a good bit lower than industry averages, but note that if you travel abroad frequently or are concerned about overdraft fees, Capital One 360 doesn’t charge either one. (Note that you can protect yourself from overdraft fees by linking an Ally savings or money market account to your checking. Ally will pull money from the linked accounts in $100 increments to cover the overdraft, but you obviously have to have the funds in the linked account to avoid fees.)

There are also some better options out there if you’re looking for the best interest rate in a checking account. For instance, Bank5Connect offers 0.20% APY on any balance over $100, and FNBO Direct offers 0.25% with no minimum balance. However, since it doesn’t make much sense to think of a checking account as a long-term place to grow your money, I don’t consider this a major con.

Ally Certificates of Deposit

None of Ally’s CDs require a minimum deposit to open, which is a rare benefit. Interest is compounded daily. Ally also offers a 10-day Best Rate Guarantee on its CDs, which ensures you can snag the best rate Ally has within 10 days of opening or renewing your account. Here’s a rundown of your CD choices with Ally:

High-Yield CD: This type of CD gives you the most flexibility on term: Go as short as three months or as long as five years. Of course, the shorter the term, the lower your interest rate, but a 12-month CD currently earns 0.55% APY. This CD is available for Ally IRAs.
Raise Your Rate CD: You’ll only be able to choose a two- or four-year term with this option. However, you get the chance to bump up your rate (once for a two-year CD, twice for a four-year CD) if Ally’s rates go up after you’ve funded your CD. This is also available for Ally IRAs.
No Penalty CD: If the prospect of early-withdrawal fees is keeping you from opening a CD, Ally’s No Penalty CD lets you skip them entirely. The convenience means you’ll be getting a lower rate, and there is only one term available (11 months).

Getting Started with Ally

Ally has a streamlined, easy-to-understand website, and opening an account is easy. In fact, you can open multiple account types at once, even linking a newly opened checking and savings account for overdraft transfer service right away.

If you prefer, you can also open an account over the phone or by mailing in an application. Online chat is available if you have any quick questions during account opening.

Online, all you’ll need to enter is your name, date of birth, Social Security number, email address, mailing address, and phone number. You’ll be able to fund your new account right away if you link a non-Ally account and transfer money electronically (you will have to verify ownership of the account). You can also mail a check, use mobile deposit to submit a check, or set up a wire transfer.

For savings and checking accounts, direct deposits are available the same day. You’ll wait up to three business days for transfers you request from linked non-Ally accounts. For most check deposits, you’ll have access to $200 within one business day and $4,800 in two business days. Any amounts over $5,000 won’t be available until the fifth business day. Ally may apply five-day holds for customers who’ve had a history of overdrafts.

Who is Ally Best For?

Ally is going to be one of your strongest overall options for online banking, but there are a few scenarios where it should definitely be your first choice:

You want the best combination of high interest rates, low fees, and no minimums: Ally is very near the top of the heap on interest rates across the board. Of course, nothing is stopping you from chasing the very highest rate you can find, but the trade-off for that rate is often higher fees and high account minimums. If you’ve got a lot of money to stash, that might not be a concern, but for the average Joe, it’s a good compromise.
You prize transparency: Ally is by far the clearest about fees of any of the banks I’ve researched, whether online or brick and mortar. Each product has a “Straight Talk Product Guide” that lays out everything you need to know about fees as well as important details such as when your money will be available.
You want to bank online, but you don’t want to skimp on customer service: Ally has 24/7 customer service, and the time you’ll wait to speak to a representative is disclosed at the top of the website (it was never more than a few minutes each time I visited). If phone calls aren’t your thing, you can still email a representative, search a comprehensive set of FAQs, or start an online chat session.

Who Might Want to Skip Ally?

Of course, there are also a couple of situations where Ally might fall short:

You want a one-stop shop: If you prefer to keep most or all of your financial dealings with one bank, Ally might not be the best option for you. It lacks several relatively common products, including mortgages, small-business accounts, and brokerage accounts. If this kind of variety is important to you, you’ll probably need a brick-and-mortar bank; if you want to stay with an online bank, Capital One 360 would be worth a look.
You want to build a personal relationship with a bank: For all of its plusses, there is one thing Ally (and all online-only banks) can’t offer: the chance for you to be more than a number. While its customer service availability is as good as it gets for an online bank, some customers may find comfort in the facetime they can get at their community bank branch. These relationships may come in handy when you’re in a bind, and one common customer complaint about online banks is that problems can take a long time to get resolved.
You need your money fast: Funds availability may be the Achilles heel of all online banks. While Ally isn’t the slowest online bank when it comes to transferring your money and making deposits available, it still generates plenty of complaints from customers who say holds were extended beyond what was promised, sometimes without explanation.

Ready to Bank With Ally?

Ally’s well-rounded personal account offerings should satisfy most of your everyday needs. The savings and checking options are particularly strong, or you can nab some of the benefits of both with a money market account.

