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Posted on: April 27, 2023

The GI Bill offers veterans, military members, and their loved ones many benefits. But one thing it doesn’t cover? That’d be buying a house.

Fortunately, if you’re looking to purchase a new home as a veteran or active-duty service member, you still have options. While there may not be a specific GI Bill home loan out there, there is a mortgage program designed just for military home buyers — and it’s one of the best home loan programs on the market.

Are you interested in using the VA loan program to buy a house? Let this VA home loan info guide the way.

Check your eligibility for a VA home loan here (Apr 30th, 2023)

Mortgage program for military home buyers

Dubbed the VA loan program, these military-only mortgages are some of the best financing options available. They’re backed by the Department of Veterans Affairs and offer low interest rates, come with no loan limits, and require zero down payment at all.

So while there is no official “GI home loan,” military borrowers have access to a VA home loan benefit, a great mortgage program intended to put homeownership into reach for veterans, active-duty service members and their families.

Benefits of a VA loan

VA loans come with countless benefits, but the biggest perk is that they require no down payment.

Unlike other mortgage programs, which ask for anywhere from 3% to 20% down, VA loans require no down payment at all. This can offer significant savings right off the bat. (A low-cost FHA loan requires at least $7,000 down on a $200,000 house, for example, while a VA loan requires $0 down).

Some other benefits of VA loans include:

  • Competitively low interest rates
  • No credit score requirements
  • Limits on closing costs
  • Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and term it comes with)
  • No private mortgage insurance (PMI)
  • No loan limits
  • Can be used multiple times

VA loan mortgage rates 2023

When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than for the average consumer.

VA Conventional FHA
March 2023 6.18% 6.54% 6.44%
February 2023 6.04% 6.26% 6.30%
January 2023 5.96% 6.27% 6.22%
December 2022 6.17% 6.36% 6.36%
November 2022 6.56% 6.81% 6.66%
October 2022 6.62% 6.90% 6.73%

Source: Economic Research Federal Reserve Bank of St. Louis

A lower interest rate translates to a lower monthly mortgage payment and substantial savings over the life of your loan.

Qualify with GI Monthly Housing Allowance (MHA)

One last advantage? If you qualify for GI Bill benefits, you can actually use your GI Monthly Housing Allowance (MHA) to qualify for a VA loan. If you’re considering this option, talk to a VA lender. They can give you an idea of what your MHA qualifies you for.

VA loan eligibility & guidelines

For eligible borrowers, VA loans are usually the best mortgage option available. To qualify, borrowers must meet eligibility requirements set by the U.S. Department of Veterans Affairs and by the individual lender.

VA loan service eligibility requirements

VA loans are only for active-duty military members, veterans, and their families (including surviving spouses), so there are strict service requirements you’ll need to meet to qualify.

The exact standards depend on when you served, but generally speaking, you’ll need to have one of the following:

  • 90 consecutive days of active service during wartime
  • 181 days of active service during peacetime
  • 6 years of service in the National Guard or Reserves
  • A veteran/service member spouse who died in the line of duty or due to a service-related disability or injury

Qualifying for a VA loan

The VA doesn’t set specific financial standards for its loans, though private mortgage lenders — the companies who actually issue the loans — do. These vary from one lender to the next, but in most cases, borrowers need at least a 620 credit score and a debt-to-income ratio of 41% or less.

If you fall short of these requirements, you still might qualify. Just make sure to shop around for your lender, work on improving your credit, and consider making a down payment. These steps can all help you better qualify for a mortgage loan (VA or not).

VA loan property requirements

The VA home loan program is intended to help veterans and active-duty service members become homeowners. That means, with some rare exceptions, these homes are reserved for single-family homes that the borrower plans to use as a primary residence.

A VA appraisal will ensure the property meets the VA’s Minimum Property Requirements, to ensure the home is livable and worth the value of the loan.

See if you’re eligible for a VA home loan (Apr 30th, 2023)

Types of VA loans

You can use a VA loan to either purchase a property or refinance an existing one. In both cases, there are a few options.

These include:

  • VA Purchase Loans: These can be used to buy a home (up to four units), an approved condo, or a manufactured home. You can also use VA purchase loans to build a new construction property or purchase a home and renovate it
  • VA Streamline Refinance: Also known as a VA Interest Rate Reduction Refinance Loan (IRRRL), these streamlined refinance loans allow existing VA loan borrowers to lower their interest rates or get more favorable terms quickly and affordably.
  • Native American Direct Loans: These are VA loans reserved just for veterans of Native American descent. They can be used to buy, build, or renovate properties on federal trust lands or to refinance.
  • VA Cash-out Refinance Loans: These are VA loans that let you tap your home equity. They replace your existing VA loan with a larger-balance one and give you a lump-sum payment in return. Cash-out refinancing can be a good choice if you need to make repairs on your property or if you have unexpected or looming expenses to cover.

VA funding fee

The VA funding fee is a one-time fee you’ll pay at closing. It helps subsidize the VA loan program and keeps costs low for future VA borrowers. The exact fee depends on your loan type, the number of times you’ve used your VA loan benefits, and your down payment size.

VA home loan FAQ

How much is a typical GI home loan?

There is no GI Bill home loan, but VA loans have no loan limits. As long as you have your full entitlement, you can borrow as much as you need to purchase a property. Keep in mind, though, lenders have their own criteria for evaluating borrowers. These tend to be stricter on higher loan amounts.

What are the benefits of a VA home loan?

The VA housing loan is one of the most beneficial financing products out there. The VA guarantee means private lenders can afford to pass along valuable benefits to eligible veterans, active-duty service members and their families. These loans come with no mortgage insurance or down payment, they have low interest rates, and there are no credit score requirements or loan limits either.

How much house can I afford as a veteran?

That depends on your budget, the interest rate you qualify for, and the down payment you’re willing to make. You can use this VA home loan calculator to point you in the right direction.

What is a Certificate of Eligibility (COE)?

A Certificate of Eligibility is an official document from the VA that details your military service. Lenders use it to determine whether you meet the VA loan program’s service requirements, which are detailed above. You can retrieve your COE yourself through your eBenefits portal, or you can ask your chosen VA lender to request the document on your behalf.

