The property market has been highly competitive over the last year because housing supply has shrunk dramatically. Now, many adults have given up on owning a home and expect they’ll rent for the rest of their lives. While most of the older generations will have their own homes through retirement, less than half of the largest group in the workforce – Millennials – think they’ll have that same luxury.

Despite their pessimism, a competitive market doesn’t mean it’s impossible to own a home – even if you have bad credit.

But what is a bad credit score?

Credit scores are usually based on the FICO scoring system, and different credit bureaus may grade scores differently. This is how Experian ranks them:

• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very Good: 740-799
• Exceptional: 800-850

About a third of consumers have a poor or fair credit score. If you fall in that category, don’t give up on homeownership. Some loans cater specifically to Americans with low scores.

Mortgage Options

A traditional mortgage is usually a fixed-rate loan, so the interest rate never changes. Although this is the kind of loan people typically think of, it’s only ideal for people with a credit score above 620.

By contrast, an adjustable-rate mortgage (ARM) typically has a set interest rate for the first three to seven years but then fluctuates based on the market thereafter. ARMs are better for people with a credit score of 600 or higher. That difference between 600 and 620 might not seem like much, but it can help someone who needs it. 

When market rates are lower, the interest on your loan will also be lower. The drawback, however, is that if rates are high, you will pay more too. You’re at the mercy of the economy – you could save money on the interest rate or lose some.

If you have a score as low as 500, you could qualify for a Federal Housing Administration (FHA) loan. FHA loans will cover about 97 percent of your home’s value, so you’ll need to make at least a 3 percent down payment. And until you pay off 20 percent of your home’s value, you’ll have to pay for private mortgage insurance. This covers your lender in case you default on the loan.

Since it’s a government-backed program, you’ll have to go to an FHA-approved lender.

Now that you know the various loan options, it’s time to take a look at the steps to getting there.

Step-by-Step Guide for Buying a Home With Low Credit

With so many loans and interest options, the best thing to do is talk to a professional who can review your situation and find the best path for you.

Step One: Get Your Free Credit Report

The last thing you want is your credit score to be misreported. Go to annualcreditreport.com – you can get a copy of your credit report for free every year. Review all of the information provided. Is your social security number accurate? Are your addresses up to date? Which debts and transactions are causing you to lose points?

If anything looks inaccurate, reach out to your lender. It could be something as simple as a paperwork mistake or as serious as identity theft. Work with your lender to get some documents proving the error, and reach out to the credit reporting agency with the evidence. The Federal Trade Commission even offers a sample letter you can use to dispute any errors.

Step Two: Do What You Can To Raise Your Score

Unless you’re in a rush to buy a home immediately, take some time to improve your credit score as much as you can. Five factors determine your score. From most to least critical are your payment history, outstanding debts, length of your credit history (how long you’ve had your cards), types of credit you’ve used, and amount of new credit.

You can sign up for a credit monitoring service to help you keep track of it all. An app called SmartCredit offers a paid service and is one of the more helpful options. You can also use free tools, although they aren’t as in-depth. Credit Karma is one example. It can flag which credit factors are hurting or helping you the most, but it won’t give you detailed tips on how to fix those issues.

Step Three: Talk to a Professional

The best person to go to is a Department of Housing and Urban Development (HUD)-approved housing counselor. The government trains these counselors, specifically the Department of Housing and Urban Development. Their job is to help you find affordable, quality housing. They’ll get to know you and your situation, so they’ll be able to find local options that suit your situation.

Step Four: Enroll in a Homebuyers Workshop

If you can get into a course locally, it should be free. You can also do it online at your own pace. However, there will probably be a charge for this. Once the course is complete, you’ll get a certificate you can use when you apply for financing. The HUD counselor should be able to help you with this.

Step Five: Look For Fha Loans

As mentioned earlier, Federal Housing Administration (FHA) loans are the best option for someone with poor credit. The loan won’t come directly from the FHA but through an approved, private lender. Your local HUD office should be able to find the best option in your area. Make sure you have enough funds to cover the down payment and the mortgage insurance fee.

Step Six: Try To Get Pre-approved

Like any other mortgage, you can get pre-approved for an FHA loan. Pre-approval can help you save time and narrow your search as you look for a home. Like an approved counselor, this will help you understand what you can and can’t afford so you can look within your price range.

Getting pre-approved for a mortgage also makes you a much more attractive buyer to whoever is selling the home. This is an excellent leg-up, especially in a competitive market like we see today. Once approved, don’t spend money on furniture or other big-ticket items. The banks will monitor your activity so be sure to stay on budget.

In Conclusion

Keep three main goals in mind as you move forward in your house-hunting journey: save up for a down payment, track your credit, and work with a professional.

Doing this makes it possible to find a mortgage option that works for you despite your low credit score.

This post was produced by Wealth of Geeks.

January 20th, 2022 will be a day I remember for a while as it pertains to real estate deals. That was the day I sold the most expensive lot in the history of the Tobiano Resort Development at 315 Holloway Dr. for $620,000.00.

The lot itself is one of the best, if not the best building lot in the entire Tobiano development as it is 0.41acre in size and sits on top of a bluff overlooking Kamloops Lake and is adjacent to the 15th green of the Tobiano Golf Course. What makes this lot so unique and rare is that we only have 18 of these lake view bluff lots and only one that borders the golf course.

The Tobiano Resort Development was originally opened up to the public back in the fall of 2006 with the release of a limited number of lots and the Lake Star townhouse development. Sales were spectacular through 2007 and part of 2008 as we released more and more inventory for sale. There was a strategy whereby we would put 4 bluff lots on the market at a time and increase the price each time we released a new section of lots. The strategy worked pretty well until the global real estate crash in late 2008. After 2008 the Tobiano development languished for a few years as it struggled to continue down its development path. It was at this point that the lot at 315 Holloway was first sold by the bank to a local resident. Since that first sale, it changed hands 2 more times before finally selling for $620,000.00 in 2022.

This recent lot sale is actually the most expensive single-family building lot to have sold in the entire Kamloops and area real estate board in the past 3 years. With such a limited supply of building lots in the Kamloops area, any future lot developments will likely be very expensive unless we can put out a large number of building lots at once to deal with the pent up demand.