If you want to read up on your other options, take a look at The Simple Dollar’s other banking recommendations in our guides to the best free checking accounts, best savings accounts, and best money market accounts.

Compare top bank accounts

Source: thesimpledollar.com

May 7, 2021

5 Tips on How to Store Winter Clothes

Sewing is not something everyone is fluent in, and let’s face it — it is a time-consuming and often frustrating activity. Fortunately, with the right resources, you can easily repair your winter items before storing them with iron-on patches. (Here’s a side gig opportunity for you sewers out there. Offer to make these repairs for friends or the winter sports community for cash, of course.)
Most department stores stock iron-on patches, making it as simple as heading to your local Walmart or Joann Fabrics to quickly and economically get your winter clothes ready for long-term storage.

5 Ways to Get More Life Out Cold Weather Clothes

Patagonia offers a free repair for all of its branded clothing, for example. All you need to do is submit a repair assessment form and Patagonia will pay for the shipping and repair of your item.
You may be tempted to stuff that down parka in a box and store it in the attic. After all, you want that closet space for summer clothes. But don’t. Down needs to breathe. Follow the tips below but let the coat hang loose in the closet. When you’re ready to wear it again, and doesn’t that come too soon, toss it in the dryer on low for about 10 minutes.

1. Repair Before You Pack

To wash a down jacket, aim to use a front-loading washer (top-loading washer drums can sometimes agitate or distort down items). Place the down jacket in the washer with like items (ahem, your other winter clothes), set the wash and rinse setting to cold water, and use a down-specific detergent.
One unique trait of winter clothing is that much of it is waterproof or water-resistant. This comes in handy during snowstorms, sleet and slush that are trademarks of the year’s most frigid months.
There are tons of waterproofing products on the market to protect your winter gear. Many exist in the form of sprays or paint-on coatings that dry quickly and do not impact the look or feel of the clothing. Most cost under and will help your winter clothes last for numerous snowstorms to come.
Source: thepennyhoarder.com
Whether you’re hoping to make your winter wardrobe more resistant to the elements or protect a particularly cozy sweater from the cold, making the investment in waterproofing before storing winter clothes will help you save time and money next year and beyond.
Being proactive is rarely a bad thing. In this case, taking steps to prevent winter clothes-loving critters like moths and mice will pay dividends in keeping your winter gear creature-free.

2. Prepare for the Next Snowstorm … a Year in Advance

REI also makes it easy to extend the life of your winter gear before storing it into a closet. Whether you have a backpack, jacket, shirt, or winter shoes that could use some love, REI has you covered and will provide you with a free estimate for any repairs.
Instead, make your first stop in storing winter clothes the repair shop. And thanks to nationally available programs, fixing a rip or tear doesn’t have to cost you a fortune.
Wool coats, however, can be stored in bug-proof garment bags and stored in the attic or basement. Read on for more tips.
It may seem obvious, but giving winter gear a once-over with detergent or other cleaning supplies will help winter coats, winter shoes, and other cold-weather items to maintain their textile integrity and bonus — it will help keep clothes smelling fresh for the next time you pull them out and over your head.
The sting of winter’s cold is finally giving way to the warmer, sunnier days of spring. As the seasons change, so too does our wardrobe. Goodbye parka, hello light sweater. It’s a welcome change for many of us to store our winter clothes and not give them a second thought for many months.

3. Bring the Heat to the Cold

Winter is a harsh season. For many of us, it entails snow, wind, mud and sidewalk salt. All of these can impact the integrity of your favorite winter clothes.
To ward off moths and other bugs, spend less than on a bag of cedar chips. Place the chips in the storage bin, plastic bag, or closet where you are storing winter clothes and let the refreshing cedar scent not only soothe your nose, but naturally ward off undesirable insects. Cedar will not damage clothes or alter them, either, making it a cheap way to keep winter clothes fresh.
Ensuring that down-filled products — and all winter gear — are entirely dry before storing them in a closet for months is critical. Down products can go in a low-heat dryer. For other products such as shoes and boots, using a low-heat setting on a hairdryer or good ole’ air drying should suffice.
But knowing how to store winter clothes is key to making garments last beyond one season. Down parkas can cost anywhere from 0 to ,000. No matter what you spend, you don’t want to flush that money away. Taking care to store winter clothes with an eye for longevity can help turn your one-season parka purchase into a multi-decade investment, saving you hundreds — if not thousands — of dollars over the years.

Depending on how big the tear is, a tailor might charge to . If you have a good relationship with a cleaners, their tailor might make the fix for less. On a less expensive coat, the repair might not be worth it but if you’ve paid 0 or more and only worn the coat for one season, consider the repair.