Can I get a COE as the spouse of a Veteran?

You can get a Certificate of Eligibility as the spouse of a veteran in some cases, but not all. To qualify for a COE, your spouse will either need to be missing in action, a prisoner of war or have died while in service from a service-connected disability. There are some other nuances, too — especially if you’ve remarried, so be sure to check out the VA’s detailed rules here.

Can I get a Certificate of Eligibility (COE) for a VA direct or VA-backed home loan?

Certificates of Eligibility are required for all VA mortgages, including Native American Direct and VA-backed purchase and refinance loans.

How much is the VA funding fee?

Your VA funding fee will depend on a few factors, including the type of loan you’re using, whether you’re a first-time home buyer, and whether you’re making a down payment. Fees range anywhere from 0.5% to 3.6% of the total loan amount and is typically well-worth the VA loan savings it allows you to access. This money allows the U.S. Department of Veterans Affairs to continue to offer this valuable VA home loan benefit to qualified veterans, active-duty service members and their families.

GI home loans: The bottom line

While there is technically no such thing as a GI home loan, veterans and active-duty service members do have access to excellent VA mortgage program, which offers significant benefits including:

  • Zero down payment
  • Competitively low interest rates
  • No credit score requirements
  • Limits on closing costs
  • Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and term it comes with)
  • No private mortgage insurance (PMI)
  • No loan limits
  • Can be used multiple times

If you’re ready to buy a home (or refinance one), a VA loan might be your best option.

Ready to buy a home with a VA loan? Start here (Apr 30th, 2023)

Source: militaryvaloan.com

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Life insurance can be an integral part of most any complete financial plan. The takings from life insurance coverage can be used in a wide variety of ways, such as for paying off debt, continuing to pay everyday expenses, ensuring that a child or grandchild has funds to attend college in the future, paying estate taxes, and/or ensuring that one’s funeral and other final expenses are taken care of.

When looking for the best life insurance policy, it is imperative to make sure that you have the right type and amount of coverage. That way, your survivors won’t need to worry about financial hardship at an already difficult time in their lives.

It is also essential to ensure that the life insurance carrier you are planning to purchase the coverage through is secure and stable from a fiscal standpoint and that it has a positive reputation for quickly paying out its policy holder claims. One insurance carrier that meets these criteria is The Hartford.

History of The Hartford Life Insurance Company

The Hartford has been in the business of providing life insurance coverage for more than two centuries. The company had its beginning back in the year 1810 when it was formed as a fire insurance carrier. The Hartford quickly differentiated itself from other insurance companies at that time, when in 1835, a fire destroyed New York’s fire insurance district and the leaders of the company pledged their fortunes to help with paying the claims.

Throughout the years, the company grew and expanded, adding some insurance products along the way. Hartford continues its path of excellence today. In addition to offering financial protection through insurance coverage, the company helps in the communities in which it serves and promotes volunteerism and charitable donations. The Hartford also became a founding partner in the U.S. Paralympics in 2003, and it has been named as one of the world’s most ethical companies nine times.

The Hartford Life Insurance Review

Today, The Hartford offers an extensive list of insurance and other financial products, which can help its clients to customize their wealth enhancement and protection essentially. The company has a key focus on property and casualty insurance, as well as mutual funds and group benefits. It also offers life insurance and retirement annuities.

In the year 2016, Hartford had a net written premium of more than $10.5 billion just in personal lines insurance. In fact, Hartford is a leading direct personal lines insurance carrier, with a 30+ year partnership with AARP. The insurer has a leading share in P&C small commercial, and it is rated as the number two provider of workers’ compensation insurance. The Hartford is also ranked as the number four insurer in the group disability market, and number seven position in group life insurance coverage.

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Hartford Life is also a primary provider of group life insurance and in voluntary life insurance benefits. It serves more than one million small business customers with its coverage products. In 2016, the company had revenues of more than $18.3 billion. The Hartford is headquartered in Hartford, Connecticut.

Ratings and BBB Grade

Due to its strong financial position, The Hartford has high ratings from the insurer rating agencies. These include an:

  • A+ from A.M. Best Company
  • A+ from Standard & Poor’s
  • A1 from Moody’s Investor Services

Also, while The Hartford is not an accredited company through the Better Business Bureau (BBB), it has been given a rating of A- from the BBB, based on an overall grade scale of A+ to F. Over the past three years, The Hartford has closed out a total of 293 customer complaints – of which 13 were closed out over the past year.

Of these total 293 customer complaints, 202 had to do with problems with the company’s products and/or services, 71 were related to billing and/or collection issues, 12 were in relation to advertising and/or sales issues, 6 were delivery related, and the remaining 2 had to do with guarantee and/or warranty issues.

Life Insurance Policy Options Offered by The Hartford

The Hartford provides several options in terms of life insurance coverage. These come primarily by way of group life insurance coverage, as well as in voluntary life insurance plans that are offered through the employer-sponsored market.

Helping to protect employees against the unexpected is a key focus for many employers. Knowing that employees and their loved ones are covered financially can contribute to enhancing peace of mind, and in turn, employer productivity.

The Hartford offers industry leading group life insurance that includes features such as the following:

  • Enhanced Continuity of Coverage 
  • Living Benefit Option 
  • No Interruption in Premium Waiver Elimination Period
  • Portability and Conversion 

In addition, there are also a variety of other programs that can provide employees with access to online tools and services that can help with guiding them through major life decisions, such as funeral planning and / or the creation of a will.

The Hartford also offers Accidental Death and Dismemberment Insurance (AD&D) in the group life insurance arena. Here, protection is available to employees, as well as for spouses and / or children against losses that can stem from unforeseen covered accidents.

With this plan, there is 24-hour accident coverage that can be combined with an employee’s group life insurance offering – or alternatively, it may be purchased by the employee as stand-alone coverage. There are also various riders available with this plan that can help to better customize the insurance to fit an employee’s individual needs.

The Hartford also offers a variety of voluntary life insurance options in the employer market. The coverage amounts of this life insurance can range from a flat dollar amount to multiples of the employee’s salary. There are also additional benefits offered, such as help with the preparing of a will, funeral planning, travel assistance, and more.

