Which Type of Mortgage Is Right for You?

Would you like to own your home within 15 years or 30 years?

When you’re approved for a mortgage loan one of the first questions asked will be if you want a fixed rate loan for either 15 or 30 years. Depending on your financial situation and income flexibility, you should determine which is the right loan for you.

Look at the rates and your income and decide if the loan repayments are something that you can truly afford without any problems. Experts recommend spending between 25 to 35% of your pretax income on your mortgage — this includes property taxes and home insurance payments.

Interest rates can vary between both loans, so it’s important to determine which rate would suffice.

First-time homebuyers

If you’re a first-time homebuyer, you may want to consider a 30-year mortgage to allow for smaller mortgage payments and overall flexibility of the loan. If you’re in the market and looking for additional property, you can look at the variables in choosing a 15 year mortgage. The bottom line is that you should consider the time of the loan, which could save you thousands of dollars in the end.

An FHA, or Federal Housing Administration loan can also help, as down payments can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan.

15 years

If you’re looking to pay off the mortgage in half the time of the 30-year loan, consider this option. The 15-year loan forces the consumer to discipline themselves into making those payments on time.

One big plus is that you can save money over the life of your loan and receive a lower interest rate. Also consider the fact that you will pay off the loan quicker and save on half the amount of interest. If you plan to only live in the house for a few years, this loan may be better for you.

You can still lock in a lower rate with this loan which may offset the increase in the monthly payment. The downfall of the loan is that you will have a higher mortgage payment.

If you miss even one payment due to a financial emergency, you risk your house being put on the foreclosure block. The lender is not flexible with this type of loan so you will not be able to switch to the 30-year mortgage should you change your mind. Really consider if this option is a viable one for you.

30 years

This option is great for someone who is a first-time homebuyer and is also the more popular choice due to its affordability.

Depending on the interest rate and size of the loan, you can expect to pay hundreds of dollars less than with a 15-year loan.  The flexibility of the payments on this loan varies.

Even though it may seem like you can afford to pay off a 15-year loan, you may want to consider the 30-year option due to the fact that there is flexibility. You can pay off your 30 year mortgage in half the time by paying more each month, which can go toward the principal amount.

If by chance there is a time within the life of the loan that you run into money problems, you can go back to the original payment agreement without any stipulations. Let’s consider the idea that if you borrow $100,000 for 30 years at 8% interest, you will ultimately end up paying the lender about $265,000. This includes the $165,000 in interest.

Whatever option you decide, make sure you do your homework before you commit to paying off a mortgage.

Steven Banass

Director of Quality Control

truerate partners

350 Pfingsten Suite 103 l Northbrook, IL l 60062

DIRECT:  (224)-374-1470

www.trueratepartners.com

Consequences of Maxing Out Your Credit Card

There are over 600 million credit cards held by U.S. consumers and the average credit card debt per household averages about $16,000 according to CreditCards.com.

Just because your card company offers you a $5,000 limit, doesn’t mean that you have to come close or exceed this amount.

Some of this debt can be a reflection of carrying a high credit card balance or maxing out on credit card purchases. With the average credit card holder owning 3.5 cards, it’s important to manage and keep track of purchases made with your card, so you don’t go over your credit card limit or cap.

Consequences

If for some reason you are nearing your credit card limit or if you go over your limit, there are dire consequences. You should be aware and prepared for the penalties and fees that will incur. When you max out on your card, you owe a debt to the credit card company and you’re expected to pay it.

There are various reasons why you shouldn’t max out your credit card. First off, you won’t be able to use your card at any time once you push your card to the limit. You will need to pay off a portion of the balance in order for you to use the card again. Some companies will close or put a freeze on the account all together, requiring you to pay the entire amount in full in order to use the card again.

You can bet on the fact that your credit score will be affected and will drop. The majority of you credit score is based on how much “available” credit you use.

Thirty percent of an individual’s FICO score is affected by what happens on the card. If you had good credit before you applied for the card, that will surely change the course of things, when you max out your card.

If you try to refinance a mortgage loan, apply for educational loans or attain additional credit, the maxed out card will show up on your credit report which look bad on your part and can determine if you are a risk or not.

At the lender’s discretion, they can charge a default rate if you max out. These rates can vary depending on the company and can rise as high as 30% or more depending on the balance, which could spell disaster for your repayment plans.

Depending on your credit cap, if you’re paying the minimum balance, the repayment can take up to a few years. The balance can include finance and interest charges that accrue along with over-limit fees which can balloon your balance. Don’t miss any payments or pay late under any circumstances.  This may increase your minimum payment amount and the lender can raise your interest rates which will affect your overall credit score.

What you can do

You can always choose to pay the balance in full; again this is depending on how much the balance is.