There are a number of new building lot developments anticipated to come on the market in 2022. They are located in Juniper West, Aberdeen Highlands, Rose Hill South, Tobiano and Ord Rd.

This article originally appeared on Kamloops Living.

How much house you can afford to buy depends on various factors, including your income, the size of your down payment, any existing outstanding debts, and your mortgage interest rate. Here are the five key factors you should consider when determining how much house you can afford. We will go into details for each further below.

1. Down Payment - How much down payment do I need to buy a house?
2. Mortgages - What are the various types of mortgage options?
3. Lender Criteria - What numbers and ratios are critical to mortgage lenders?
4. Closing Costs - What are closing costs, and how much money do I need for it?
5. Property Taxes and Insurance - What is the impact of taxes and insurance on how much house I can afford?

1. How Much Down Payment Do I Need To Buy a House?

The first step in calculating how much house you can afford is determining the size of your down payment on the house. The required down payment amount will depend on various factors, including the terms your mortgage lender mandates, the type of mortgage loan you get, and how much money you have saved up.

While many first-time home-buyers would like to think they can buy a home with no money down, this is rarely the case. To avoid paying for mortgage insurance, you will need to save up at least 20% of the house's purchase price.

For example, let's say you have $40,000 saved up for a down payment. Assuming a conventional mortgage at 20% down, you can aim for a home purchase price of $200,000 if your income and credit score support the mortgage of $160,000. There are, of course, other factors that may bring that number down, such as closing costs and interest rates. We will get into those details further below.

2. What are the Various Types of Mortgage Options? 

There are several types of mortgages, including 30-year fixed-rate loans, 15-year fixed-rate loans, and adjustable-rate mortgages, where the interest rate changes after every 3 to 5 years. Talk to your lender about all your options.

The most popular type of mortgage is the conventional 30-year fixed-rate mortgage because it allows borrowers to have low monthly payments while still paying off their homes in a reasonable amount of time.

What If I Do Not Have a 20% Down Payment Saved?

If you don't have enough saved up yet, options are still available.

• You can ask family or friends to help you or take out a loan against your existing assets. That will help you qualify for a conventional mortgage, a better long-term choice than the ones below.
• Alternately, ask your lender about FHA loans, which are federally insured mortgages with down payment requirements as low as 3.5%. FHA loans usually come with higher interest rates and mandatory mortgage insurance. These costs can add up over time. Therefore, we only recommend this option if your credit score is low or you cannot save up enough for a conventional mortgage.
• If you are a veteran or on active duty, you can also qualify for a VA (Veteran Affairs) loan. This loan is similar to the FHA loan because it is federally insured, but VA loans usually require no down payment. At the same time, there is a funding fee of 2% to 4% of the loan amount. The mortgage interest rate is usually higher for a 15 year VA loan versus a 15-year conventional loan.

As you can see, various mortgage options allow you to put down little or no money upfront. Before you jump into it, ask your lender to calculate and provide a comparison of the total costs of choosing one option over the other. Most often, conventional mortgages with a 20% down payment will end up costing you less over the long term.

3. What Numbers and Ratios are Important to Mortgage Lenders?

Now that you have decided on your down payment and mortgage, the next step in calculating how much house you can afford is to figure out your debt-to-income ratio (DTI). This number is significant because it shows lenders the percentage of your income allocated to debt repayment every month, including your mortgage payment. Some home buyers get discouraged by their net worth, but it is essential to know that average net worth varies based on age and various factors. So while it is critical to understand how to calculate and compare your net worth against others for financial planning purposes, it is not critical for lenders.

Rule of 36%

A debt-to-income ratio greater than 36% is considered high-risk for lenders and may make it difficult for you to get the best interest rate.

Lenders want to make sure they're not lending more money than you can afford to pay back, so they'll look at your DTI along with other factors such as your credit score. So before you head to your bank, do a little math to calculate your DTI and ensure you will qualify for a loan.

Calculate Your Debt-to-Income Ratios

There are two ways to calculate your debt-to-income ratio: the front-end ratio and the back-end ratio.

• The front-end ratio is your monthly housing-related expenses divided by your gross monthly income. Do not include non-housing-related expenses in this one.
• The back-end ratio is the total of all your monthly debt obligations (including housing) divided by your gross monthly income.

Lenders typically prefer that you keep housing costs (front-end ratio) lower than 28% of your monthly income and your total expenses below 36%. So if you make $3,000 a month, they want your housing-related costs to be no higher than $840 and overall expenses no higher than $1,080 a month.

Credit Score

Another critical part of determining how much house you can afford is calculating how much monthly payment you can afford, which is based on the interest rate on your mortgage. Lenders will usually provide a mortgage at lower interest rates for those with a high credit score.

Your credit score is determined by your ability to repay a loan on time, using information compiled from various sources, including public records and your history of paying back loans and credit card balances.

You can raise your credit score by paying all your bills on time and avoiding maxing out any payment cards. If you have a high balance relative to available credit, this will negatively impact your credit score. There are many other ways to raise or maintain your credit score. Click here to see a list of factors that may affect your score.

4. What Are Closing Costs and How Much Money Do I Need for Them?

In addition to your down payment, you will also need to pay closing costs. Closing costs are taxes and fees charged by the lender and other parties involved in the home purchase transaction, such as title companies, lawyers, and escrow agents. You may also have to pay appraisal fees and additional fees required by state law. A rule of thumb is to budget at least 1.5% to 2% of the purchase price for closing costs.

It's also crucial that you understand what portion of these costs are included in your loan or paid upfront because this affects how much money you will have available at closing time. For example, if your lender charges $3000 in closing costs and you're required to pay $1000 upfront, you will only have $2000 available at closing.

5. What Is the Impact of Taxes and Insurance on How Much House I Can Afford?

The last step in calculating how much house you can afford is considering other factors such as property taxes and homeowners insurance rates in your area. These two costs can vary drastically from one city to another, so it's essential to do your research before settling on a final number.

How To Get Ready: Budget and Get Your Credit in Order

After you have done the calculations above, it's time to get ready by plugging any gaps in your savings, credit score, ratios, etc.

Start by creating a budget and getting your credit in order. Next, decide on an amount you can afford to spend each month and then create a budget that allows for this while also paying down your debts. If you don't already have one, open a savings account or use an automated savings app so you can start saving money toward a down payment or emergency fund in case of unexpected expenses when buying a house.