The term life insurance coverage that is provided via the Hartford’s voluntary benefits can include a living benefit option / accelerated death benefit, as well as accidental death and dismemberment (AD&D), and a disability waiver of premium. As with the group life insurance coverage, the voluntary life insurance benefits offered by the Hartford are both portable and convertible.

The coverage is also quite flexible, allowing employees in many cases to choose face amounts of between $25,000 to $250,000, as well as coverage for his or her spouse – up to 100 percent of the employee’s value.

With the voluntary benefit offering, there is also children’s coverage available. This coverage can range up to $15,000 in benefit. And, the coverage for all the insureds is typically guaranteed issue. This means that the individuals will be covered, regardless of their current health condition.

In addition to life insurance protection for employees, the Hartford provides value added services that can help an employee’s recovery in the event of an unexpected situation. Just some of these services include the following:

  • Counseling Beneficiaries – This service offers compassionate expertise that can help employees to cope with the financial, legal, and emotional issues that come from losing a loved one.
  • Funeral Planning and Concierge Services – These online tools can guide employees through a loss, such as help with planning a funeral.
  • Will Services – The Estate Guidance Will Services that is offered through The Hartford can help with protecting a future with an online will, which is backed by support from licensed attorneys.
  • Travel Assistance – With travel assistance, employees can get information to help them with feeling safe and secure.
  • ID Theft Protection and Assistance Services – Today, the fastest growing crime is identity theft. Once an identity has been stolen, it can wreak havoc on an individual and their family for many years to come. With ID theft protection services from The Hartford, employees will have access to educational materials that can help with preventing such a crime, as well as access to case workers who can assist with resolving issues that can arise from identity theft.

Other Products and Services Available

In addition to life insurance coverage, The Hartford offers many other products and services to its customers. These include the following:

Auto Insurance

The auto insurance that is available through The Hartford includes car / vehicle coverage, as well as coverage for classic vehicles, RVs (recreational vehicles), boats, golf cards, snow mobiles, and ATV (all-terrain vehicles).

Home Owners Insurance

The home owner’s insurance offered via Hartford includes coverage for one’s primary residence and investment property, along with renter’s insurance, condo insurance, flood insurance, and overall umbrella insurance coverage.

Business Insurance

The Hartford works with businesses to protect what is important to them. The company provides a wide variety of different business insurance protection options to choose from, depending on a company’s needs. These include:

  • Business owner’s policies
  • Workers’ compensation
  • Commercial auto insurance
  • Commercial property insurance
  • Data breach insurance
  • General liability
  • Home based business insurance
  • Employment practices liability
  • Personal Liability Insurance

How to Find the Best Life Insurance Premium Rates Through The Hartford

If you are seeking the best rates for life insurance coverage from The Hartford – or from any highly rated life insurance carrier , it is recommended that you compare policies and the prices of multiple plans with an independent insurance agent or broker  – and from there, you can choose the option that will be right for you and your precise needs.

Source: goodfinancialcents.com

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By Peter Anderson 2 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited January 22, 2013.

A few months back the IRS released their 2012 IRA contribution limits and deduction phaseouts. If you have a traditional or Roth IRA, you should keep a close eye on the limits every year because every once in a while we’ll see an increase in allowed contribution amounts or in the income phaseouts.  When that happens, you’ll want to increase your contribution amounts, or adjust  your pre-tax giving so that you can fully take advantage of what the current rules are.

For the 2012 tax year the allowed contribution amounts haven’t changed at all.  The income phaseout limits have seen some small increases, however.

2012 Contribution Limits For Roth & Traditional IRA

2012 saw the contribution limit  both Roth and Traditional IRAs stay at $5,000 for people under the age of 50.  If you are older than 50 this year you are able to make catch up contributions to your account of $1,000 – which means your limit is actually $6,000.

One thing to remember is that the Roth and Traditional IRA contribution limit is shared, so while you can contribute to both account types in one year, your $5,000 limit is a combined limit.  So if you contribute $3,000 to your Roth IRA, you could only contribute $2,000 to your traditional IRA (bump that up by $1,000 if you’re over 50).

Here’s a table showing the 2012 Traditional and Roth IRA contribution limits, along with the limits in years past.

Year Age 49 and Below Age 50 and Above
2002-2004 $3,000 $3,500
2005 $4,000 $4,500
2006-2007 $4,000 $5,000
2008-2012 $5,000 $6,000
2013-2018 $5,500 $6,500
2019-2022 $6,000 $7,000
2023 $6,500 $7,500

AGI Based Income Phaseouts For  IRAs  In 2012

Both Roth and traditional IRAs have income phaseouts.  What that means is once you reach a certain level of income the amount of deductible contributions you can deduct gets reduced.

For Roth IRAs single taxpayers with an annual Modified Adjusted Gross Income (MAGI) over $110,000 begin to see their allowable deduction drop until at $125,000 it goes away completely. The limits for Married Filing Jointly investors are $173,000-$183,000.

For Traditional IRAs single taxpayers with an annual Modified Adjusted Gross Income (MAGI) over $58,000 begin to see their allowed deduction drop until at $68,000 it goes away completely. The limits for Married Filing Jointly investors are $92,000-$112,000.

Roth IRA Income Limits For Contributions (2021) Contributions are reduced if income is above this amount Contributions are not available if income exceeds this amount
Single/Married Filing Separate IF you didn’t live together during the year. $125,000 $140,000
Married Filing Jointly or qualifying widow or widower. $198,000 $208,000
Married filing separately IF you lived with your spouse at any point during the year. $0 $10,000

Tax Day Of The Following Year Is Contribution Cutoff

One thing a lot of people don’t realize is that if they haven’t already contributed the full amount to your Traditional IRA or Roth IRA for the 2011 tax year, they can still open a Roth IRA or a traditional IRA and contribute to the accounts up until tax day.  This year tax day falls on April 17th, 2012 because of a government holiday.

If you do make a contribution in 2012 before tax day, make sure you specify which tax year the contribution is being made for.

Keep An Eye On Phaseout Limits

One reason why you’ll want to keep an eye on the income based phaseout limits is that your ability to contribute to your accounts is reduced if you reach a certain income level.    If you know you’re close to reaching an income limit, try reducing your taxable income by contributing to an account like a 401k, reducing your taxable income and allowing yourself to contribute more to your IRA as well.

