Data Facts Blog


Finding the RIGHT Credit Card for YOU!

CreditCardConfusion_484-401x272

 

 

 

 

 

 

Looking for a credit card? If so, you’ll need to shop around. Do some research to compare costs, features and drawbacks before settling on a single card.

 

Annual fee: Some cards charge an annual fee – anywhere between $15 and $50 – while others may not. Check to see which ones do and if their annual fee still makes smart financial sense to you.

Grace period: Most credit cards offer a 25-day time period for you to pay off your total balance without paying a finance charge. The grace period runs from the date printed on the bill, not the date you receive it or the date you make a purchase.

APR/interest rate: The APR or interest rate is the percentage of interest you’re charged on the balance you carry on the card and cash advances. It can either be fixed or variable.   A fixed rate APR is usually higher, but you’ll know what to expect for the year. A variable rate is typically lower, based on an interest rate that swings up and down.

Introductory rate: Some cards offer a super-low introductory rate that will later switch to a higher fixed or variable rate. Make sure you know how long the introductory rate lasts and what the new rate will be. The introductory rate is often terminated if you send a late payment.

Finance charge: This is the actual dollar amount you’ll pay when you carry a balance. It includes interest costs and any other transaction fees. It’s helpful to know how this number is calculated. The average daily balance method is the most common. It adds the amount of debt on your account for each day during the billing period and averages it

Other fees: These include fees for paying late, charging over your limit, and getting a cash advance. Make sure you read the cardholder agreement, which discloses these charges.

Other Rewards and Benefits:  Many cards now offer added benefits, like rebates, discounts and/or frequent flyer miles. With these cards, find out how many dollars equal a free ticket, etc and if you will actually use these types of rebates.

Payback Time:  If you plan to pay your credit card bill in full each month, look for a card with no annual fee & a generous grace period. If you think you’ll carry a balance, then the important thing is a card with a low interest rate.

Be a smart consumer and shop before you buy.

 

5 Tax Deduction Tips for Homeowners

Posted in Data Facts,Data Facts blog,finances,Mortgage,Mortgage loan by datafactssolutions on March 13, 2014
Tags: , ,

house_tax_form2

April 15th is just over a month away, and many of us that have yet to file taxes are spending the next few weeks thinking about the various deductions we qualify for before we file.   For tax year 2013, the standard deduction is $6,100 for single Americans and $12,200 for those married and filing jointly.  That means unless you can claim more than those amounts, there’s usually no reason to itemize.

One of the most common ways to get over the threshold, however, is to own a house and unlock the many deductions that come with homeownership.

But it’s not as simply as simply mailing a mortgage bill to the IRS and reaping the rewards. There are a bunch of very specific deductions that require specific paperwork.

Here are 5 important tax tips to look for if you’re a homeowner:

Mortgage Interest

Claiming mortgage interest is the biggie, and one of the most common deductions among taxpayers.  Currently the cap on mortgage debt we can deduct for tax purposes is 1.1 million.  This includes multiple loans, so those with a primary residence in Tennessee, but own a vacation home in Florida, they can claim interest on both, as long as the total is under the cap.

Be careful of claiming a mortgage interest deduction on home equity loans that haven’t been used to improve the property.  If you refinanced your loan and decided, ‘Hey, why don’t we take another $50,000 out in equity,’ but then you don’t use that money to, say, build a pool, that’s not fully deductible.  You must use the money to improve the house, or you aren’t allowed a deduction.

Mortgage Insurance and Taxes

In addition to mortgage interest, private mortgage insurance is also deductible.

Don’t mistake private mortgage insurance, or PMI, for homeowner’s insurance that protects against a fire or other loss. PMI comes into play with lower-income homeowners who often can’t afford a big down payment, and instead pay a small monthly fee as insurance against default.

If you make a private mortgage insurance payment, in most cases this is deductible.

Also worth noting is that local and state property taxes can also be itemized on federal tax returns. Particularly for lower-income Americans, there may be special property tax benefits available based on your community.

 

Going Green

Unless Congress extends existing tax credits for residential energy efficiency, 2013 is your last chance to claim up to $500 in green energy credits.