Final Words

Considering all these factors together will give you a reasonable estimate of how much house you can afford. If the number is too low for comfort, consider spending less on other expenses to help pay down your debts faster or take up some side hustles to increase your income so that you can finance more of your home purchase with cash instead of debt.

If you are still unsure about how much house you can afford, plenty of online calculators will do the math for you. Just enter all of your information accurately to get the most accurate number possible.

Buying a house is a considerable investment, so it's essential to do your research and get the best deal possible. Follow the steps above, and you will be on your way to finding the perfect home for you and your family.

This article originally appeared on Wealth of Geeks.

Let's find out how your credit score could be impacted by signing that car loan.

Top Ways Buying a Car Affects Your Credit

Buying a car has the potential to increase your credit score, but it can also go the other way and drop. How are you to know?

It all depends upon when and how you make the payments for your car loan. To find out if you can afford a car or not, consider if you can make timely payments, which will result in your credit score going up.

However, if you cannot make payments on time or even miss a few, you will see a negative impact on your credit scores.

If you're wondering if buying a car helps your credit, then we're here to make things clear. Here are a few ways your credit score is affected when you decide to buy a vehicle.

Hard Inquiry

When you apply for a car loan, the first course of action your account goes through is a hard inquiry. Unfortunately, a hard inquiry will lead to an automatic lowering of a few points of your credit score for a couple of months. The good thing is that even though your car loan application gets forwarded to many lenders, major credit bureaus will all count as a single inquiry.

A new inquiry usually forms when a lender takes a peek at your credit history. Some of the newest systems don't even consider inquiries for auto loans at all.

Acquiring Debt

Once you buy a car and acquire a loan for it, your credit report will reflect the additional debt that will impact your credit score. As soon as the debt is accepted, you will see a drop in your credit score as your liabilities increase. Depending on the price of the car and the loan amount, the fallen points may vary.

That is because you haven't made any payments yet. The drop in score is mainly due to the uncertainty regarding your ability to pay off the debt in time.

Making Timely Payments

Payment history is one of the most significant factors that affect your credit score. By making timely payments, you can enhance your credit score.

As you continue to make these payments, your credit score will increase steadily. Most of the time, this increase will trump the initial drop in the score and ultimately help you make your way towards a good credit score.

Managing Your Credit Mix

When you apply for a car loan, lenders can see a credit mix on your credit history. Your credit mix is the different sorts of credits you have, such as revolving credits, installment credits, and more. Your ability to manage a mix of various types of credits proves that you are creditworthy and will give your credit score a positive boost.

Most individuals already have ongoing revolving credit, such as using a credit card, affecting your credit utilization. Adding an installment credit in the form of a car loan and successfully paying it off in time will lead to a positive impact on your credit score.

Where To Find Auto Loans on Your Credit Report

Although sometimes, your auto loan might be missing from your credit score due to the infancy of the loan. Another reason is if the three major credit reporting bureaus, Experian, TransUnion, and Equifax, haven't yet updated the loan information on your credit score, usually because the lender hasn't forwarded the information to the credit reporting agencies.

However, if you are looking for auto loans on your credit report, the place to consult would be the Industry-Specific Score.

What Is an Industry-Specific Score?

When applying for a loan for specific purposes such as the purchase of a car, student loans, mortgages, and more, FICO will help you. They provide you with Industry-Specific Scores that will help the lenders decide on the loan terms, such as the future installments and interest rates.

The FICO Auto Scores reflect your credit behavior in terms of any loans you have acquired and your management history concerning such loans when it comes to your auto loans. The score ranges from 250 to 900.

If you have a bad Auto Score, your future auto loans will have unfavorable terms such as increased interest rates and higher monthly installment payments.

How To Make Sure Your Credit Is Ready to Buy a Car

Buying a car and taking on a car loan is a big financial responsibility, and you should have adequate preparations if you are planning on going along with the decision. Here are a few quick tips to help you get your credit ready to buy a car.

Check Your Credit Report and Scores

Although you might be able to get an auto loan with less than perfect credit scores, you might get charged higher interest rates. So, by checking up on your credit, you will know where you stand regarding auto financing.

Pay Bills on Time

Whether you want to buy a house, a new car, or plan to refinance, you should always consider paying off your bills on time. That is because your payment score makes up for the most significant part of your FICO score. Making up for 35% of your total score, if you want to improve your FICO scores, you can do so by taking on under-the-table jobs to pay off any late payments that are currently due.

However, when you have multiple bills to pay off, it is only human to forget a few due dates. That is why it is advisable to set up automated payments for your bills or set up reminders or alarms on your phone.

Pay off Credit Card Debt

The first order of business to improve your credit score is to repay your credit card debt, thus lowering your credit utilization ratio. The most optimal credit utilization lenders hope for is 30% or less.

High credit utilization scores enhance the risk level you carry in the eyes of lenders, which makes them more concerned about you as a borrower. Additionally, a low credit utilization will lower the debt-to-income ratio, which is also a good indicator of your credit history to the lenders.

Apply for Credit Only As a Last Resort

As mentioned above, an auto loan can lead to a hard inquiry placed on your credit report, lowering your credit score. Although the effects of an inquiry only last for a few months, if your credit report shows multiple inquiries in the same timeframe, you can be considered a credit risk.

The best way to avoid this is to get your auto loan pre-approved before you start comparing lenders' rates, as they make an inquiry every time a lender views your credit report. However, in the case of a pre-approved loan, the credit scoring models will treat all inquiries as a single one. Therefore it's advisable only to set up a line of credit if necessary.

Dispute Inaccuracies

Never settle for anything when it comes to your credit scores, and if you feel like there are any inaccuracies on your credit report, you should address them.

To do this, you can start a dispute regarding the item you think has been inaccurately recorded. Filing a dispute will not affect your credit score. But it might help you enhance it when you were right, and there were discrepancies present.

For example, you made a timely payment, but the lender failed to report it on time, and it shows up on your credit report as a late payment. In such a case, filing a dispute will help you get your credit scores back to where they are supposed to be.

Save Up for a Down Payment

A down payment is a payment you make at the start of financing your car. At least a 10% down payment is necessary to be made to finance a car.

One of the reasons why saving enough money is important is because a larger down payment will help you lower your interest rates, monthly installments, and less risk of defaulting on the loan.