The best way to prevent going over your credit card limit is to stop the spending and create a budget in advance and establish where and when you want to spend your money. You can also sign up for email or text alerts to tell you when you’re about to go over your limit.

Steven Banass

Director of Quality Control

truerate partners

350 Pfingsten Suite 103 l Northbrook, IL l 60062

DIRECT:  (224)-374-1470

www.trueratepartners.com

UPDATE - BBB Shredder Day Parking Lot Change

UPDATE - BBB Shredder Day Parking Lot Change 

           

Chicago, IL - June 19, 2013 - Crime statistics show that last year, more than 9.9 million Americans were victims of identity theft, costing them roughly $5 billion.

The Better Business Bureau serving Chicago and Northern Illinois, in conjunction with various government agencies, invites consumers and businesses to protect their identities by shredding unwanted personal, financial or confidential documents FREE at the annual "Shred It and Forget It" Shredder Day at the United Center 1901 W. Madison St. Lot A in Chicago from 9AM-1PM on June 22nd. Gates close at 12:45pm. Free electronics recycling will also be available.      

Hosts of the annual event include the BBB along with the City of Chicago, Chicago Police Department, FBI, FTC, Illinois Attorney General's Office, and United States Postal Inspection Service. Shredding and recycling services will be provided by Acme Document Destruction, Beaver Shredding Inc., Chicago Shred Authority, Cintas Document Management, Shred-It, Inc., ShredStation Express, and Vintage Tech Recyclers.

As of January 1, 2012 the  Electronic Products Recycling & Reuse Act requires people to recycle their electronic devices including televisions, monitors, printers and computers, rather than allow them to be disposed of in a landfill.

TVs, monitors, laptops, PCs, servers, data storage devices, printers, fax/copy machines, cell phones, VCRs, DVD players, video cameras and game consoles are among the types of electronic equipment that will be collected for recycling at the event. To learn more about the electronics you can recycle at this event, visit www.chicagoshreds.com      

Participants are asked to limit the material they want shred to 10 boxes of documents per vehicle. There will also be free home shredders given away during the event every 15 minutes. You can register online to win a free shredder at www.chicagoshreds.com

Below are some suggestions for deciding how long to keep personal financial information:  

• A good rule of thumb is to keep all tax returns and supporting documentation for seven years. The IRS has three years from your tax-filing date to audit, and has six years to challenge a claim.

• Keep credit card statements for seven years if tax related expenses are documented.

• Keep paycheck stubs for one year. Be sure to cross reference the paycheck stub to the W-2 form.

• Be sure to keep bank statements and canceled checks for at least one year.

• Bills should be kept for one year or until the canceled check has been returned. Receipts for large ticket items should be kept for insurance purposes.

• Home improvement receipts should be kept for six years or permanently.

• Items such as birth certificates, social security cards, insurance policies, titles or wills should be kept permanently in a safety deposit box.

• If you are going to dispose of documents with sensitive information, be sure to SHRED!

More information about the "Shred It and Forget It" Shredder Day event can be found at www.chicagoshreds.com 

For more information on how to protect your identity, visit www.bbb.org

Breaking News from CNN

Call me today!

Steven Banass

Director of Quality Control

truerate partners

350 Pfingsten Suite 103 l Northbrook, IL l 60062

DIRECT:  (224)-374-1470

www.trueratepartners.com

College Grads: How to Manage Your Finances This Summer

Congratulations, you’ve graduated from college! As a college grad, there are many transitions you’ll be making into the “real world,” now that you’re done with 16 years of schooling. (Sixteen!)

Whether you have something lined up immediately or you plan on exploring options, it’s important to understand your finances now that you’re finished with undergraduate studies. You’re a college grad, you have no excuse not to!

For those going to grad school

If you have student loans, you won’t need to starting repayment until you’re done with grad school. However, if you plan on taking out new loans for grad school, consider your options. If you took out loans for undergraduate studies and you didn’t pick the best loans (read: they had high interest rates), now is the time to really learn more about the loans you’re taking out. It’s in your best interest to find loans with the lowest interest rates and how you can qualify for them.

Keep in mind, graduate school programs offer less financial aid than undergraduate ones. Perkins loans, for example, are available for grad students and they’re government-backed loans, usually one of the best options because it has the lowest interest rate at 5%. However, only those who demonstrate serious financial need will qualify for these loans and how many Perkins dollars are available to you depends on the school you attend, which goes for all federally-backed loans. So if financial aid is a priority, make sure you do research on the kinds of loan amounts available to you from the schools you’re interested in attending.

Find more information on the different kinds of student loans available in our Guides.

For those still looking for a job

Don’t panic. The economy is still in bad shape, and despite it being less horrible than it was 5 years ago, it’s still recovering at a very sluggish pace. Finding a job is not the same process as it was years ago, and it’ll take perseverance and patience. Don’t beat yourself up for not being a nab a job as fast as you’d like, and don’t compare yourself incessantly with others who have.