You can still get credit for, Insulation, energy efficient windows and doors, high efficiency air conditioner and heaters.  Still, the cap is small at just $500, and it’s not applicable if you claimed it previously since the credit was passed in 2011.

A separate and more substantial credit is available for solar energy installations, so long as they are on your primary residence and not a rental property.

The credit is for 30% of the cost, including installation, wiring, and set up.

 

Selling Your Home Unlocks Tax Breaks

Of course, for homeowners who have taken advantage of a resurgent housing market by selling their homes altogether, there are also tax implications.

If you sold a home in the past year, costs including title insurance, advertising and real estate broker fees can also be claimed on your return.

You can also claim certain repairs to reduce your capital gains on the sale, presuming they were made within 90 days of the sale and clearly for the intent of marketing the property.

And after the sale? If you had to find a new home because of a new job that is located more than 50 miles away from your old home, you may be able to deduct your reasonable moving expenses, too.

 

Casualty Losses

Especially given the very harsh winter weather we’ve seen recently, it’s important to note that when disaster strikes you are able to claim a tax break for any significant losses.

You have to have a loss more than 10% of your income.  If you make $50,000, you have to pay $5,000 out-of-pocket before you are eligible for any deduction.  And for the record, that’s an out-of-pocket loss. You won’t get a deduction for losses that were covered by your insurer and that you were compensated for.

STOP! Don’t Mess Up Your Home Mortgage!

approved mortgageYou’ve gone to your lender and been approved for a home mortgage.  You’ve found the home of your dreams.  But just when you are about to close, the lender says you are no longer approved.  What happened?

Since the infamous “mortgage meltdown” a few years back, lenders as well as industry regulations have gotten much stricter.  The latest tightening of the screws comes from Fannie Mae. The mortgage titan’s Loan Quality Initiative, which went into effect June 1, requires lenders to track “changes in borrower circumstances” between application and closing.  While these rules aren’t new, Fannie is enforcing them more vigorously.

The new rules simply want to ensure the new home loans are deemed “low risk” for default or buyback.  Basically, lenders want to be assured that this is the type of borrower that has the ability to repay this loan in full.  With the increase in regulation and scrutiny over any changes, even seemingly small changes can implode your pending mortgage.

Following are three things borrowers can do to mess up their next mortgage closing.

Get a new credit card or auto loan

Get a new credit card or auto loan, and you could find yourself no longer approved for that mortgage loan.

Lenders have long admonished mortgage applicants to avoid getting new credit cards and auto loans while home loans are in underwriting. Fannie’s Loan Quality Initiative adds urgency to this request.

For example, picture a borrower who gets a car loan a week before closing on the mortgage. The mortgage lender doesn’t know about it. Later, the borrower misses a couple of mortgage payments.

Fannie Mae can look back, discover the undisclosed auto loan and make the lender buy back the bad mortgage. That’s a money loser for the lender.

So at the eleventh hour, most lenders check credit for new accounts.

Even merely opening an account — without charging anything to it — can be a mistake.

Charge up credit cards

Charging up credit cards with thousands of dollars’ worth of appliances, tools and yard equipment is another surefire way to muck up a closing. It’s best to leave those cards alone.

Don’t increase your credit card balances at all. Mortgage approval is based partly on debt-to-income ratio.  The lender looks at the borrower’s minimum monthly  debt payments and compares them to income. If the ratio of debt payments to income is too high, the borrower could be turned down for a mortgage.

Fannie encourages mortgage lenders to recalculate debt-to-income ratios just before closing. If a spending spree sends the debt-to-income ratio too high, the mortgage could be doomed. For this reason, borrowers should wait until after closing the mortgage before buying furniture, a refrigerator or a lawn mower on credit.

Change jobs

Changing jobs is another good way to derail a mortgage before closing. Other potential deal-breakers include staying with a current employer, but switching from a salaried position to one where primary income comes from commissions or bonuses.

Any slight change in income could cause you to not qualify.

The main thing to remember is, keep everything exactly the same as the day you got approved.  No new car.  Don’t apply for a credit card so you can get brand new furniture.   And definitely don’t change your job.