Fast Ways To Build a Positive Credit Score

If you have decided to finance an automobile but want to improve your credit score, here are a few quick fixes that will help you enhance your credit score.

Ask for Higher Credit Limits

With a higher credit limit, you will have the same outstanding balance. The total credit increases will help lower your credit utilization ratio and instantly enhance your credit score.

Although getting a higher credit limit can be difficult, if you have experienced an increase in your income, you have a high chance of getting an increased credit limit.

Authorized User

If you know someone who has a good credit history, ask them to have you added as an authorized user adding their account to your credit report. The best part about this is that you won't have to use their card or even know the bank account to increase your credit score. It allows you to benefit from their payment histories and use their credit limits to lower your utilization ratios.

Collection Accounts

Paying off your collection account will mitigate the chances of getting sued over a debt. You can also report to the collection agencies to stop registering the debt as you have paid it off.

When checking up on your collection accounts, ensure that everything is in order and the recorded charges aren't inaccurate or too old to be on your report.

Secured Credit Cards

Another way to enhance your credit score is to use a secured credit card. This type of credit card is backed by a cash deposit, which gets paid upfront, and the money you use gets taken out of this deposit.

Credit Mix

A user's ability to manage a credit mix reflects very positively on your credit history. Most people already have a revolving credit set in place, as most have a credit card.

To get a credit mix going, consider getting a loan on top of that and make timely payments. That will represent you as a person capable of managing their debt, adding to your overall credit report.

Frequently Asked Questions

Car loans can be a tricky business, and you must have some questions regarding them. Here are a few frequently asked questions that might be able to help.

Should I Buy a Car with Bad Credit?

Buying a car with bad credit is possible. However, the interest rates offered to borrowers with bad credits are much higher, leading to them paying more than the conventional interest rates. The lenders would look at your credit history, and if you appear to have bad credits, you get the high-risk credit borrower label.

How Much Will My Credit Drop If I Buy a Car?

Although it isn't guaranteed that your credit drops after buying a car, you often experience an initial dip. An inquiry on your account to acquire a car loan causes this dip.

A hard inquiry can lower your FICO points by a total of 10 points. That will change once you begin making payments against the debt, and there remains uncertainty around your ability to repay the debt. After you have made a few timely payments, you will be able to recover from this deficit in your credit score.

This article originally appeared on Wealth of Geeks.

When you're driving away from the dealership in your brand-new car, you're probably not asking yourself, "Does buying a car help your credit score?" However, that's an important question to answer.

Let's find out how your credit score could be impacted by signing that car loan.

Top Ways Buying a Car Affects Your Credit

Buying a car has the potential to increase your credit score, but it can also go the other way and drop. How are you to know?

It all depends upon when and how you make the payments for your car loan. To find out if you can afford a car or not, consider if you can make timely payments, which will result in your credit score going up.

However, if you cannot make payments on time or even miss a few, you will see a negative impact on your credit scores.

If you're wondering if buying a car helps your credit, then we're here to make things clear. Here are a few ways your credit score is affected when you decide to buy a vehicle.

Hard Inquiry

When you apply for a car loan, the first course of action your account goes through is a hard inquiry. Unfortunately, a hard inquiry will lead to an automatic lowering of a few points of your credit score for a couple of months. The good thing is that even though your car loan application gets forwarded to many lenders, major credit bureaus will all count as a single inquiry.

A new inquiry usually forms when a lender takes a peek at your credit history. Some of the newest systems don't even consider inquiries for auto loans at all.

Acquiring Debt

Once you buy a car and acquire a loan for it, your credit report will reflect the additional debt that will impact your credit score. As soon as the debt is accepted, you will see a drop in your credit score as your liabilities increase. Depending on the price of the car and the loan amount, the fallen points may vary.

That is because you haven't made any payments yet. The drop in score is mainly due to the uncertainty regarding your ability to pay off the debt in time.

Making Timely Payments

Payment history is one of the most significant factors that affect your credit score. By making timely payments, you can enhance your credit score.

As you continue to make these payments, your credit score will increase steadily. Most of the time, this increase will trump the initial drop in the score and ultimately help you make your way towards a good credit score.

Managing Your Credit Mix

When you apply for a car loan, lenders can see a credit mix on your credit history. Your credit mix is the different sorts of credits you have, such as revolving credits, installment credits, and more. Your ability to manage a mix of various types of credits proves that you are creditworthy and will give your credit score a positive boost.

Most individuals already have ongoing revolving credit, such as using a credit card, affecting your credit utilization. Adding an installment credit in the form of a car loan and successfully paying it off in time will lead to a positive impact on your credit score.

Where To Find Auto Loans on Your Credit Report

Although sometimes, your auto loan might be missing from your credit score due to the infancy of the loan. Another reason is if the three major credit reporting bureaus, Experian, TransUnion, and Equifax, haven't yet updated the loan information on your credit score, usually because the lender hasn't forwarded the information to the credit reporting agencies.

However, if you are looking for auto loans on your credit report, the place to consult would be the Industry-Specific Score.

What Is an Industry-Specific Score?

When applying for a loan for specific purposes such as the purchase of a car, student loans, mortgages, and more, FICO will help you. They provide you with Industry-Specific Scores that will help the lenders decide on the loan terms, such as the future installments and interest rates.

The FICO Auto Scores reflect your credit behavior in terms of any loans you have acquired and your management history concerning such loans when it comes to your auto loans. The score ranges from 250 to 900.

If you have a bad Auto Score, your future auto loans will have unfavorable terms such as increased interest rates and higher monthly installment payments.

How To Make Sure Your Credit Is Ready to Buy a Car

Buying a car and taking on a car loan is a big financial responsibility, and you should have adequate preparations if you are planning on going along with the decision. Here are a few quick tips to help you get your credit ready to buy a car.

Check Your Credit Report and Scores

Although you might be able to get an auto loan with less than perfect credit scores, you might get charged higher interest rates. So, by checking up on your credit, you will know where you stand regarding auto financing.

Pay Bills on Time

Whether you want to buy a house, a new car, or plan to refinance, you should always consider paying off your bills on time. That is because your payment score makes up for the most significant part of your FICO score. Making up for 35% of your total score, if you want to improve your FICO scores, you can do so by taking on under-the-table jobs to pay off any late payments that are currently due.