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Source: biblemoneymatters.com

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Should You Become an Authorized User? – MintLife Blog

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establish credit history, consider becoming an authorized user and building your credit in other ways, like getting a secured credit card.

What Is an Authorized User? 

An authorized user is someone who can make purchases on your credit card but isn’t legally obligated to pay the balance. It’s easy to sign someone up as an authorized user online or over the phone with a few pieces of information like their address, name, and birth date. You can order a separate card or have them use your credit card. You can have several authorized users on a single credit card, usually up to five. If the person is under 18, they can still usually be an authorized user on a parent or guardian’s account.

You get some privileges as an authorized user, but not the same ones as the cardholder. You can make purchases, find the available balance, and make payments. You can also report a missing card and dispute a fraudulent charge. Authorized users aren’t able to make changes to the account, though. For instance, they can’t close the account, add another user, or change the address.

Authorized Users and Credit

Becoming an authorized user could improve your credit score, but not always, and typically not in a drastic way. Check to see if the creditor sends authorized users’ activity to the major credit bureaus. Most do, but not all. If you’re trying to build your credit, you want to make sure being an authorized user will count toward your history.

When you’re a user on someone’s account who has a solid history of on-time payments and low credit utilization, it can help your credit. On the flip side, if you’re connected to someone with a lower credit score or a spotty payment history, your credit might suffer. For instance, if the cardholder misses a payment, your score could be affected, because it will also be reported on your history. That’s why it’s important to select someone you trust. Choose someone who you know will pay on time and not let their balance lapse. You can even have an upfront conversation about credit history and payments before being added as an authorized user to their credit card.

Just because you won’t be legally responsible for your charges, you may have a different arrangement with family. For example, Asher is an authorized user on his mom’s credit card. She pays for his groceries and utilities, but he is responsible for discretionary spending like going to the movies. Still, if the authorized user like Asher refuses to pay their portion, the cardholder remains responsible for covering it. If the cardholder doesn’t pay or can’t pay the balance, it could harm you more than help you.

Ways to Build Credit

Besides becoming an authorized user, there are other ways to build your credit. Try a combination of different approaches to build your history and show that you’re a responsible borrower.

  • Try a rent reporting service: Put your monthly payments toward your credit history by signing up for a rent reporting service. Proof of your payments is sent to the major credit bureaus. You’ll have to pay a small fee for the service, but it’s a low-risk way to create a credit history for payments you already make.
  • Apply for a secured credit card: Most credit cards are unsecured but require an established credit history. Secured credit cards allow you to put down collateral, such as a $500 cash deposit, in case you don’t pay your bills. These cards are for those without much credit history because the deposit guarantees payment to the lender if you don’t make payments. In most cases, secured credit cards carry higher fees and interest rates than normal unsecured cards.
  • Have someone cosign on a loan: Whether you’re purchasing a vehicle or need more funds for college, having someone cosign on a loan can help build your credit. Banks and lenders will often give out small loans to those without much credit history, as long as they have a solid cosigner backing them.
  • Choose a student credit card: If you’re in college, build credit with a student card. You may be approved even with no credit history. You might have a lower credit limit, such as $500 or $1,000, but the card allows you to spend on credit and build trust with creditors.

Practicing smart financial habits, like building your credit or having a personal budget, reaps rewards both now and in the future. Being an authorized user is one practical way to go about improving your overall financial health when done correctly. With a higher credit score and stronger finances, you can achieve bigger goals, like buying a home or saving for early retirement.

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Source: mint.intuit.com

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By Peter Anderson 9 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited August 24, 2020.

The Roth IRA is probably my favorite investment vehicles, and it’s something I’ve written about pretty extensively here on this site. When I started hearing stories from folks recently about how a lot of people have never even heard of the Roth IRA, I was a little bit shocked. Maybe I shouldn’t have been.

Jeff Rose of GoodFinancialCents.com recently gave a talk to a group of graduating seniors at his alma-mater about investing and retirement. While he was there he took an informal poll and asked who knew what a Roth IRA is.  Out of 50 people attending, not a single one knew what a Roth IRA was.  For Jeff that moment was a bit of an ephiphany, and he decided to start the Roth IRA Movement.  The Roth IRA Movement is a group of 140+ bloggers and personal finance journalists all coming together today to write about the Roth IRA, and to get others to start thinking about saving for retirement.

I decided to pitch in and give 10 reasons why the Roth IRA should be your retirement account of choice.

10 Reasons To Love The Roth IRA

There are probably a million and one reasons to love the Roth IRA, but for the sake of brevity, here are my top 10.