Getting Married? How Marriage Affects Your Credit

marriage--joint

 

Today, February 14th is the most romantic day of the year.  In fact over 2.2 million people will get married today and millions more will become engaged.    Getting married is a wonderful moment in life, but it can affect many things, including your credit.  So in the spirit of the holiday that love built, we’ve decided to debunk some credit myths associated with marriage, and its effect on credit. 

 

Our Credit Reports MERGE TOGETHER When We Get Married

Many people mistakenly believe that getting married means that your credit also gets hitched. That’s not true because you never share, inherit, or merge credit histories. Marriage has no affect on your credit score even if you take your spouse’s last name or live in a community property state. Everyone has their own credit report and credit scores.

If you have joint account—such as a credit card, car loan, or mortgage—with a spouse (or anyone else) the account history appears on both of your credit reports. But if you have a credit account in your name only, it never appears on your spouse’s credit file.

 

If My Spouse Has BAD Credit So Do I

Marrying someone with bad credit doesn’t affect your credit (unless your name is added as a co-owner on a delinquent credit account), but it can hinder your ability to get credit as a couple.

For instance, if you apply for a mortgage or car loan that requires both of your incomes to qualify, the lender will review both of your credit histories. Having a spouse with poor credit could cause your joint application to be declined or require you to pay a relatively high interest rate on a loan.

 

My Credit History Is ERASED When I Change My Last Name

If you change your name after you are married and report this change to your creditors, you will see some updates to your existing credit reports. Along with your old name, your new name will be listed as an alias. You will not have to start from scratch with a new credit history. There may be a few inaccuracies on your report as this transition takes place, so it’s important to check your credit report frequently during this period.

 

I Will AUTOMATICALLY Become A Joint User On My Spouse’s Accounts

Marriage doesn’t automatically make you an authorized user or co-signer on your spouse’s accounts. If you wish to be added to your spouse’s credit cards, you will need to call the creditors with this request. Please note that being added as an authorized user will not result in the account being factored into your credit score. As for loan accounts, becoming a co-signer for a loan usually requires refinancing.

 

Before getting married, make sure there is complete financial transparency. Understand your partner’s debt situation and credit history so you address any negative issues and increase your chances of living happily ever after.

 

H.A.R.P. Has Been Extended!

{591A83C3-EE82-46D3-A0B9-F0B07F20A31C}09232011_Underwater_Mortgages_article

The H.A.R.P. (Home Affordable Refinance Program) program which enables struggling homeowners to refinance their mortgage, whose home value has declined, has extended its application deadline to December 31st 2015.

H.A.R.P. is a federal-government program designed to help homeowners refinance at today’s low mortgage rates even if they owe as much or more on their mortgage than their home is worth. The goal is to allow borrowers to refinance into a more affordable or stable mortgage. Most homeowners eligible for a HARP refinance are able to reduce their monthly payment by lowering the interest rate on their mortgage. Other homeowners can use HARP to convert their adjustable mortgage into a more predictable, fixed-loan program. You also have the option to do a HARP refinance for a shorter-term loan, which will help you build equity in your home at a faster pace.

To be eligible for a HARP refinance homeowners must meet the following criteria:

  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80 percent.
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months. 

Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances.  For more information, please go to http://harpprogram.org/

 

Back On Track: The Housing Market Is Changing For The Better

Home ownership in the palm of your handsThe housing market is improving much faster than anyone would have expected a year ago. Nationally, the prices of homes increased by 10% since February of 2012. However, many in the industry think that this may be cause for concern. They are nervous that the fast pace of recovery will cause another bubble.

Housing prices have remained positive throughout the seasonally slow winter months. “Home prices ended the first quarter of 2013 in a similar fashion to how they started the year, stable and in positive territory,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “It has been seven years since home price growth continued throughout winter. This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consumers and lenders alike that the recovery is real. As buyers become more confident the recovery is sustainable, this sentiment should grow to create a positive feedback loop.” It even appears that prices will still go higher. Here are a few reasons this may be the case:

