Requirements of HELOC’s and Home Equity Loans

Sometimes things can happen that put you behind on a few payments. Then it can all snowball quickly. What do you do when your mortgage is behind? Some homeowners opt to apply for a home equity line of credit or equity loan.

Standard home equity loans offer a large lump sum for the entire amount you are borrowing against while HELOCs allow you to borrow on your home equity at different times and in varying amounts, as you need it. Whichever method you choose, the qualifications for both are similar.

  • The equity in your home must be at least 15-20% of its value at the time of appraisal. This guarantees the lender of collateral in the event you are unable to pay back the loan. If you default, the lender can put a lien on your home to get their money back.
  • You need a debt-to-income ratio of 43%, but 50% is preferred. The higher your debt-to-income ratio is, the better because it means that you are making more money than you owe, in general, and you are considered a lower repayment risk.
  • You should have a credit score of 620 or higher. Lenders love high credit scores because it means you usually meet your obligations.
  • You need a strong history of paying your bills on time. Even if you have fallen behind on your recent mortgage payments, bankers and lenders want to see that you usually make a habit of paying your bills on time. This means that they can trust you to pay back the loan in a reasonable amount of time.
  • Recommendations from other lenders help build your credibility. If you go in with a 740-credit rating, you are almost guaranteed you’ll get the loan. But that depends on how well you meet the other qualifications. Provided you follow these steps and meet these requirements, you should be able to secure either a home equity loan or line of credit without too much trouble.

An Example of a HELOC

If you are still having troubling grasping the idea of a HELOC, here’s an example. In this example, we will assume you bank with Chase as your lender, and you are looking to utilize a Chase home equity line of credit If you have total home equity of $40,000 and the lender requires you to keep up to 20% of your home equity, you’d be allowed to borrow up to $20,000 or half of your loan.

Home equity lines of credit have fallen in popularity recently due to the recent surge in home ownership and increased equity. In a bad market or down times, we tend to see this increase. But when things are going well in the economy, people need the money less, and they are hesitant to borrow on a refinance agreement due to the variable interest rates of a HELOC.

In a perfect world, when things are going well for you, don’t borrow if you don’t have to! But if you need to get ahead and don’t have the cash flow you need, you can choose to apply for either a lump sum cash loan via a home equity loan or a home equity line of credit. Either option is a viable alternative to get ahead and avoid the worse scenario of defaulting on your mortgage. If you need help paying your mortgage, don’t let it go too long. Ask a financial advisor or local banker about an HELOC or home equity loan and see if you qualify. Keeping your home and your credit in good standing should be your primary goal, no matter how you have to do it.

 

How to Buy a Great Car for the Best Value

Saving money is vital when you’re searching for a new car for yourself. Your desire should be to find the car with the most value for the least amount of cash. Here are a few tips you can use to help you find an excellent vehicle for the best value.

Research Efficient Vehicles

Saving money begins with looking for features and benefits that can cut overall usage costs. Therefore, you should research available cars to find options that have high fuel efficiency numbers and safety features that will reduce insurance costs. You can get your hands on a fabulous car that offers you more than 30 miles per gallon and save hundreds of dollars on filling it up for traveling. Look for safety features like airbags and security systems to get discounts on your insurance premiums, as well.

Sell Your Old Car for Cash

Another thing you may want to consider doing to help with your new car purchase is selling your old car for cash. You have several options for selling your car. You can put it in the newspaper or an online classified ad site. Alternatively, you can offer it to a company that specializes in buying used cars for cash. Most companies specializing in cash for cars in Utah and other states are willing to buy used vehicles with minimal hassle. The money you receive can then help you with the down payment on your new vehicle. The heftier the down payment is, the more of an opportunity you will have to reduce the monthly payments if you opt to finance. It will alleviate the burden if you want to pay cash, as well.

Find a Private Owner

Finding a private owner to buy your next vehicle is one of the absolute best ways to save money. Private owners often want to sell their vehicles quickly to pay bills, move or involve themselves in business ventures. You can bargain with a private owner in a way that you can’t bargain with the dealership. You might come out of this situation with an amazing car at an awesome price if you possess the gift of gab.

Bargain Hard

No matter where you buy your car, you can always get a sales advantage by using hard bargaining. For example, you can negotiate the price for exterior flaws such as dents, dings, nicks and missing paint. You can ask for a discount if you see that the tires don’t have a high amount of tread on them. You can perhaps knock off some of the price if you notice a minor repair that needs to be done. Use every opportunity possible to get yourself the best deal you can on the car. Set a threshold price in your mind and work hard not to go past that when you buy your car.

Find Dealer Specials

Finally, you can find a great deal on a car if you take advantage of specials the location might offer. One kind of special that may work well for you is a closeout special. A closeout deal is a sale on inventory from the previous deal that didn’t sell as quickly as the dealership may have wanted it to. Other specials you may come across are manufacturer discounts, dealer promotions, and holiday sales.

Now you know a few secrets you can use during your car-seeking journey. Start using them today and see if they can help you get a fantastic ride for yourself. With any luck, you’ll end up behind the driver’s seat in no time.

How Some of The Rich & Famous End Up Dead Broke

Celebrities have captured the attention and imagination of regular folks for over a century. We tend to measure our own success and build our dreams based on how we see famous people living. But, the truth is that fame doesn’t always mean vast wealth.