If money is tight, absolutely consider moving home while you get it all figured out. If possible, get a job that gives you flexibility to look for others, so you can earn some money in the meantime. Also, consider doing odds-and-ends on the side to earn extra money, like picking up work on Elance.com or decluttering and selling your items. (Don’t take the “Arrested Development” route of earning side money though!)

While it may be harder to figure out a budget when your financial circumstances can change day-to-day, budget anyway. Figure out how much you earn with your paying job, and how much side income you can also earn. Make goals for yourself to stay motivated.

If you have student loans, look into deferment options or income-based repayment plans. For certain plans, you may qualify for $0 monthly payments if your income is low enough.

Update your LinkedIn, post your resume on Monster, CareerBuilder, Indeed.com, and give Craigslist a browse. Attend networking events, career panels, and reach out to people for coffee to learn more about their career processes. Most importantly, stay productive and positive.

For those starting their first full-time jobs

Congratulations are in order again! You’re going to start on another chapter of your life and if you have been lucky enough not to have to deal with money or finances outside of maintaining a part-time job during college, now is the time when you will.

Now that you’ll be starting your first job, you have no excuse not to learn about how to manage your finances. Have you set up a bank account? Do you have credit cards? Do you plan on contributing to savings? Retirement?

While it may be overwhelming, we’re here to help. If you didn’t have a bank account while you were in college, set one up now. Consider what you want out of your bank — online checking, robust mobile banking, no-fee ATMs — and narrow down a list of options. Look up a bank and check out our bank report card pages for an overview on how well banks are doing, and read some of the comments from bank customers.

Now that you’re hired and you know how much you’ll be earning, figure out your living expenses. Even if budgeting is not your thing, list out all your anticipated costs (rent, utilities, food) and plan for the payments you’ll be making (credit card? student loans?). Set some savings goals and contribute as much as you can. Even if you’re only working with rough figures, once you have all those figures on your list, you’ll be able to see how much money you’ll have left over, month to month. The first few months of working with a budget might be tough, but after you have a better sense of your working lifestyle, managing your money will be much easier.

If you haven’t used a credit card throughout college (bravo, my friend), it might be a good time to apply for one, just so you can build your credit history. Think about your lifestyle and get a card that fits what you like to do: do you eat out a lot? Get a card that has better reward options for dining out. Thinking of traveling a lot? Earn points towards travel. Check out our credit cards section to compare some of the best cards on the market.

Are Identity Thieves Living It Up on Your Utilities?

Identity thieves may be living large — watching HBO, running the AC nonstop and taking long showers — all on your dime. Learn about utility fraud and how to protect yourself in this Q&A with Brett Montgomery, a fraud operations manager at IDentity Theft 911′s Resolution Center.

What is utility fraud and how does it affect consumers?

Utility fraud comes in several flavors. The most common involves the opening of a fraudulent account — for cable, electricity, water or gas — in a consumer’s name without their knowledge. One reason this type of fraud is so common is that it’s so easy. Very little information is needed to open a utility account — a name, phone number, and service address are usually enough, and in any case, the service address belongs to the criminal. It’s really much too simple.

Another reason utility fraud is so prevalent is that it takes a long time to discover. In most cases, there’s no way for the victim to know that an account has been opened in his or her name. The fraudulent account often is opened with another service provider in another city or state—and even after an account goes to collections for nonpayment, it can be months or years before a collection agency can track down the supposed account holder. By that time, the criminal is long gone.

3 Times It’s Crucial to Montior Your Credit

What can consumers do to protect themselves against utility fraud?

This is a tough question because the crime itself is so easy to commit. In general, we give the same advice for utility fraud as for other forms of account fraud: Don’t expose your personal information, and watch your accounts and credit reports for anything suspicious. Shredding bills and other documents before you dispose of them is especially important. A lot of the information used in utility fraud is simply pulled from the victim’s trash.

But the truth is that while you can take measures to protect yourself, this crime cannot be prevented. We have had cases where consumers who regularly check their credit reportsstill had no idea that accounts had been opened and services rendered in their name. Why? Because the accounts aren’t reported until they reach collections — and even then, they have to find the consumer before they can report it.

Because so little information is required to open the account in the first place, connecting those dots can take a very long time. To make things worse, the criminals are using their own address as the service address, so collection notices go to the criminal, not the consumer. The result is that the victim remains in the dark.

5 Credit Rules Everyone Should Follow

What are the different types of utility fraud?

Cable accounts are actually the No. 1 type of utility fraud we see, followed by the opening of fraudulent household electricity and gas accounts. We see fraudulent accounts being opened with all the major cable providers — Dish, Comcast, DirectTV — and at this point, they know us well.