4. Ward Off the Vermin

Colorado-based writer Kristin Jenny focuses on lifestyle and wellness. She is a regular contributor to The Penny Hoarder.
Instead of chucking those winter boots into a closet and hoping for the best, be proactive by restoring waterproof abilities prior to tossing in a storage container.
Iron-on patches are extremely cheap — often less than —and only require a hot iron in order to be effective.
Storing winter clothes is a process that should be done with some thought and should not be a haphazard process of tossing things into plastic bags, shoving them under the bed, and calling it good.
Although bugs are typically the main culprit in clothing destruction, mice are not uncommon predators to winter clothing in long term storage or hastily-packed storage bins.

5. Keep it Clean

Winter clothing is rarely cheap and is often a budget-altering expense. From boots costing over 0 to specialized pants and accessories starting in the -range, it is to your benefit to know how to store winter clothes. When done correctly, you’ll have gear that lasts for years —if not decades — and will save you enough money to perhaps take that ski trip you’ve always dreamed about.
There are a variety of iron-on patches to choose from, with some made specific for nylon gear, some for jeans, and others for standard cotton clothing.
For synthetic and water-resistant products like Gore-Tex, a damp towel with some gentle soap should be enough to wipe away a winter’s worth of grime. The same goes for many winterized shoes and winter boots.
Even the most durable of winter gear can rip, snag or tear. While programs like those of Patagonia and REI will assist in repairing everything from damaged clothing to worn winter boots, sometimes it can be easier and more efficient to fix a small hole yourself.
For just about , you can purchase these ultrasonic sensors to put in your closet, small space, or attic and know that your winter gear will be safe for another season.
Outside of mouse traps, ultrasonic mice repellent sensors are a natural and slightly less grisly way to defend against these four-legged foe.
Nothing lasts forever, including the waterproof coating that protects much of the winter gear you’re getting ready to put into a storage bin.

May 6, 2021

5 Mind-Altering Wealth Strategies for Successful Business Owners

I’m an entrepreneur and just so happen to be in the business of providing other entrepreneurs with financial advice. But I don’t typically offer up the usual status quo advice that tells you to do things that aren’t always in alignment with growing your business.

My views originate from my experiences and at times are contrarian to what’s being recommended by the usual tax preparer and other financial advisers, because I am in the trenches running a business just like you. I know what it takes to grow a business, make payroll, deal with IRS notices and manage cash flow.

The truth is that being an entrepreneur can be isolating at times as a result of being wrapped up in the day-to-day of running your business. When you are hyper-focused on your business, it is difficult to also be an expert at managing the profits of the company. You may be great at making money, but once it’s made, what do you do with it?

Thinking differently about your company and how you will use it to build wealth is the key to true financial success.

In this article, I’ll outline five ways you can shift your mindset about money to transform how you define and operate your business and approach your financial decisions. It will help you identify what you really want to achieve: A Self-Managing Company®, a term coined by Dan Sullivan of Strategic Coach.

Mind Shift No. 1: Understand that Retirement Savings Plans Don’t ‘Lower’ Your Tax Bill

As a business owner, you are probably time-starved and used to making fast decisions. And you may be tempted to make fast decisions at tax time, especially when your tax preparer suggests that tax-deferred investments are the answer to lower your tax bill and save some money for retirement. Easy enough, right?

This is what I like to call a half-truth. It’s true that you’ll get the deduction for that year’s taxes. But the other half of the story uncovers the problem with the use of SEP IRAs, 401(k)s and other tax-deferred options to “lower” your tax bill. The reality is that you are taking money from your business where you have some level of control and redirecting those dollars into the stock market where you have absolutely no control. The money is tied up until you are 59½ years old and face potentially higher tax liabilities than you previously owed with no access to your cash if it is needed for growing or sustaining your business.

When you own a business, the half-truths you hear from many finance professionals and the mainstream media can at times negatively impact your ability to grow your business and protect your interests. I have found there are other, more productive ways to build wealth outside of your business, beyond the base-level concepts of investing or putting money in an IRA or 401(k).

Mind Shift No. 2: View Your Company Not as Your Job, but as a Tool for Building Your Wealth

If you run a healthy business, you have a long-term strategy. You know what the end-goal is. You think about the business as a whole, rather than focusing on simply the day-to-day tasks.

We’ve all heard the old adage: Work on your business, not in your business. That’s because if you’re working in your business all the time, you’ve only created a job for yourself. The goal is to build systems and develop people to slowly work yourself out of the role you have and allow the business to run on its own. The sooner you shift your mindset to this way of thinking, the sooner you can begin to experience the results.

First, carve out the time in your day to think about your business. Many business owners I talk to don’t do this, because they are buried in the work. Take time to talk to your future self about what you want your life to look like in the future. What would your future self say to you about the decisions and choices you are making? It helps to outline your thinking time, keep a journal of your discoveries, meditate to de-stress, and use the time to reflect on what you are trying to accomplish in the business.