  • The inventory of homes available for sale has fallen to the lowest amount in 20 years.
  • Since 2008, Homebuilders are not adding as many newly constructed homes to the market. Rising costs of building materials and labor are causing builder confidence to be low. “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, NAHB chairman and a home builder from Charlotte, N.C. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”
  • Banks are selling fewer foreclosures. “Although the overall national foreclosure trend continues to head lower, late-blooming foreclosures are bolting higher in some local markets where aggressive foreclosure prevention efforts in previous years are wearing off,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, more recent foreclosure prevention efforts in other states have drastically increased the average time to foreclose, which could result in a similar outbreak of delayed foreclosures down the road in those states.”
  • Investors have purchased many available homes, converting them to rental properties.
  • Borrowers aren’t willing or able to sell at such low prices.
  • Tighter Lending standards mean that sellers are afraid they will not qualify for a new loan.
  • Demand has increased dramatically due to first-time homebuyers. Rising rents and falling interest rates make monthly payments less than what it costs to rent. Also, the demand is currently higher than the available supply.
    Low interest rates allowing qualified buyers to borrow more money. Today’s historically low interest rates have given American homeowners a significant boost to their purchasing power. In the pre-bubble period from 1985 through 1999, when rates for a 30-year fixed mortgage ranged between six percent and 13 percent, Americans spent 19.9 percent of their median monthly incomes, on average, on mortgage payments for a typical, median-priced home, according to Zillow. At the end of the fourth quarter of 2012, with mortgage rates in the 3 to 4 percent range, U.S. homeowners paid 12.6 percent of their monthly income on mortgage payments, down 36.9 percent from historic, pre-bubble norms, according to Zillow.

Prices may be rising quickly but tight credit standards are keeping everything in check. The housing market is healing but could potentially be in for more instability until more people purchase homes in which they want to live.

~~Stacie Shelton is a member of the Marketing Team at Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Debt Relief Act Extended Through 2013

calendar_iconFor the past few years, homeowners were able to utilize a tax break (part of the Mortgage Forgiveness Debt Relief Act) when dealing with a short sale.  Fortunately for many, this debt relief has been extended until the end of 2013.

Under the United States Federal Tax Code, any debt that is forgiven is treated as debt discharge income . As such, short sales with a deficiency balance could be counted as income on the difference between the mortgage balance and the sale price.

EX: If a person has a $200,000 mortgage balance, and short sold their home for $150,000, the deficiency balance is $50,000. Under the original Tax Code, the  $50,000 would be reported as income and taxed.  This can cost the homeowner 2 ways:

1: In this example, tax on $50,000 of income can rack up to thousands of dollars.

2: An extra $50,000 of income could raise the homeowner to an entirely new tax bracket.

The Mortgage Forgiveness Debt Relief Act, however, forgives the difference between the debt owed and the sale price, up to 2 million dollars on a primary residence.

The Act-which passed in 2007- was scheduled to expire at the end of last year, but Congress did some last minute maneuvering to extend it out another year, due to the still struggling housing market.

{591A83C3-EE82-46D3-A0B9-F0B07F20A31C}09232011_Underwater_Mortgages_articleHomeowners may choose to short sale for a variety of reasons:

  • They are late on the mortgage payments
  • They are not eligible for HARP, or any other refinancing
  • They owe more on the home than it’s worth
  • They can no longer afford the home , due to job loss or other circumstance
  • They have tried unsuccessfully to sell the home at a price that would cover the mortgage balance

Homeowners choosing to short sale can sometimes face large drops in their credit score.

According to CNN/MONEY, shorts sales have tripled over the last 3 years.  In some areas of the country, short sales make up almost half of the area home sales.

With this extension, homeowners who are underwater can breathe a little easier for a few more months, knowing this option is still in play.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services

 

Spending Mistakes Smart People Make Over the Holidays

empty-pocketDecember is a time for families and friends to come together over the holidays. However, the last month of the year can also be a big budget buster that can leave you broke and in debt if you aren’t careful.

We have created a breakdown of mistakes smart people make over the holidays that result in January being hard to bear.  Avoiding these actions can help you make certain you roll into January with some money left in your pocket and your credit score intact.

The “I’ll pay it off next month” blunder.  Perhaps the best thing you can do for yourself is to set a budget for the holidays, and pay for those plans with cash. Using a credit card for holiday purchases sets you up to overspend. Paying for gifts you bought in December all the way through April is nobody’s idea of fun. Not to mention the negative affect those credit card charges could have on your credit score.