These cases can be tricky for consumers to resolve, because you really have to know the process. It can be hard for a consumer even to get to the right department. Dealing with the documentation and other requirements for getting the fraudulent account removed can be confusing and time-consuming for the average consumer.

One fact worth noting is that utility fraud hits about 15 percent of senior citizens.

Can You Really Get Your Credit Score for Free?

How are these cases resolved?

Trying to clear it up is difficult. A consumer basically needs about twice as much information to clear their name as they would need to open an account in the first place. To do that, there are three documents that are essential from the point of view of the utility company:

• A police report to show that the crime has been reported.
• A sworn affidavit from the victim attesting to the facts in the case.
• Proof of a current utility service with the dates of service.

Beyond that, the more documentation, the better. We recommend when notifying the utility company that you ask them, “What do you need?”

Most utility companies are satisfied to have the consumer complete the standard affidavit provided by the Federal Trade Commission (FTC). But some utilities require that the consumer use their own form for the affidavit.

Are there other utility-related scams that people should know about?

The AARP has a solid list of utility scams that’s worth checking out. One common scam uses spoofing software to manipulate the information that appears via Caller ID to make it look like the call is coming from a utility company. When you answer, the caller tells you that your account is past due, then offers to have you take care of it right then and there — all you have to do is give them your credit or debit card information. Needless to say, if your bill really was unpaid, it will stay that way.

Mortgage-Bond Yields Approach 14-Month High After Jobs Report

Yields on Fannie Mae and Freddie Mac mortgage bonds that guide U.S. home-loan rates approached a 14-month high as May employment data failed to allay concern that the Federal Reserve will pare back its unprecedented stimulus.

Fannie Mae’s current-coupon 30-year securities rose 0.03 percentage point to 2.96 percent as of 11 a.m. in New York, according to data compiled by Bloomberg. Yields reached 3 percent on June 4, the highest level since April 2012, climbing from a record-low 1.68 percent in September when the Fed said it would start buying $40 billion of home-loan debt a month to begin its third round of bond purchases.

“I don’t think much can be taken away from today’s numbers in terms of tapering being taken off the table,” Matthew Peterson, a money manager in New York at Bank of Toyko-Mitsubishi Ltd., said in a telephone interview. “We still have the potential for tapering in September and we still have a couple of long summer months of employment reports before we get to that meeting” of Fed policy makers, he said.The Fed has stoked credit markets through buying $85 billion of the bonds and Treasuries monthly to stimulate the economy, a program that policy makers have said would remain in place until evidence emerges of a sustained improvement. While figures released today showed the jobless rate unexpectedly climbed from a four-year low to 7.6 percent, payrolls rose 175,000, more than the median forecast in a Bloomberg survey.

“So volatility will continue at least through the summer,” Peterson said.

Pimco Buying

Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said earlier in a radio interview on “Bloomberg Surveillance” with Tom Keene and Mike McKee that the employment report suggested the Fed won’t taper.

“Today’s report doesn’t say anything about tapering at all,” Gross said. Fed Chairman Ben S. Bernanke “won’t taper. But I think ultimately in order to get a more normal economy, the Fed has got to move interest rates up to more normal levels,” he said.

Pimco has begun to re-enter the mortgage-bond market after relative yields on the securities widened during the past month, he said.

The central bank’s debt buying had been pushing down mortgage rates, helping property prices rally after a five-year housing slump and boosting homeowner refinancing that’s aided consumers and banks. With interest rates now rising, it’s no longer attractive for borrowers to refinance about $600 billion more of Fannie Mae and Freddie Mac 30-year loans, JPMorgan Chase & Co. analysts wrote in a report yesterday.

Mortgage Rates

The average rate for a 30-year fixed mortgage rose to 3.91 percent this week, from this year’s low of 3.35 percent five weeks earlier and a nadir of 3.31 percent in November, according to Freddie Mac surveys.

Securities in the more than $5 trillion market for housing debt backed by government-supported Fannie Mae and Freddie Mac or U.S.-owned Ginnie Mae lost 1.5 percent in May, the most since April 2004, according to Bank of America Merrill Lynch index data. The notes declined an additional 0.1 percent this month through yesterday.

Losses among Fannie Mae’s current-coupon securities, or those trading closest to face value and the largest target of the Fed’s buying, have been more extreme, totaling 4.5 percent since April, according to Bank of America Merrill Lynch index data.

A measure of spreads on the Fannie Mae current coupon debt declined for a second day. A Bloomberg index of yields on the mortgage bonds narrowed about 0.01 percentage point to 1.38 percentage point higher than an average of five- and 10-year Treasury rates. The gap soared almost 0.3 percentage point from the end of April to 1.42 percentage point on June 5.