Next, think about your business as a piece of your financial plan. How much time and capital are you investing into the business, and what are you getting out of it? What is your ROI? I’ve found that a business can offer the biggest opportunity to build wealth, and in many cases — depending on your results — it can offer more than what you might get from investing in the market.

Finally, think with the end in mind. At the end of the day, what are you trying to get out of your company? To build wealth through your business, you must identify what will build its value.

Building value revolves around creating a self-managing company, one that runs without you and has a strategy to sustain itself into the future. This allows you to sell it for maximum value, or even create a passive income stream without actually having to work in the business.

Shifting your mindset is important, because you probably didn’t start your business that way. Many business owners don’t, and that’s OK while you’re getting things up and running. But it’s important to remember that what got you started will not get you to the next level and will not build the wealth needed to successfully exit the business.

Mind Shift No. 3: Master Your Cash Flow

I tend to bust a lot of myths when it comes to financial matters, and one of them has to do with cash flow. This is especially important to understand as an entrepreneur. Your cash flow is not there to simply pay your bills. Yes, you must pay your bills of course, but there is more to it than simply making payroll.

Cash flow is a tool to help you build wealth and the value of your company. Healthy cash flow allows for you to control your money, and there are strategies you can explore to help you maximize it.

I recently spoke with a partner of a business who was earning a W-2 salary of $400,000 per year. In working with his CPA, we were able to rework his partnership agreement, removing him as an employee and adding him as a consultant of his own LLC. While this simple strategy reduced his tax liability by $20,000, implementing this strategy was about more than just lowering taxes. This was about cash flow – everything is always about cash flow. By making this little tweak, he increased his cash flow by $1,666 per month.

I’m not a CPA and don’t provide tax advice, but I ask a lot of questions and propose many scenarios for the tax professionals to consider – scenarios that can increase cash flow for business owners. Increasing and optimizing your cash flow should be a top priority for your business.

Mind Shift No. 4: Be Your Own Bank

Companies with cash are able to do many things without having to rely on a bank or other source of funding. In essence, they can be their own bank. Think about it. When you have cash, you can use it to work on your wealth-building strategy. You could buy a company, invest in equipment, hire more people (maybe even a replacement for yourself who can run the company while you collect passive income), buy property, or take advantage of any other opportunity that may come your way.

But there is another way you can be your own bank. Maybe you’ve heard of the concept of “BUILD Banking™,” a cash flow strategy using a specially designed life insurance contract. It’s a strategy that I use personally and with many of my clients who want to have greater control of their cash flow. It frees them from dependence on banks for capital infusions and avoids government red tape when they need to access their money.

For more information about BUILD Banking™, visit www.buildbanking.com.

This strategy enables business owners to grow assets tax-free and have access to those funds whenever they’re needed. In essence, you’re accessing cash when it is needed while having uninterrupted compounding growth for your future.

Mind Shift No. 5: Understand Your Legal Exposures and Protect Yourself

You likely have some form, or forms, of insurance in place for your business. And you may believe that these policies have you covered. Well, they may, and they may not. The coverage you need goes far beyond liability, even extending into punitive damages.

It’s important to work with an insurance professional who specializes in business coverage to ensure that you have the right type of policies and the proper level of protection for your specific business.

There are also certain types of insurance policies (including the BUILD Banking strategy I’ve described above) that can serve a strategic purpose for your business. It’s common, and valuable, for business owners to have a life insurance contract as part of their succession plan, acting as a funding mechanism for the beneficiary to purchase the deceased owner’s share of the business.

Again, you will want to have a collaborating team of insurance professionals who have expertise in their vertical and who understand your business, your goals and what you are trying to accomplish. It’s also a good idea to include your CPA, attorney and financial planner in on those discussions.

These five financial planning tips and mindset shifts will help you use your business as a tool to start building wealth (or build greater wealth). They may be things you’ve never thought about, or things you’ve considered but haven’t been able to implement. Putting these ideas to work can get you on the path to true business success.

Results may vary. Any descriptions involving life insurance policies and their use as an alternative form of financing or risk management techniques are provided for illustration purposes only, will not apply in all situations, may not be fully indicative of any present or future investments, and may be changed at the discretion of the insurance carrier, General Partner and/or Manager and are not intended to reflect guarantees on securities performance. Benefits and guarantees are based on the claims paying ability of the insurance company.

The terms BUILD Banking™, private banking alternatives or specially designed life insurance contracts (SDLIC) are not meant to insinuate that the issuer is creating a real bank for its clients or communicating that life insurance companies are the same as traditional banking institutions.

This material is educational in nature and should not be deemed as a solicitation of any specific product or service. BUILD Banking™ is offered by Skrobonja Insurance Services LLC only and is not offered by Kalos Capital Inc. nor Kalos Management.