The “I’ll know it when I see it” shopping plan. Scour sales papers BEFORE your shopping trip to get an idea of the items you will be buying, and the cost. Shopping without a plan is like going into the grocery store hungry; it sets you up to overspend on impulse items.

The “it’s a bargain” trap. Don’t fall for the deep discount prices and one-day only ads. These ploys can break your budget and rack up lots of credit card charges. If the item wasn’t on your list and included in your budget, don’t buy it.

The “open a credit card today” ambush. Sure, an extra 10 or 15% off for simply opening a store credit card sounds great. However, don’t be taken in by this offer. A new credit card will show up as an inquiry on your credit report, and will give you the urge to use it lavishly. Just say no.

Now, those are goofs that deal with shopping. However, other activities can be budget breakers during the holiday season.

The “this dress makes me look skinny” argument. While we all like a new outfit, do you really need that new dress, new purse, or new cufflinks for your holiday party? Do you really not already own an outfit you can wear? Make sure you don’t overspend on clothing for the holidays that will end up only being worn once.

The “eat, drink, and be merry” boo-boo. Holidays inspire quality time with friends and family. However, expensive meals and overindulging in alcohol can tank your budget. Plan ahead for nights out, and suggest less expensive venues if your budget is tight.

Being aware of these holiday budget saboteurs is the first step to success. By avoiding these mistakes, you can keep your bank account and credit score high! Don’t let money mistakes over the holidays turn HO HO HO into NO NO NO!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

7 Steps to Protect Your Finances During a Divorce

We all hope it never happens to us. The “D” word.  Divorce.

It’s a sad fact that lots of marriages end in divorce, and sometimes the relationship is contentious and hostile. If you are facing divorce, protect yourself and your finances with these simple tips:

1.  Keep detailed records.  The first step is to commit to making certain that all financial arrangements and obligations are well-documented.  If you end up having problems with a creditor for a debt that is not your responsibility, documentation can help clear the issue up faster and with less effort.

2. Dissolve every joint account.   This is one of the biggest mistakes that divorcing couples make. One person will keep a joint account, and the other person finds out months or years later that the account has been paid late or sent to collection. Be aware that divorce decrees do not supersede contracts. In other words, if you and your ex split certain debts in the divorce, but your name is still on the debt, YOU ARE STILL RESPONSIBLE FOR THE PAYMENT OF THAT DEBT.  This is a biggie, and can completely tank your credit score and ruin your finances.

Remove your spouse’s name on any accounts that you plan to keep (such as your car, etc). Move the utilities and any other bills into one name. If you share joint credit cards, divvy up the balance and open a credit card in just your name, and transfer the balance over to the new account. BE SURE all joint credit cards are closed.

3.  Sell the house if possible. The best idea is to sell the house and split any profits. It is imperative to not walk away from your house with your name still on the mortgage.  If selling the house is not an option, the person who ends up with the house needs to refinance it in his/her name alone as quickly as possible.

4.  Divide all assets. Split all cash, property, and any other assets during the divorce. Do not share assets with an ex.

5.  Be on guard online.  An ex can do some real damage when armed with passwords to bank and credit card accounts. The first action should be password protecting your computer and your cell phone (this will ensure your ex does not add a sneaky spyware).  Change ALL of your passwords on all of your accounts to something your soon to be ex would not know. Do not use birthdays, anniversaries, mother’s name, dog’s name, or anything else that your former beloved would be able to figure out.  Phrases like “bobpleasedie” or “lovereallystinks” probably aren’t good ideas, either.  A long password (10 characters or more) with letters in upper and lower case and numbers is the best option.

6.  Check your credit report. This is a good all-round rule for everyone. However, it’s especially important after going through a divorce.  Pull a credit report every 3-4 months, and scour it to make certain all joint accounts are closed and that there are no accounts you do not recognize. Follow up on any errors and get them cleared up immediately.

7.  Change your will and life insurance beneficiaries.  When moving on after a divorce, make certain to review all important documents, and implement changes where necessary. Remove the ex’s name from your will and any insurance policies in which he/she is named.

Divorce is never a fun endeavor. However, by being educated about the financial facts and following these simple tips, you can make it much easier to move forward and avoid the financial pitfalls that many people fall into when ending a marriage.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.