  • Tax free withdrawals at retirement:  The IRA and the 401(k) allow you to add funds to your account before the money gets taxed.  That’s great because it allows you to reduce your taxable income, and lowers your taxes now.  The Roth IRA has a great benefit as well, however. You pay taxes on your income now and fund your Roth IRA, and then you get to take your contributions and earnings out without paying taxes at retirement.  Who doesn’t love tax-free money at retirement?
  • Withdraw contributions at any time:  When you contribute money to your Roth IRA, you can withdraw those contributions without penalty or taxes at any time (not so with earnings).  While I wouldn’t suggest doing that as it can short-circuit your gains, it is nice to know that if an emergency arises and your emergency fund doesn’t cover it, this may be an option.
  • No age limit for a Roth IRA:   There isn’t an age limit to have a Roth IRA, so even your children can have one!  As long as you or your child have earned income, and you’re below certain income thresholds, most likely you will qualify to contribute to a Roth IRA.
  • Good way to diversify tax treatment:  As mentioned earlier in this post Roth IRA withdrawals at retirement are tax free.  By contributing to an IRA (pre-tax) and Roth IRA (post-tax) you can diversify your situation when it comes to taxes. That can be especially important if you’re unsure how your tax rates will compare – now versus at retirement.  Hedge your bets and contribute some to each.
  • High income limits: The income limits for contributing to a Roth IRA are relatively high, so most people will be able to contribute.  The limits are $193,000 if you’re married filing jointly, or $131,000 if you’re single, head of household, or married filing separately and did not live with your spouse for any part of the year.
  • Perfect for procrastinators like me:  The Roth IRA account type allows people to contribute to their Roth IRA right up until tax day of the following year.  So for example, if I wanted to start a Roth IRA and fund it for 2014, I could do that right up until April 15th, 2015, the day that taxes are due for 2014.
  • You can use it to save for college or a home without penalties:  You can take contributions out of a Roth IRA to pay for college expenses, without incurring any penalties.  While it isn’t always a good idea to short circuit gains in your account by taking money out, if you do run into the situation where you need to, you won’t be subject to the normal early withdrawal penalties and taxes.  Withdrawing earnings would still be subject to taxes, but no penalties.  For first time homebuyers, you can withdraw up to $10,000 tax free from your Roth IRA contributions and earnings, just be aware of all the fine print on withdrawing for a home purchase.
  • The Roth IRA can secure your golden years:  If you want to be secure in retirement you need to start saving, and start now!  The Roth IRA is a great way to get started because you can invest in smaller increments – which will add up to much larger dollar amounts by the time you retire.
  • A Roth IRA will usually have more investment options than your company 401k:  One great thing about the Roth IRA is that they’re flexible. You can invest in what you want through the Roth IRA.  Company 401ks aren’t always as flexible as you’re held hostage to whatever plan administrator your company chooses, and
  • Easy to open a Roth IRA: Opening a Roth IRA is really easy. Companies like Vanguard, Betterment, Wealthfront or Axos Invest have made the signup process to get started with a Roth extremely easy. In many instances it will only take a few minutes to open an account.  Depending on your investment strategy choosing your investments may take a bit longer, but it isn’t as complicated as some people might think.  Just choose where you’ll open the account, fund the account, and choose your investments.

Those are a few of the reasons why I love the Roth IRA, and why I think you should give the Roth a look as well.

Have you started your Roth IRA yet?  If not, what’s holding you back?  Tell us your thoughts in the comments.

Roth IRA Contribution Limits

Year Age 49 and Below Age 50 and Above
2002-2004 $3,000 $3,500
2005 $4,000 $4,500
2006-2007 $4,000 $5,000
2008-2012 $5,000 $6,000
2013-2018 $5,500 $6,500
2019-2022 $6,000 $7,000
2023 $6,500 $7,500

Open Your Roth IRA Today

Open your Roth IRA today with one of my favorite and recommended providers.

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Source: biblemoneymatters.com

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Posted on: May 25, 2022

VA loans present an incredible opportunity to eligible active duty service members, veterans, reservists and qualifying surviving spouses. But if you live in an expensive area or need a bigger loan, a regular VA loan might not be enough. Luckily, a VA jumbo loan is an option. 

Here’s what you need to know about this mortgage type.

See if you’re eligible for a VA home loan (Apr 27th, 2023)

What is a VA jumbo loan?

A VA loan is considered a jumbo loan if it exceeds the conforming loan limits for your county. Technically, there is no maximum VA loan amount. But the loan cannot exceed the appraised value of the home. 

What is VA Entitlement?

Essentially, VA entitlement is the amount that the Department of Veterans Affairs will guarantee for a lender. So, if you default on the loan, your VA entitlement is the maximum amount that the VA would repay your lender. 

You will have a full entitlement if this is your first time using a VA loan. Another way to get full entitlement is to pay off a previous VA loan in full and sell the property. If you have a full entitlement, the VA will guarantee up to 25% of the loan amount. Importantly, you can only have your full entitlement restored once. 

But if you previously purchased a house with the VA loan and haven’t paid off the loan, you may only have a partial entitlement left. With a partial entitlement, otherwise known as an impacted entitlement, you may still qualify for a jumbo loan. But you’ll have to make a down payment if you exceed your entitlement.

See if you’re eligible for a VA home loan (Apr 27th, 2023)

VA loan limits & VA jumbo loan limits

As a homebuyer, knowing the limits of a loan type are important. 

When it comes to government-backed VA loans, most homebuyers don’t have a limit. As of 2020, the Department of Veterans Affairs announced changes to the loan program. These changes included that it would guarantee the same percentage of the loan amount for lenders without regard to the loan amount. 

Of course, this generous guarantee is only available if your full entitlement is intact. 

If you have a partial entitlement, the numbers change a bit. You’ll run into a loan maximum that is impacted based on your down payment. Essentially, you’ll multiply your remaining entitlement by 4 to arrive at your maximum loan amount. But if you are making a down payment, you can add that to your remaining entitlement and multiple it by 4 to arrive at your maximum guarantee available through the VA. 

What qualifies as a VA jumbo loan?

A VA mortgage loan is considered a jumbo loan when the amount exceeds the conforming loan limits. Although these limits vary by county, the range is from $647,200 to $970,800 for single-family homes. You can find the conforming loan limits through this convenient map provided by the Federal Housing Finance Agency. 

But just because the VA is offering to guarantee this amount, it doesn’t mean that you’ll find a lender willing to approve you for a jumbo loan. With this in mind, you won’t run into a loan ceiling set by the VA. But you will run into a loan limit based on your qualifications. 

VA jumbo loan requirements

A VA jumbo loan might be an option for you. The requirements to qualify for this large loan will vary based on the lender.

Is a down payment required for a VA jumbo loan?

For those with full entitlement, the loan can exceed the conforming loan limit for your county. With that, you would have access to a VA jumbo loan. You may not even need to make a down payment. 

If you have a partial entitlement, you could still qualify for a jumbo loan. But you may need to make a bigger down payment because you’ll likely exceed your entitlement. 

Ultimately, the lender will determine whether or not you need to make a down payment on a VA jumbo loan. For example, a lender may offer a loan of $1.5 million without a down payment to a borrower with a high credit score. But the same lender may require a down payment of 10% on a $2 million loan. 

When considering a VA jumbo loan, it is critical to shop around. The right lender will be able to provide the ideal loan for your situation. 

Requirements to qualify

The requirements for a jumbo VA loan vary based on the lender. 

In general, you can expect more stringent requirements than you would find with a regular VA loan. 

Most lenders will want borrowers to have a credit score of at least 620. Plus, you may need to have some cash reserves on hand to qualify for this loan. 