BUILD Banking™ is a DBA of Skrobonja Insurance Services LLC. Skrobonja Insurance Services LLC does not provide tax or legal advice. The opinions and views expressed here are for informational purposes only. Please consult with your tax and/or legal adviser for such guidance.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Founder & President, Skrobonja Financial Group LLC

Brian Skrobonja is an author, blogger, podcaster and speaker. He is the founder of St. Louis Missouri-based wealth management firm Skrobonja Financial Group LLC. His goal is to help his audience discover the root of their beliefs about money and challenge them to think differently to reach their goals. Brian is the author of three books, the Common Sense podcast and blog. In 2017 and 2019 Brian received the award for Best Wealth Manager and in 2018 the Future 50 St. Louis Small Business.

Source: kiplinger.com

May 6, 2021

What to Know about FHA 203K loans

Buying a fixer-upper is sometimes romanticized by pop culture. While it’s fun to dream, the reality of home renovation is that it can be laborious and draining, especially if the home needs serious help.

Repair work requires energy and resources, and it can be difficult to secure a loan to cover both the value of the home and the cost of repairs—especially if the home is currently uninhabitable. Most lenders won’t take that sort of chance.

But if you have your heart set on buying a fixer upper, an FHA 203(k) loan can help.

The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), insures loans for the purchase and substantial rehab of homes. It is also possible to take out an FHA 203(k) loan for home repairs only, though it might not be your best option if that’s all you need.

If you have the vision to revive a dreary house, here’s info about FHA 203(k) loans and other home improvement loan options.

What Is an FHA 203(k) home loan?

Section 203(k) insurance lets buyers finance both the purchase of a house and its rehabilitation costs through a single long-term, fixed- or adjustable-rate loan.

Before the availability of FHA 203(k) loans, borrowers often had to secure multiple loans to obtain a mortgage and a home improvement loan.

The loans are provided through HUD-approved mortgage lenders and insured by the FHA. The government is interested in rejuvenating neighborhoods and expanding homeownership opportunities.

Because the loans are backed by the federal government, you may be able to secure one even if you don’t have stellar credit. Rates are generally competitive but may not be the best, because a home with major flaws is a risk to the lender.

The FHA 203(k) process also requires more coordination, paperwork, and work on behalf of the lender, which can drive the interest rate up slightly. Lenders also may charge a supplemental origination fee, fees to cover review of the rehabilitation plan, and a higher appraisal fee.

The loan will require an upfront mortgage insurance payment of 1.75% of the total loan amount (it can be wrapped into the financing) and then a monthly mortgage insurance premium.

Applications must be submitted through an approved lender .

What Can FHA 203(k) Loans Be Used For?

Purchase and Repairs

Other than the cost of acquiring a property, rehabilitation may range from minor repairs (though exceeding $5,000 worth) to virtual reconstruction.

If a home needs a new bathroom or new siding, for example, the loan will include the projected cost of those renovations in addition to the value of the existing home. An FHA 203(k) loan, however, will not cover “luxury” upgrades like a pool, tennis court, or gazebo (so close!).

If you’re buying a condo, 203(k) loans are generally only issued for interior improvements. However, you can use a 203(k) loan to convert a property into a two- to four-unit dwelling.

Your loan amount is determined by project estimates done by the lender or the FHA. The loan process is paperwork-heavy. Working with contractors who are familiar with the way the program works and will not underbid will be important.

Contractors will also need to be efficient: The work must begin within 30 days of closing and be finished within six months.

Temporary Housing

If the home is indeed unlivable, the 203(k) loan can include a provision to provide you with up to six months of temporary housing costs or existing mortgage payments.

Who Is Eligible for an FHA 203(k) Loan?

Individuals and nonprofit organizations can use an FHA 203(k) loan, but investors cannot.

Most of the eligibility guidelines for regular FHA loans apply to 203(k) loans. They include a minimum credit score of 580 and at least a 3.5% down payment.

Applicants with a score as low as 500 will typically need to put 10% down.

Your debt-to-income ratio typically can’t exceed 43%. And you must be able to qualify for the costs of the renovations and the purchase price.

Again, to apply for any FHA loan, you have to use an approved lender. (It’s a good idea to get multiple quotes.)

Home Improvement Loan Options

The FHA 203(k) provides the most comprehensive solution for buyers who need a loan for both a home and substantial repairs. However, if you need a loan only for home improvements, there are other options to consider.

Depending on the improvements you have planned, your timeline, and your personal financial situation, one of the following could be a better fit.

Other Government-Backed Loans

In addition to the standard FHA 203(k) program, there is a limited FHA 203(k) loan of up to $35,000. Homebuyers and homeowners can use the funding to repair or upgrade a home.

Then there are FHA Title 1 loans for improvements that “substantially protect or improve the basic livability or utility of the property.” The fixed-rate loans may be used in tandem with a 203(k) rehabilitation mortgage.

The owner of a single-family home can apply to borrow up to $25,000 with a secured Title 1 loan.