However, when you have multiple bills to pay off, it is only human to forget a few due dates. That is why it is advisable to set up automated payments for your bills or set up reminders or alarms on your phone.

Pay off Credit Card Debt

The first order of business to improve your credit score is to repay your credit card debt, thus lowering your credit utilization ratio. The most optimal credit utilization lenders hope for is 30% or less.

High credit utilization scores enhance the risk level you carry in the eyes of lenders, which makes them more concerned about you as a borrower. Additionally, a low credit utilization will lower the debt-to-income ratio, which is also a good indicator of your credit history to the lenders.

Apply for Credit Only As a Last Resort

As mentioned above, an auto loan can lead to a hard inquiry placed on your credit report, lowering your credit score. Although the effects of an inquiry only last for a few months, if your credit report shows multiple inquiries in the same timeframe, you can be considered a credit risk.

The best way to avoid this is to get your auto loan pre-approved before you start comparing lenders' rates, as they make an inquiry every time a lender views your credit report. However, in the case of a pre-approved loan, the credit scoring models will treat all inquiries as a single one. Therefore it's advisable only to set up a line of credit if necessary.

Dispute Inaccuracies

Never settle for anything when it comes to your credit scores, and if you feel like there are any inaccuracies on your credit report, you should address them.

To do this, you can start a dispute regarding the item you think has been inaccurately recorded. Filing a dispute will not affect your credit score. But it might help you enhance it when you were right, and there were discrepancies present.

For example, you made a timely payment, but the lender failed to report it on time, and it shows up on your credit report as a late payment. In such a case, filing a dispute will help you get your credit scores back to where they are supposed to be.

Save Up for a Down Payment

A down payment is a payment you make at the start of financing your car. At least a 10% down payment is necessary to be made to finance a car.

One of the reasons why saving enough money is important is because a larger down payment will help you lower your interest rates, monthly installments, and less risk of defaulting on the loan.

Fast Ways To Build a Positive Credit Score

If you have decided to finance an automobile but want to improve your credit score, here are a few quick fixes that will help you enhance your credit score.

Ask for Higher Credit Limits

With a higher credit limit, you will have the same outstanding balance. The total credit increases will help lower your credit utilization ratio and instantly enhance your credit score.

Although getting a higher credit limit can be difficult, if you have experienced an increase in your income, you have a high chance of getting an increased credit limit.

Authorized User

If you know someone who has a good credit history, ask them to have you added as an authorized user adding their account to your credit report. The best part about this is that you won't have to use their card or even know the bank account to increase your credit score. It allows you to benefit from their payment histories and use their credit limits to lower your utilization ratios.

Collection Accounts

Paying off your collection account will mitigate the chances of getting sued over a debt. You can also report to the collection agencies to stop registering the debt as you have paid it off.

When checking up on your collection accounts, ensure that everything is in order and the recorded charges aren't inaccurate or too old to be on your report.

Secured Credit Cards

Another way to enhance your credit score is to use a secured credit card. This type of credit card is backed by a cash deposit, which gets paid upfront, and the money you use gets taken out of this deposit.

Credit Mix

A user's ability to manage a credit mix reflects very positively on your credit history. Most people already have a revolving credit set in place, as most have a credit card.

To get a credit mix going, consider getting a loan on top of that and make timely payments. That will represent you as a person capable of managing their debt, adding to your overall credit report.

Frequently Asked Questions

Car loans can be a tricky business, and you must have some questions regarding them. Here are a few frequently asked questions that might be able to help.

Should I Buy a Car with Bad Credit?

Buying a car with bad credit is possible. However, the interest rates offered to borrowers with bad credits are much higher, leading to them paying more than the conventional interest rates. The lenders would look at your credit history, and if you appear to have bad credits, you get the high-risk credit borrower label.

How Much Will My Credit Drop If I Buy a Car?

Although it isn't guaranteed that your credit drops after buying a car, you often experience an initial dip. An inquiry on your account to acquire a car loan causes this dip.

A hard inquiry can lower your FICO points by a total of 10 points. That will change once you begin making payments against the debt, and there remains uncertainty around your ability to repay the debt. After you have made a few timely payments, you will be able to recover from this deficit in your credit score.

This article originally appeared on Wealth of Geeks.

Suppose you're thinking about buying both a vehicle and a home. In that case, you're probably wondering quite a few questions, including, "what should I know about typical interest rates on mortgages and car loans," "should I buy a new or used car," and "how long after buying a car can I buy a house?"

Ready to learn about some of the most important things you'll need to know when buying a car and a house? This post aims to answer all those questions and more, providing you with a straightforward guide to making these two large purchases. Let's get right into it.

How Long After Buying a Car Can I Buy a House? Factors to Consider

When thinking about buying a car and a house, there are a few essential factors that you should keep in mind. After all, you don't want to have completed the purchases and realize that you unexpectedly can't make the monthly payments.

Here are some factors to consider when thinking about how long you should wait after buying your car to buy your house.

Your Credit Score

Before buying a home, you'll want to ensure that you have good credit. More specifically, you'll want to make sure that your credit history is as good as it can be and that your credit score is in perfect shape. Unfortunately, buying a car can negatively impact both (in the short term).

Making a vehicle purchase will require your lender to make a hard inquiry. A hard inquiry is when lenders send a legal request to the credit bureau to inquire about your credit score.

Typically, a hard inquiry will stay on your credit report for around two years and reduce your credit score by a few points. Then, on top of the hard inquiry, your lender will also need to open up a new account, which will further lower your score by a couple of points.

Of course, if you make every monthly payment on your auto loan, it will boost your credit score over time. But when you first borrow the money required to buy a car, there will be no credit history associated with the loan, and your credit score will initially suffer.

Having your credit score in good shape is important because bad credit can increase the interest rate you're able to get on your mortgage (potentially adding up to thousands of dollars over time). So before you rush into scrapping up a down payment for your home, be sure to get a copy of your credit report and make sure that your score is as high as can be.

Some ways you can make sure that your credit is in good shape are:

• Pay all your loan payments on time (car payments, previous mortgage payments, etc.).
• Pay all of your bills on time and in full.
• Use your credit cards responsibly (but still use them consistently as consistent credit card usage builds up credit).