VA jumbo loan rates

Typically, VA jumbo loan rates are similar to regular VA mortgage rates. The exact fixed rate you see will vary based on the lender and your loan qualifications. 

The good news is your VA jumbo loan rates should be lower than they would be for a traditional jumbo loan. Low rates are just one of the many VA loan benefits available for those with the appropriate military service. 

VA jumbo loan funding fees

As with all VA loans, you’ll have to pay a funding fee for the jumbo option.

The VA loan funding fee ranges from 0.50% to 3.6% of the purchase price in 2022. The exact fee will vary based on your loan purpose, which can include purchase, refinance (IRRRL), or cash-out refinance. Additionally, any previous usage of the VA loan can impact your fee. 

Although there is a funding fee, you won’t have to pay PMI. With that, your monthly mortgage payment won’t have that added cost. 

Pros & cons of a VA jumbo loan

Every mortgage product has advantages and disadvantages. Here’s what to keep in mind about the VA jumbo loan. 

Pros of a VA jumbo loan

  • Lower interest rates: You’ll likely find lower interest rates with a VA jumbo loan than with a traditional jumbo loan. 
  • Possibility of no down payment: Depending on your situation, you might not have to make a down payment. 

Cons of a VA jumbo loan

  • Funding fee: You’ll have to pay a funding fee of 0.5% to 3.6%.
  • More extensive property requirements: The property will need to pass a VA home inspection. 

VA jumbo loans vs. traditional jumbo loans

Like VA jumbo loans, traditional jumbo loans offer amounts over the conforming loan limit. And with that, traditional jumbo loans cannot be sold through the secondary mortgage market based on the guidelines set by Fannie Mae and Freddie Mac. 

The limitations on resale of traditional jumbo mortgages make it challenging for borrowers to find these types of home loans. If you are seeking a traditional jumbo loan, you’ll likely need to make a 20% down payment. That’s on top of having great credit and significant cash reserves. 

But VA jumbo loans can be securitized through Ginnie Mae, which makes lenders more willing to provide the loan. Plus, the guarantee by the VA makes a VA jumbo loan easier to obtain than a traditional jumbo loan. 

VA jumbo loan FAQ

What is a VA jumbo loan?

A VA jumbo loan offers loan amounts over the conforming loan limits for your county. 

This loan type is available through VA lenders that work with eligible borrowers. You’ll need to be an active-duty service member, veteran, or surviving spouse seeking a primary residence. If you are eligible for a standard VA loan, you may be eligible for a VA jumbo loan. 

Does the VA allow jumbo loans?

Yes, the VA allows jumbo loans as part of its home loan benefit program. 

If you have a full entitlement, you won’t encounter a loan limit from the VA. 

How does a VA jumbo loan work?

A VA jumbo loan works by allowing eligible borrowers to obtain loans larger than the conforming loan limits. If you are eligible for a VA loan, a lender may be willing to provide a VA jumbo loan. 

What is considered a VA jumbo loan?

A VA jumbo loan is considered any VA loan with an amount larger than the conforming loan limits for a particular county. 

When making a home purchase in a high-cost area, the conforming loan limit can be higher. But it might not be enough if home prices are too high. That’s when a VA jumbo loan can come in handy because the loan amount can exceed the limits. 

How much do you have to put down on a VA jumbo loan?

The required down payment for a VA jumbo loan varies. In some cases, you won’t have to make a down payment. But some lenders will require a down payment. 

In either case, you’ll need to cover a VA funding fee of 0.50% to 3.6%. That’s a substantial fee that will add to your closing costs. 

Can I get a VA loan for $1,000,000?

It’s possible to get a VA loan for $1,000,000 but you’ll need to meet the unique borrower requirements of a lender. You’ll likely need a great credit score and substantial cash reserves to qualify for a VA loan of this size.

See if you’re eligible for a VA home loan (Apr 27th, 2023)

Source: militaryvaloan.com

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When you apply for a loan, you might have the option to add a co-signer or co-borrower. And while the terms are similar, a co-borrower — or joint applicant — shares ownership of the loan and assumes responsibility for payments from the start.

On the other hand, a co-signer is only liable for the loan if the primary borrower fails to make payments.

Quite a few lenders will allow co-borrowers on a loan, but co-signers are much rarer. When you apply, confirm with your lender and the other person on the loan which term applies best to avoid confusion down the road.

Get pre-qualified

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

What are the differences between a co-signer and a co-borrower?

The most important difference between a co-borrower and a co-signer is the degree of investment in the loan.

A co-borrower has more responsibility (and ownership) than a co-signer because a co-borrower’s name is on the loan, and they are expected to make payments. A co-signer only backs your loan and will not need to make payments unless you are unable to.

Co-signers

A co-signer agrees to take responsibility for repaying a loan if the primary borrower misses a payment. The co-signer typically has better credit or a higher income than the primary borrower, who might otherwise not get a loan application approved without the help of a co-signer.

Co-signers typically have a close relationship with the primary borrower. A co-signer is typically a parent, immediate family member or spouse.

How it works

A co-signer is a guarantor for the primary borrower. Co-signers promise to assume responsibility for repayment if the primary borrower doesn’t pay as required.

Pros of a co-signer

Adding a co-signer to a loan application could improve a borrower’s chances of qualifying and securing a lower rate. Plus, if the loan is repaid on time, it can improve both parties’ credit scores.

Risks of co-signers

Like co-borrowers, co-signers take on financial risk. Co-signers are legally responsible for paying the outstanding debt that the primary borrower fails to pay.

Who a co-signer is best for

Co-signing is typically preferable if only one of the borrowers will benefit from the loan. For example, if a young person without established credit wants a personal loan, the bank might decide that the loan is too risky unless someone with better credit agrees to share legal responsibility for repayment. A parent with good credit might agree to co-sign with the understanding that their child will pay it back.

Co-borrowers

A co-borrower, sometimes called a co-applicant or joint applicant, is a person who shares responsibility for repaying a loan with another person — and who has access to the loan funds. Applying for a loan with a co-borrower reassures the lender that multiple sources of income can go toward repayment.

Applicants with co-borrowers are more likely to receive larger loan amounts since they are viewed as less risky for lenders.