With Fannie Mae’s HomeStyle® Renovation Mortgage, homebuyers and homeowners can combine their home purchase or refinance with renovation funding in a single mortgage. There’s also a Freddie Mac renovation mortgage, but standard credit score guidelines apply.

Cash-Out Refinance

If you have an existing mortgage and equity in the home, and want to take out a loan for home improvements, a cash-out refinance from a private lender may be worth looking into.

You usually must have at least 20% equity in your home to be eligible, meaning a maximum 80% loan-to-value (LTV) ratio of the home’s current value. (To calculate LTV, divide your mortgage balance by the home’s appraised value. Let’s say your mortgage balance is $225,000 and the home’s appraised value is $350,000. Your LTV is 64%, which indicates 36% equity in the home.)

A cash-out refi could also be an opportunity to improve your mortgage interest rate and change the length of the loan.

PACE Loan

For green improvements to your home, such as solar panels or an energy-efficient heating system, you might be eligible for a PACE loan .

The nonprofit organization PACENation promotes property-assessed clean energy (or PACE) financing for homeowners and commercial property owners, to be repaid over a period of up to 30 years.

Home Improvement Loan

A home improvement loan is an unsecured personal loan—meaning the house isn’t used as collateral to secure the loan. Approval is based on personal financial factors that will vary from lender to lender.

Lenders offer a wide range of loan sizes, so you can invest in minor updates to major renovations.

Home Equity Line of Credit

If you need a loan only for repairs but don’t have great credit, a HELOC may provide a lower rate. Be aware that if you can’t make payments on the borrowed funding, which is secured by your home, the lender can seize your home.

The Takeaway

If you have your eye on a fixer-upper that you just know can be polished into a jewel, an FHA 203(k) loan could be the ticket, but options may make more sense to other homebuyers and homeowners.

SoFi offers cash-out refinancing, turning your home equity into renovation money.

Or maybe a home improvement loan of $5,000 to $100,000 seems like a better way to turn your home into a haven.

Check your rate today.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

May 5, 2021

What Is a Mortgagee? Hint: It’s Not a Typo

Are You a Mortgagee or Mortgagor?

It’s mortgage Q&A time! Today’s question: “What is a mortgagee?”

No, it’s not a typo. I didn’t leave an extra “e” on the word mortgage by mistake, though it may appear that way.

Despite its striking appearance, it’s actually a completely different word, somehow, simply with the mere addition of the letter E.

Don’t ask me how or why, I don’t claim to be an expert in word origins.

Seems like a good way to confuse a lot of people though, and it has probably been successful in that department for years now.

You can blame the British English language for that, or maybe American English.

Anyway, let’s stop beating up on the English language and define the darn thing, shall we.

A “mortgagee” is the entity that originates (makes) and sometimes holds the mortgage, otherwise known as the bank or the mortgage lender.

They lend money so individuals like you and I can purchase real estate without draining our bank accounts.

It could also be your loan servicer, the entity that sends you a mortgage bill each month, and perhaps an escrow analysis each year if your loan has impounds.

The mortgagee extends financing to the “mortgagor,” who is the homeowner or borrower in the transaction.

So if you’re reading this and you aren’t a bank, you are the mortgagor. It’s as simple as that.

Another way to remember this rather confusing word jumble; Who is the mortgagee? Not me!!

Mortgagor Rhymes with Borrower, Kind Of

mortgagor

Here’s a handy way to remember the word mortgagor
It kind of rhymes with the word borrower…
Or even the word homeowner, which is also accurate if you hold a mortgage on your property

I was trying to think of a good association so homeowners can remember which one they are, instead of having to look it up every time they come across the word.

I believe I came up with a semi-decent, not great one. Mortgagor rhymes with borrower, kind of. Right? Not really, but they look and end similar, no?

Anyway, the real property (real estate) acts as collateral for the mortgage, and the mortgagee obtains a security interest in exchange for providing financing (a home loan) to the mortgagor.

If the mortgagor doesn’t make their mortgage payments as agreed, the mortgagee has the right to take possession of the property in question, typically through a process we’ve all at least heard of called foreclosure.

Assuming that happens, the property can eventually be sold by the mortgage lender to a third party to pay off any attached liens, or mortgages.

So if you’re still not sure, you are probably the mortgagor, also known as the homeowner with a mortgage. And your lender is the mortgagee. Yippee!

What makes this particular issue even more confusing is that it’s the other way around when it comes to related words like renters and landlords.

Yep, for some reason a landlord is known as a “lessor,” whereas the renter/tenant is known as the “lessee.” In other words, it’s the exact opposite for renters than it is for homeowners.

But I suppose it makes sense that both landlord and mortgage borrower are property owners.

What About a Mortgagee Clause?

mortgagee clause

An important document you may come across when dealing with homeowners insurance
Stipulates who the lender (mortgagee) is in the event there is damage to the subject property
Protects the lender’s interest if/when an insurance claim is filed
Since they are often the majority owner of the property

You may have also heard the term “mortgagee clause” when going through the home loan process.