There are plenty of celebrities that may appear to be living the high life, but in fact are struggling with finances. How does this happen? When you are in the public eye, many celebrities can get caught up in the rush of new money and keeping up the illusion of having money to spend.

For us non-famous folks, struggling with money can mean taking out a payday loan or tightening the budget belt, but for celebrities it can mean losing everything in a minute. There are some lessons to be learned here. You may come into some money one day, with or without the 15 minutes of fame. Let’s take a look at some of the most common mistakes that stars make that can have them poorer than where they started.

Rags To Riches Syndrome

Many celebs come from very modest means. When they hit the big time, the money rolling in can be overwhelming. The temptation to live and spend big can be hard to resist. Add to that the sudden change in their social circle, and in no time at all, new stars can find themselves rubbing shoulders with the rich and famous. The need to live up to those kinds of financial standards can be intense.

When wealth and fame come quickly, many stars may overestimate the power of their 15 minutes of fame. It may feel like they will be famous forever, when in fact they could end up being a flash in the pan like so many other minor celebrities. The public can be fickle, and the hottest thing today can be old news tomorrow. Assuming that the money will just continue to roll in is a common mistake for new stars.

Poor Money Management

Living the celebrity life can be busy and chaotic. For people that aren’t familiar with the ways of the famous, it can be easier to let someone else deal with the finances. This is a mistake that has cost many celebrities dearly. When checks are being signed and money is being managed without any sort of monitoring, it is no surprise that many stars are shocked to learn that the money has run out.

For many upcoming stars that have come from modest means, they have no real life experience in wise money management. That lack of experience and naive trust in advisors are what end up putting many in financial ruin.

Bad Investments

Opening your own restaurant, putting your name on a liquor brand or partnering with a designer to create your own clothing line are all celebrity standards in investing. Just because the fame is there today, doesn’t mean that the name will be able to support a brand long term. When money is no longer an issue, stars can tend to make unwise and spontaneous investments that are too risky.

It’s not uncommon when someone comes into money that family and friends start asking to borrow money. In many cases, personal loans are what can drain a celeb’s bank accounts faster than any other bad investment.

Divorce

Celebs that are married before they make it big can be at risk of losing everything in a divorce. As lives change quickly once celebrity hits, often marriages can dissolve just as fast. Although divorce can be expensive for anyone, stars that were married prior to their fame are less likely to have a prenuptial agreement in place. This means that their spouse is entitled to at least half of everything accumulated during the marriage.

How to Deal with the Unexpected Costs of Divorce

A divorce can be expensive. What you have to figure out is just how expensive. What unexpected costs will you find?

This is not a simple question of just doing the math. Besides your own evaluation of costs, there will be that of your spouse and their lawyer.

It’s difficult, and here are a few five things to consider when figuring out the costs.

Financial Planning

Despite all the conflicting emotions you’ll experience when you go through a divorce, a part of you has to remain utterly logical about financial planning.

You must find out about the legalities and think about how they’ll impact your financial wellbeing.

While a divorce lawyer can answer all your questions about legal rights and obligations, you also have to pay attention to how much you can afford to settle without suffering extreme financial hardship.

How Much Will It Cost?

Adding up all the various costs involved in a divorce can be utterly confusing.  While you could rely on a calculator, a spreadsheet, or a notebook, this will be a slow and often inaccurate way of figuring out what you own and how much you owe.

A better solution for doing the math is to get a divorce calculator. The calculator will help you stay focused on adding up and subtracting the right things.

It’s also a good idea to talk to an accountant. They will help you better understand what things to consider and what to disregard. They will also serve as a detached third-party, giving you an objective assessment of your financial situation. An accountant will add clarity to how you interpret assets and liabilities.

Alimony? Child Support?

Unfortunately, figuring out divorce expenses is not as simple as identifying property and debts, making a list of everything you own and everything you must still pay off. There are also fees you will have to pay various professionals for their invaluable help—therapists, lawyers, accountants.

Then, there is alimony and child support. If you’re the single breadwinner, calculate how much you can afford to pay out each month. If you’re on the receiving end, calculate how much the law entitles you to receive and how well you will manage with it.

Insurance?

You will have many insurance plans as a couple, such as home insurance, auto insurance, and health insurance. The list could be a long one.

After dissolving your joint insurance policies, you must shop for new insurance. The process can be a long, frustrating, and expensive one. Working with an insurance professional to figure out the best policies will make the process go much faster and help you make better decisions.

Moving Expenses?

Packing up and moving may seem like an incidental expense, but it’s something to think about, too, because costs can run high, especially if you have a large house with lots of furniture and are planning on moving to another city or state.

There will also be the cost of renting a new apartment or home, covering rent for the first and last month and putting down a security deposit.

In fact, moving expenses can add up to thousands of dollars. So, this is something else you must factor in when crunching your numbers.

Divorce May Still Be Your Best Option

Despite the emotional cost and financial losses of a divorce, it may still be the best option. It’s messy—involving splitting up the family, moving, making new life decisions, and wrestling with many financial expenses—but if you and your spouse can no longer agree on most things, then embarking on a new course in life is the only rational thing to do.