Your Debt-to-Income Ratio (DTI)

Your debt to income ratio is a measurement of how much of your income needs to go towards paying off liabilities. Lenders look at this measurement to determine the loan rates they will apply to the house's purchase price. Also, when trying to apply for a loan, you'll have a much better shot to negotiate successfully with lenders if you have a higher DTI than lower.

Any debt can count towards your debt-to-income ratio, including:

• Auto loans
• Home loans
• Student loans
• Personal loans

Of course, if you choose to buy a car right before purchasing a house, your debt-to-income ratio will take a significant hit as you add a substantial liability to your balance sheet.

You can use an online calculator to figure out your debt to income ratio and see if you can do anything to lower it. Always try to have the lowest debt-to-income ratio possible (not just because it makes you look more favorable in the eyes of lenders but also because it will help with your finances).

Your Cushion

This factor ties to your debt-to-income ratio, but you add debt to your finances when you buy a car. This factor, combined with an additional mortgage, means that you will have a tiny cushion to withstand any shocks to your finances compared to before you made the two purchases.

Before you buy a home (especially right after you buy a car), make sure that you can withstand the additional payments on both purchases. Home-ownership isn't cheap. Thus, you must be fiscally responsible with your money. And, though you may work the numbers out on paper and get it to work, you'll still need to account for the fact that unexpected things can happen (a pipe breaks in the house, or a hurricane sweeps through the area, or the house catches on fire).

Be sure that you're confident you can afford a home mortgage before taking one out. For example, suppose you realize that you can barely afford your mortgage loan with the additional loan payment from the car.

In that case, it might be a good idea to wait a few months to build up your reserves and also potentially improve your cash flow. Although your annual income can make you look rich on paper, you don't want to own a house you can barely afford, causing you to become "house poor."

The Verdict

The answer to the question "how long after buying a car can I buy a house?" will depend entirely on your financial situation. The home-buying process looks very different for different people, and a car payment can also differ by hundreds of dollars every month.

Suppose you have very high credit scores, an extremely low debt-to-income ratio, and tons of discretionary income. In that case, you might be able to buy a house almost immediately after buying a car and still get favorable mortgage rates.

Suppose you have decent credit but a pretty high debt-to-income ratio and not too much discretionary income. In that case, it might be a wise move to wait anywhere from 6 to 12 months (and up) to build up your credit score (after 12 months, your credit score should bounce back if you've made timely payments), earn some extra income, and potentially add to your income streams.

Finally, you might check your credit reports and realize you have a low credit score, a high debt-to-income ratio, and little discretionary income. It might be a good idea to reconsider buying a car in the first place.

A car loan can significantly hurt your finances, especially if you buy a new car when you're not financially stable enough to withstand the hit. If this sounds like you, one suggestion is to look at used cars or be highly meticulous in the car-buying process, not overextending yourself financially. Then, once you've settled in with the vehicle over time and built up extra income, you can start thinking about buying a house.

Other Related Questions

Chances are, if you're thinking about making a car purchase and a house purchase, you have more questions than just how long you should wait before buying one after the other. So here are the answers to some other related questions you might be wondering.

Does Buying a New Home Affect Your Credit Score?

Though being a responsible homeowner can indeed help you build your credit score over time, in the short term, your credit score can drop quite significantly (up to 14 points!). Like car loan lenders, mortgage lenders may pull your credit history and make a hard inquiry before finalizing the loan.

How Is a New Auto Loan Different from a Home Loan?

A car loan and a mortgage are similar in many ways, including that both have collateral behind them (one is your car and the other is your house). The main difference is that you will make mortgage payments amortizing. Car payments will typically be towards simple interest add-on loans or simple interest amortizing loans.

Does Leasing a Car Affect Your Credit Score?

If you make all the payments on time, leasing a car can positively impact your credit score. Plus, a lease is a different type of credit that you can add to your credit mix, further benefiting your credit score (the more types of credit you have, the higher your credit score). With that said, if you miss a payment, it could be very damaging to your credit score.

Recap: How Long After Buying a Car Can I Buy a House?

Buying a car and buying a house are major financial decisions in life. If you've been considering making these purchases, you've likely wondered to yourself, "how long after buying a car can I buy a house?" So, before giving your 30-day notice to your landlord, make sure that you do everything you can to make the process as smooth as possible and ensure that you're not making any financial mistakes.

As a quick recap, there are three main factors you should think about when considering this question:

• Your Credit Score - After buying a car, your credit score will initially dip, but it will recover over time as you make timely payments.
• Your Debt-to-Income Ratio - With an additional liability added to your balance sheet, your debt-to-income ratio will rise. A higher debt-to-income ratio might raise the mortgage rates lenders are willing to give you and make buying a house more unfeasible.
• Your Cushion - With an additional car payment you need to make every month, you'll need to consider that your cushion will also be significantly smaller.

The amount of time you should wait to buy a house after buying a car depends entirely on your financial situation. As long as you consider all the relevant factors and make sure that you are making a wise financial decision that will not negatively impact you in the long run, you should be good to go.

This article originally appeared on Wealth of Geeks.

But Don is best known for playing for NFL teams like the New York Jets, Buffalo Bills and Seattle Seahawks. He holds dual degrees in Marketing and Business Administration from the University of Pittsburgh, where he was an Academic All-American.

The Pitt Varsity Letter Club named Don a 2021 Awardee of Distinction, and he was recognized as a Foster Care/Social Services Hero in September 2021 in Fort Lauderdale, Florida.

__________________________________________________________________________

In the 1990s, football was my life. I was a placekicker for the New York Jets, Seattle Seahawks, and Buffalo Bills. My career highlight was leading the AFC in touchbacks in 1995.

If you don't know what any of that means, let me explain it another way: I played the nation's most popular sport, and I did it very well for a little while. But then it was over because NFL careers average just over three years. I beat that limit, but I couldn't beat time. Time has an undefeated record.

For my second career, I chose a profession I already had some experience with -  personal finance. Throughout the '90s, I saw young men sign contracts for millions of dollars – and for many, those millions evaporated shortly after their careers ended.

My years in the NFL taught me almost as much about staying out of debt as my subsequent career as president of Debt.com. So let's kick off 10 Debt Lessons You Can Learn from Football Players.

1. Brains Beat Bucks

Money will get you out of debt, but it won't keep you out of debt. I saw that up close for years. Give someone $1 million and don't teach them how to budget, save, and invest – and I promise you they'll be down to their last dollar before they retire.