It refers to a document that protects the lender’s interest in the property in the event of any damage or loss.

It contains important information about the mortgagee/lender, including name, address, etc. so the homeowners insurance company knows exactly who has ownership in the event of a claim.

Remember, while you are technically the homeowner, the bank probably still has quite a bit of exposure to your property if you put down a small down payment.

For example, if you come in with just a 3% down payment, and the bank grants you a mortgage for 97% of the home’s value, they are a lot more exposed than you are.

This is why hazard insurance is required when you take out a mortgage, to protect the lender if something bad happens to the property.

Conversely, if you buy a home with cash, as opposed to taking advantage of the low mortgage rates on offer, it’s your choice to insure it or not.

But more than likely, you’ll want insurance coverage on your property regardless.

In summary:

Mortgagee: Bank or mortgage lender
Mortgagor: Borrower/homeowner (probably you!)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

May 5, 2021

4 Things to Tell Your Boss If You Want to Work From Home

These days, more and more employees are working from home on a regular basis. In fact, Global Workplace Analytics says that about 2.8% of the total workforce work from home at least half time. Nearly all U.S. workers say they’d like to work from home at least part-time, and about half the workforce say they could work remotely at least some of the time.

But what if you’re not one the lucky ones who stumbles into a job that already allows working from home, whether sometimes or on a regular basis? In this case, you might need to convince your boss that working from home is a good idea.

And, in fact, working from home is a good idea, much of the time. It can actually save you money, and it can reduce your overall stress level. And if you’re like many people, you might actually get more done in less time when you’re working from home.

Get It Now

But those arguments, especially the ones that are mostly beneficial to your personal life, may not be enough to convince your boss to let you work from home. Here are four more convincing arguments to try:

1. Better Productivity

Working from home isn’t a good fit for all jobs, but for some types, studies show that working from home actually increases productivity.

2. Reduced Overhead Costs

Outfitting an employee with an office or even cubicle comes with overhead costs. Not to mention all that water you flush down the toilet on bathroom breaks! In fact, many large employers started moving employees to work from home positions specifically to reduce overhead costs. (Of course, you’ll be taking on some of those costs by working from home — increased electricity and water usage can eat into your savings on commuting. You can try some of these easy penny pinching tips to help offset those costs.

3. Fewer Sick Days

Having the ability to work from home often curbs the number of sick days you take. You might not drag yourself into the office when you’re feeling under the weather, but you may opt to work as normal from your comfortable couch. Your fellow employees will appreciate fewer germs, anyway.

4. At-Home Workers Are Happier (& Stay Longer)

If working from home is really important to you, and if you’re in a field where it’s common, you may be more likely to stay in your job for the long term if you are allowed some flexibility to work from home. You don’t necessarily need to tell your boss this, but you can show that employees who work from home are happier in their jobs.

Making Your Proposal & Pulling It Off

Now that you’ve got some arguments in your back pocket, how do you go about actually asking your boss to let you work from home? Here are a few steps to take:

1. Create a Formal Proposal

Don’t just approach working from home by the seat of your pants, especially if it’s not already a common practice in your workplace. Instead, create a formal proposal for what working from home would look like for you.

What tasks would you accomplish at home? How would you handle meetings and phone calls? Would you be available during certain hours online? How would you keep track of the tasks that you’re working on at home? What sort of accountability system could you build in?

Put all this into writing. When in doubt, talk to someone else with a job similar to yours who works from home. See what kind of arrangements they have with their employers, and go from there. If others in your organization work from home, talk to them about their written work plans, too.

2. Pre-empt Your Boss’s Concerns

When you’re creating your proposal, try to think about it from your boss’s perspective. What concerns will he or she likely have? You know this person best as a supervisor, so you can likely anticipate how the conversation will go.

Again, talk to others in your organization who work from home sometimes or regularly, and use that as a jumping off point. You’ll want to work those points into your written proposal, preferably, or at least address them in your conversation with your boss.

3. Propose a Trial Run

Don’t just jump in and ask to switch your in-office job to a full-time, work-from-home position. Instead, propose a trial. You may want to propose a part-time work from home schedule of one to three days per week at first. And you should also suggest trying to work from home for a period of thirty to ninety days before you and your boss formally evaluate the situation.

Starting with a trial period can help make working from home more palatable. Plus, if you’ve never worked from home before, you may find that a blended schedule of in-office and at-home actually suits you better than working from home full-time.

4. Be Flexible

Go into the conversation with your boss with goals and a proposal, but be willing to take his or her feedback into account, too. Be flexible in what you’re asking for, and be prepared to give up ground if that’s what you need to get your foot in the door. Maybe your three days a week goes to two, or your 90-day trial goes to 30. It’s still a start!