How it works

In addition to both parties being responsible for making payments toward the loan, assets that guarantee the loan — like a home or car — may be owned by both co-borrowers. Each co-borrower has equal access to the loan funds. And if the loan was used to secure property — like a vehicle — both co-borrowers will be listed on the vehicle’s title.

Pros of a co-borrower

Similar to adding a co-signer, adding a co-borrower could help a consumer secure a lower interest rate. In addition, depending on the co-borrower’s income, it might also help them qualify for a higher loan amount.

Risks of co-borrowers

The biggest risk for co-borrowing on a loan is that each co-borrower is responsible for repayment from the start. Any actions by either co-borrower that impact the loan will have a ripple effect on the other borrower.

Who a co-borrower is best for

Co-borrowing is typically preferable if both borrowers will benefit from the loan. For example, if two people start a business together, they might take out a personal loan as co-borrowers and work on paying it back together. Both directly benefit from borrowing and enter the transaction knowing that they’ll each be making payments.

How to choose between a co-signer or co-borrower

The right approach depends on what your goals are for the loan. Consider these factors when choosing between a co-signer and a co-borrower.

Co-signers

A co-signer won’t have to put up collateral or accept responsibility for regular payments. Also, if the primary borrower makes on-time payments, the co-signer will never have to worry about the loan — and may still benefit from an improved credit score. .

On the flip side, if the primary borrower defaults, the co-signer will be on the hook for payments. Plus, they won’t be able to use the loan funds and might have difficulty getting approved for other loans since it still counts toward their total debt-to-income ratio (DTI).

Co-borrowers

A co-borrower benefits from the loan directly. Lenders may also offer lower rates and higher loan amounts, especially if both borrowers have good credit. And since each borrower has equal responsibility, you may not need to provide additional collateral to secure the loan.

What should I do before co-borrowing or cosigning?

Before co-borrowing or cosigning a loan application, have an open conversation with the other person. Determine if the loan is necessary, consider what alternatives there are and discuss each person’s financial picture and future goals.

Because both options have considerable financial risk, you should consider a contract that outlines how responsibility will be split and what happens in worst-case financial situations. It is also useful to research your state’s co-borrower and co-signer rights. There may be protections around property ownership and how credit is impacted.

Bottom line

Ask yourself a few questions before applying for a loan with someone else:

  • Can you afford to make payments toward the loan?
  • How stable is your source of income?
  • How will co-signing or co-borrowing affect your future goals?
  • What are the financial habits of the co-applicant or primary borrower?

Co-borrowing might make sense if you know the risks and want to borrow money with someone to accomplish a common goal. Alternatively, co-signing might be right for you if you want to help out a loved one by guaranteeing a loan.

Source: thesimpledollar.com

Apache is functioning normally

Upstart is one of the newer peer-to-peer (P2P) lending platforms available on the Internet. But the platform is coming up quickly, drawing interest from both borrowers and investors. Despite the fact that the service is barely two years old, Upstart could be one of the better P2P platforms to use, whether you are a borrower or an investor.

About Upstart

Based in Palo Alto, California, Upstart is a peer-to-peer lending platform that began operations in 2014. Despite Upstart’s tender age, the platform has already arranged more than $300 million in loans. The company was “founded by ex-Googlers” (former Google employees) to provide personal loans using very different lending criteria than is common even for P2P lenders, to say nothing of banks.

All loans made through Upstart are made by Cross River Bank, which is an FDIC insured commercial bank that is chartered in New Jersey, but funded through independent investors.

Upstart Borrowing Review

In most respects, borrowing through Upstart is similar to the process on other P2P lending sites, like Lending Club and Prosper. The application is completed entirely online, your loan request – if you qualify – is graded and priced, then the loan is funded.

But what makes Upstart different is the way they underwrite your loan. They check your credit score, your years of credit, and your job history, just like every other lender does. But those aren’t the only criteria that Upstart uses in determining whether or not to make a loan to you. They also consider your education and your area of study.

The idea is that “you are more than your credit score”. Upstart also considers your future potential, which they believe is demonstrated through your education experience. They will take into consideration the college that you graduated from, your grade point average, and your major – obviously certain major fields of study are considered to be an advantage from a lending standpoint. The Upstart system seeks to identify and make loans to what it refers to as “future prime” borrowers.

The Upstart target borrower. Because of the consideration of a borrower’s education, Upstart is well suited to new and recent college graduates. The company is less concerned with how deep your credit history is, or even your employment history. Your potential for future income becomes an essential consideration.

Traditional loan requirements. Upstart does require that you have a minimum credit score of 640, however there is no minimum credit history requirement. You must also not have any bankruptcies or other negative public records on your credit report.

There is also no required minimum income level, nor is there a maximum debt-to-income ratio (DTI). That could be a major advantage if a bank turned you down for a loan due to insufficient income.

Minimum/maximum loan amounts.The minimum loan amount on Upstart is $3,000, and the maximum is $35,000.

Loan term. There are two loan terms available with Upstart, 36 months or 60 months.

Loan purpose. Upstarts loans are generally classified as personal loans, but you can use them for just about any purpose you can imagine. For example you can use the proceeds to pay off credit cards, consolidate debt, refinance student loans, take a course for boot camp, pay for college or graduate school, make a large purchase, relocate, pay medical bills, start or expand the business, buy a car or anything else that you like.

Loan qualifications. In order to qualify for a loan with Upstart, you must be a US citizen or permanent resident alien, be at least 18, not live in West Virginia, have a valid email account, be able to verify your name, date of birth, and Social Security number, have a full-time job or a full-time job offer starting within six months, or a steady part-time job or other source of regular income, and have a US bank account.

Application process. The application is online, and requests information about your academic credentials, work experience and the purpose of the loan. All information provided on the application must prove to be correct. You can complete the application in as little as two minutes.

If you accept your loan no later than 5:00 pm (Eastern Time), your loan proceeds will generally be available on the next business day. Otherwise they should arrive after two business days. However, if the loan is being used for education purposes, there is a three day waiting period between when you accept your loan, and when the funds arrive. In any event, the loan proceeds will be wired to your bank account.