Don't believe me? The National Bureau of Economic Research study shows that nearly 16 percent of retired football players go bankrupt within 12 years of ending their gridiron careers. Meanwhile, CNBC reports, "the typical salary of a football player is $2.7 million."

So if you think your money woes would just be solved by a cash injection, I don't believe that. If millionaires can go broke without possessing financial knowledge, then you can thrive with that knowledge. Where do you acquire this education? Personal finance websites.  They are free and not at all time-consuming.

2. Budgeting is Your Game Plan

For the past four years, Debt.com has polled Americans about budgeting. Typically, about 6 in 10 adults keep a monthly household budget of income and expenses. During the pandemic, that jumped to nearly 80 percent. But, it should be 100 percent.

You can't save money for a new car or a new home, or a new family if you don't know what life is costing you now. I promise you those NFL players who went bankrupt didn't have a budget. NFL all-star Warren Sapp made $40 million over his 13-year career. He retired in 2008, and he filed for bankruptcy in 2012.

We played in the NFL at the same time, and while I didn't know him, I'm confident I can say this: Warren Sapp didn't stick to a budget.

3. Shorten the Field with Technology

Those who don't budget often tell me they don't have the time. They must be very busy people because keeping a budget these days takes only a few minutes a day. You don't use a pencil and paper. You use your phone or computer.

There are secure online tools that do the boring math for you. Mint is free, while YNAB (You Need A Budget) charges $84 a year but offers more personalization. Many banks and credit unions now provide budgeting tools that make it easy to predict, say, how much you'll save per month if you drink one less Starbucks latte a day or buy fewer lunches during your workweek.

Technology has blown up any excuse you had for not budgeting.

4. Prepare for the Trick Plays of Life

Whenever I tell people they need an emergency fund that can pay their bills for at least three months, they laugh and reply, "Every week, there's an emergency in my life!" That might seem true, but five tragedies can really sack your finances:

1. Job loss

2. Divorce

3. Natural disaster

4. Serious accident

5. Heath crisis

When any of these strike – and if you live long enough, one is probably inevitable – your entire life can fall apart. Obviously, the mental and physical stress of these situations is bad enough. But mix in financial stress, and your life can fall apart.

Numerous polls show 4 in 10 Americans can't cover a $1,000 emergency. Polls also show those Americans are stressed out about that.

An emergency fund isn't just peace of mind. It can save you money because when disaster strikes and you're not prepared, you often run up your high-interest credit cards – and carry balances for months or even years before you can pay off what you owe.

How do you start an emergency fund? Slowly. Using your monthly budget, you might set aside just $5 a week at first. Then, after a few months of not missing those few dollars, you might add a few more.

5. Recruit a New Teammate

If you really want to run up the lead on your emergency fund, ask your boss or your Human Resources Department if they'll help you.

Almost 95 percent of Americans are paid by direct deposit – no more paper checks – and many employers let you split that deposit between checking and saving accounts. Many will let you break it three ways. So you shunt a few bucks every week into an emergency savings account. You won't even remember you're doing it because you'll never see it in your paycheck.

This works especially well when you get a raise. You can divert most or even all of it into your emergency fund, and before you know it, you'll have enough to never worry about recovering from bad news.

6. Automate Your Money

What if I told you, "I know how you can make almost $600, and you don't have to do anything. In fact, you only need to stop doing something." Interested?

All you need to do is stop making late payments on your debts. Late fees and overdraft fees cost Americans an average of $577 a year. That's frustrating because there's an easy and automatic fix: autopay.

Almost every bank and credit card – and even many municipal utilities – offer automatic bill pay. You set the day when you want a bill to be paid, and that amount is automatically deducted from your bank account right then, and not a day sooner. So you'll never pay a late fee again. Best of all, after you set it up, you don't have to do anything.

7. Check Your Credit Reports

These days, most people know the importance of their credit score. These three digits, which range from 300 (bad) to 850 (excellent), determine how much interest you pay on your credit cards and whether you even get a mortgage, plus every loan in between.

What most people don't know is that your credit score is based on your credit reports. These are detailed records of everything you've borrowed and paid back (or haven't paid back). Usually, you can scan these reports free once a year, although because of the pandemic, you can do it weekly through April 2022.

Checking these reports is free, and Debt.com shows you how to check your credit report quickly and painlessly. Considering a third of all credit reports in this country contain errors that can result in higher interest rates, you should be highly interested in checking them out for mistakes.

8. Plan for Retirement

Every NFL player thinks about retirement. Even if you're a rookie all-star, you know you're one injury away from a life without football. So everyone needs to think about how to save for retirement.  Fortunately, the tactics are similar to creating an emergency fund. You can actually do both at the same time by budgeting effectively and using your HR Department – this time to ask about a 401(k).

9. Get Professional Help

When I played in the NFL, we had nutritionists, strength coaches, and physical therapists to help us reach peak performance. I learned to trust experts in their field. Now I run a debt-solutions company, and credit counselors surround me. These experts can get you out of debt, and best of all, their detailed and personal debt analysis is free.

You can call a nonprofit credit counseling agency to speak with one of these counselors, but like NFL teams, some of these agencies are better than others. If you want to find the winners, a site like Debt.com can introduce you.

10. Money is a Means, Not an End Zone

So far, we've been talking about money as a practical matter. Let's end by admitting it has a psychological component. You've heard the terms "shopping therapy" and "keeping up with the Joneses." That's shorthand for spending money to make yourself feel better and spending money to make other people respect or even envy you.

Decades of research have been done on money as self-medication and as self-glorification. I just want to leave you with this thought: Money is nothing more than a football. It's just an object that helps you perform better.

I kicked a football for nearly a decade. I focused on improving my distance and accuracy. I didn't obsess about the ball. I kicked the ball. The ball didn't kick me.

Don't let your money rule your life. Rule your money.

This post originally appeared on Wealth of Geeks.





Andrew Karpiak is a Real Estate Agent in the Kamloops area including Tobiano and Sun Peaks. He was born and raised in Kamloops and is proud to call the city home while raising his own family. View his websites at andrewkarpiak.com and kamloopsliving.com for the most up to date real estate information.

While it's easy to feel like the holidays are all about gifts, it's really all about the memories we make with the ones we love.