5. What Else Can You Give Up?

Oftentimes, people who really want to work from home are willing to take a pay cut to do so, or at least forgo a big raise. This means that evaluation time can be a good time to ask for work-from-home privileges. If you get a great review and are offered a raise, consider counter-offering a smaller raise with the ability to work remotely part-time.

Maybe you’re not willing to give up a raise, but you have other privileges you could lay on the table in order to work from home. Or maybe you feel you’ll be so much more productive at home that you can tackle additional responsibilities. Either way, you could give a little to get a little in this conversation.

6. Prove You Can Do It

Finally, when you do get to work from home, don’t take advantage of the situation. Put 100% into your work each day, and set up your lifestyle so that you’re more productive than ever. Keep track of your goals, metrics, and to-do lists, so that if there’s ever a question of whether or not you can work from home well, you’ve got data to back up your answer.

[Editor’s note: It’s also a good idea to keep track of your financial goals. One way to do that is to check your credit scores. Credit.com’s credit report summary offers a free credit score, updated every 14 days, plus tools that help you establish a plan for how to improve your scores.]

Image: AlexBrylov

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Source: credit.com

May 5, 2021

Understanding credit card security codes – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Credit card security codes are an important security measure to prevent fraud and identity theft. They add an additional layer of safety when making purchases and help ensure the buyer is, in fact, the cardholder.

These security codes—often called CVV codes, short for “card verification value”—are three- or four-digit codes located directly on your credit card. They’re typically, but not always, asked for when making card-not-present transactions, such as those made online and over the phone. Here, we detail where to find them, how they work and why they’re important for consumer protection.

Where to Find Your CVV Code

The location of your CVV code depends on the credit card issuer:

Visa, Mastercard and Discover: The code will be three numbers on the back of the card to the right of the “authorized signature.”
American Express: The code will be four numbers on the front of the card above and to the right of the card number.

Where to locate your card's security code.

How to Find Your CVV Code Without the Card

Credit card security codes were designed to ensure that the person making a purchase actually has the card in their possession. Because of this, it’s impossible to look up your CVV code without having the physical card. This is why it’s important to have the physical card on hand if you need to make a purchase that requires a CVV code.

If an identity thief obtains your credit card number—for example, via shoulder surfing—may try to call the bank and pretend to be you in order to get the CVV code. However, banks typically don’t give out this information. Each financial institution has their own policies, but if you can’t read or access your CVV code, they will usually issue you a new card.

While most retailers require a CVV code when making card-not-present transactions, many don’t. In these instances, crooks would still be able to use your card.

How Are CVV Codes Generated?

According to IBM, CVV codes are generated using an algorithm. The algorithm requires the following information:

Primary account number (PAN)
Four-digit expiration date
Three-digit service code
A pair of cryptographically processed keys

Other Names for CVV Codes

Depending on the credit card company and when your card was issued, your security code may go by a different name. Even though there are many different abbreviations, the basic concept remains the same. Below are all the abbreviations and meanings for credit card security codes:

CID (Discover and American Express): Card Identification Number
CSC (American Express): Card Security Code
CVC (Mastercard): Card Verification Code
CVC2 (Visa): Card Validation Code 2
CVD (Discover): Card Verification Data
CVV (All): Card Verification Value
CVV2 (Visa): Card Verification Value 2
SPC (Uncommon): Signature Panel Code

Credit Card Security Code Precautions

While CVVs offer another layer of security to help protect users, there are still some things to be aware of when making card-not-present transactions.

Sign the back of your credit card as soon as you receive it.
Keep your CVV number secure. Never give it out unless absolutely necessary—and if you fully trust the person.
Review each billing statement to ensure there are no transactions you don’t recognize or didn’t authorize. If there are, contact your financial institution immediately and consider freezing your credit.

Protecting your identity requires constant vigilance—but emerging technology may have the potential to mitigate some of the risk of credit card fraud.

Shifting CVVs: The Future of Credit Card Safety?

Since chip-enabled cards replaced magnetic stripes, in-person credit card fraud has taken a big dip. Crooks are turning toward online and card-not-present methods of fraud. CVV codes are good at combating this type of fraud—but shifting CVVs, also referred to as dynamic CVVs, may be even better.

The technology works by displaying a temporary CVV code on a small battery-powered screen on the back of the card. The code regularly changes after a set interval of time. This helps thwart fraud because by the time a hacker has illegally obtained a shifting CVV code and tried to make a purchase, it will likely have changed.

Despite the security benefits, shifting CVVs haven’t been widely implemented due to high cost, and it remains to be seen if the technology and process can scale. Financial institutions have many measures in place, such as fraud alert, to notify you of potentially suspicious activity.

If you suspect you’ve been a victim of identity theft, call your credit card company, change your passwords and notify any credit bureaus and law enforcement agencies. By regularly checking your credit card statements, being careful about who you give your information to and being vigilant when making purchases, you’ll help do your part in keeping your identity secure.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com