Documentation requirements. Upstart will run your credit report, and you will need to upload documents that support your income. If you are a full-time employee you’ll need to provide your most recent pay stub. If you will be qualifying using bonus or commission income, you will need an offer letter from the employer spelling out the terms and expected income. If you have multiple jobs, you will need the latest pay stub for each.

Rental income will require a copy of a lease on the rented property. And if you are self-employed, they will need the most recent year’s income tax return, as well as copies of current year’s invoices.

And since your college background is an important part of the loan evaluation process, you may also need to furnish a copy of your college transcript. A college transcript will be required if you graduated within four years of your application date.

One more point on income, and it’s a big one. Since the loan that you will be applying for on Upstart is a personal loan, you cannot include other household income on your application. That includes your spouse’s income, if you’re married. Your qualification is based on your income only.

What if you lose your job and can’t make the payments? Upstart doesn’t provide specific information on this point, but they do make the following claim on the website:

“If you are experiencing hardship and cannot pay, please contact us immediately. If you are unable to pay, we may be able to work on an alternative payment plan that will avoid additional fees or penalties.”

You also have the option to change your monthly payment date to better suit your schedule. However, the new payment date needs to be set before your actual due date, otherwise you will accrue additional interest.

Collateral. There’s more good news here; Upstart doesn’t require collateral on any of its loans.

Interest rate and fees. Your interest rate is generated by the model and is based on your application and a “soft pull” of your credit report. Rates range from 4.66% APR to 29.99% APR for a 36 month loan, and between 6.00% APR and 27.32% for 60 month loans.

Like many other P2P lenders, Upstart does charge an origination fee. That fee is equal to between 1% and 6% of the loan amount (putting it squarely in line with Prosper and the other lenders). However, there is no prepayment penalty should you choose to payoff your loan early.

Upstart Investing Review

Upstart is all about lending money to borrowers, but it’s equally accommodating if you want to join the platform as an investor.

Here are the highlights:

Minimum investment. You need just $100 to open an account and invest with Upstart.

Loan quality. Upstart claims that about 98% of their loans are either current or are paid in full. Only about 1.1% of their loans are more than 30 days late, and just 1.2% are listed as charged off.

Borrower quality. The good experience that Upstart has on its loans has to do with the profile of the typical Upstart borrower. Here are some statistics:

  • Average FICO score: 691
  • Average income: $105,842
  • College graduates: 90.9%
  • Refinancing credit cards: 76.2%

Refinancing credit cards needs some explanation as to why it is seen as a positive factor as a borrower profile. Loans generally perform better when they represent some form of refinance of existing debt. If the borrower has successfully managed that debt in the past, there is a credit track record, and a better chance that the new financing will be similarly well-managed.

In a borrower is using a new loan from Upstart to replace high-interest revolving credit card debt, with a fixed rate installment loan, the borrower’s financial situation improves immediately, particularly if the new monthly payment is lower than what the total payments were on the credit cards that were refinanced.

Expected Returns. As you’ll see below, you can expect to earn rates of interest on your Upstart loan portfolio that are well above what are available through banks and brokerage firms.

Here are the modeled returns listed on the site, based on loan grade:

  • AAA – 3 year loans 3.79%; 5 year loans 5.67%
  • AA – 3 year loans 4.50%; 5 year loans 6.18%
  • A – 3 year loans 5.60%; 5 year loans 7.14%
  • B – 3 year loans 6.88%; 5 year loans 9.13%
  • C – 3 year loans 7.93%; 5 year loans 11.92%
  • D – 3 year loans 9.01%; 5 year loans 13.67%
  • E – 3 year loans 10.57%; 5 year loans 15.57%

Modeled returns for each grade and loan term are net of the annual loss rate, which is different for each grade and term. For example, on AAA loans the annual loss rate is less than 0.1% on three year loans, and less than 1% on five year loans. At the opposite end of the spectrum, there is a 13.60% annual loss rate on three year loan grade E loans, and 11.19% on five year loan grade E loans.

Income tax reporting. Upstart will report taxable interest income earned on your account with the filing of Form 1099-INT with the IRS. Naturally, you will receive a copy of the document, which must be sent to you no later than January 31, following the year in which the interest income was earned.

Income taxes may be withheld from your interest income for a number of reasons. If you did not complete lRS Form W-9 when you opened your account with Upstart, then withholding will be required. It may also be necessary in the event that the name, Social Security number or taxpayer identification number that you provided to Upstart doesn’t match IRS records. In addition, withholding will take place if Upstart is notified by the IRS that it is required for any purpose.

Withdrawing funds from Upstart. You can have cash balances in your Upstart investment account transferred to your bank account at any time you choose. There can be a delay of up to seven business days with the transfer, depending upon your bank.

IRA accounts are available with Upstart. You can set up a self-directed IRA account with Upstart that allows you to invest in loans through the platform. Given that interest rates are so low at banks and brokerage firms, the higher interest income that an Upstart account can provide could make an excellent place to hold your fixed income IRA allocation.

Fees. There’s really good news here – Upstart charges no fees to investors. What’s more, Upstart doesn’t earn fees on loans that default. Even better, if the loan defaults, Upstart turns the fees that were collected when the loan was originated over to investors in the loan. This is where that origination fee of between 1% and 5% of the loan amount could loom large.

No FDIC or SIPC insurance coverage! There is one caveat in regard to investing with Upstart. In the event that Upstart goes out of business, there is no federally sponsored insurance agency or fund that will cover your investment with the platform. However, this is another factor that is common with P2P platforms.

Upstart claims that they have a backup servicer and administrator in place so that the loans held for the platform will continue to be serviced, and you will get paid as an investor in those loans.

Upstart Review Summary

If you are a borrower, Upstart uses innovative methods in approving loans. This is an excellent loan source if you are recently out of college, and have not fully established yourself financially, or if your bank thinks your income is insufficient to support a loan. The platform will accept a very short employment history, or even a written promise of employment. It gives you an opportunity to be approved for a loan, even though banks may decline your application.

From an investor standpoint, Upstart’s loan quality is providing solid returns. The emphasis on “future prime” borrowers may be allowing Upstart to tap into a market that other lenders are ignoring. That assures more good investment opportunities in the future.

Whether you’re looking to borrow or to invest, check out Upstart as one of the P2P possibilities.

Source: goodfinancialcents.com