With all the pressure to create a magical holiday for their kids, many families neglect to save money for Christmas and end up spending more than they can afford. This ends up being a recipe for disaster and creates a lot of the stress that is so often associated with the holidays.

In reality, there are simple ways you can create a memorable holiday while you stick to your budget. With a bit of planning and creativity, you'll make some of your best holiday memories yet.

How To Create a Memorable Holiday for Your Family

If you're hoping to create some holiday magic without going into debt, you are in the right place.

While it may be a shift from what you're used to, remember that the holidays are all about spending time together, not just buying gifts that will be discarded and forgotten in a few weeks.

With the average American family spending approximately $1000 on Christmas each year, it's not surprising to learn that many of us end the holidays in debt and depressed from the stress of overspending, the complete opposite of the holly jolly we had hoped for.

Instead of stressing over what you can't afford, why not create an experience that your family will remember for years to come?

Here are some great ideas to make those holiday activities count without draining your bank account.

1) Build Anticipation

There's no better way to kickstart the festivities than by creating a holiday countdown. A simple paper chain or advent calendar filled with small treats like chocolate candy, holiday socks, or coins is a fun and inexpensive way to make the holidays more fun.

Make it a family project to create the calendar together, or encourage your kids to make their own. For older children, you can create an advent book with 24 small pages that contain fun activities for each day like reading The Night Before Christmas aloud, writing letters to Santa Claus (or Jesus), doing puzzles, or coloring sheets.

2) DIY Your Holiday Decorations

Incorporate simple do-it-yourself projects into your holiday home decor to create a festive and cozy atmosphere without spending a lot of money. Use your creativity to make ornaments from everyday items like pine cones, paper clips, popcorn, coffee filters, and ribbons! The results will look great, and the whole family will have fun working together to decorate the house.

3) Create Holiday Traditions

One of the best ways to create special memories with your kids is to create new family traditions together each year. Traditions remind us why we love the holidays, and they don't need to be expensive to be magical. Whether it's drinking hot cocoa every night before bed, hiding the Elf on the Shelf, or hanging your stockings on the mantle, simple, inexpensive traditions are all it takes to make the holidays memorable.

4) Plan a Gift Exchange

For many families, the holidays are marked by buying gifts for each other. However, creating a gift exchange tradition can make just as much meaning without breaking your budget. You could set up rules where everyone only brings one small present that costs $20 or less to keep things simple and inexpensive.

That doesn't just have to be for the extended family either. This can also be a great way to spread holiday cheer among friends and even older children. You'll create memories and traditions together while also saving money on holiday shopping!

5) Give Back to Others in Need

A great way to make Christmas more meaningful is by giving back. Find ways to make a difference as a family, whether through volunteering or donating clothes, toys, food, money, or all of these things! Giving your time and energy to those in need is a beautiful way to create meaning and memories for your family during the holidays.

6) Skip the Traditional Holiday Dinner

If you're looking to create a memorable holiday on a budget, consider skipping the traditional family dinner. A ham or turkey dinner can be costly, especially when you consider all the trimmings! Instead, consider serving one of these easy yet delicious holiday meal alternatives. You could also try having your potluck-style dinner with family and friends - everyone brings their favorite dish to share, which is great for saving money while still having plenty of food for everyone to enjoy.

7)  Host a Holiday Movie Night

Watching holiday movies is a fantastic way for the whole family to enjoy spending time together. Gather some inexpensive holiday-themed snacks like candy canes, popcorn & cocoa, and snuggle up on the couch together. No matter what age your kids are, there are hundreds of family-friendly holiday movies to choose from. You could even make it a tradition to watch the same movies every year to make them more likely to hold special memories for you and your family.

8)  DIY Holiday Gifts

Instead of buying lots of gifts for your family, create them yourselves! You can make everything from ornaments to candles, and the kids will love helping you with these unique handmade holiday crafts. Plus, when everyone receives a gift made with love, they'll know how much time & effort you put into creating it. You will have given a heartfelt gift and saved money.

9) Choose a Signature Christmas Cookie

Christmas cookies are a classic holiday tradition, but once you buy all of the frosting, decorations, and ingredients to make a dozen different cookies, your bank account could be empty. Instead, choose one cookie recipe as your family's signature holiday cookie. That way, you can buy the ingredients in bulk and save money by selecting a recipe that doesn't require frosting or decorations.

If you still want a variety of Christmas cookies to enjoy, then host a cookie exchange party. A cookie exchange is a gathering where everyone brings a dozen different cookies to sample. You'll create some festive holiday memories while saving money on ingredients, and you can even make it a tradition for each family member to bring their favorite Christmas cookie to share with everyone at the party!

10) Host a Holiday Game Night

An annual family holiday game night is the perfect way to celebrate without breaking the bank. There are dozens of excellent Christmas board games, card games, and party games to create special family memories. Start a tradition by having a game night once every holiday season! You'll make some fun & festive family memories while spending quality time together as well.

11)  Host a Holiday Open House

Hosting an open house during the holiday season is an excellent alternative to your typical fancy holiday party. Plus, it's a fantastic way for your family to create festive holiday memories while staying on budget. It's simple - make it potluck style, and let people stop by whenever they're in the mood. Keep things casual and focus on connecting and spending time together instead of spending money on a fancy holiday party.

12) Read Christmas Stories Together

Reading Christmas stories is a wonderful way to create cozy holiday memories with your family. Start by choosing a book to read together on Christmas Eve, and then gather everyone together in front of the fireplace or around the tree for an evening reading session. Since books can be expensive, stick to your budget by checking them out from your local library.

13)  Make Holiday Memories At Home

Skip the expensive destination holiday vacation and instead save your money and create your memories at home. It doesn't matter where in the world you live. There are always lots of ways to make Christmas special, no matter what time zone or climate you're living in. This is also a great option since affordable travel isn't available for many of us this year.

Holiday Memories on a Budget

As you can see, you don't have to spend a lot of money to create memories that will last long after the holidays are over.

There are plenty of ways for you and your family to create meaningful holiday traditions without breaking the bank. For instance, consider skipping traditional Christmas dinner in favor of one inexpensive alternative or making some DIY gifts together as a family instead of buying them off-the-shelf.

The key is finding creative ways to include your whole family in making memories they'll cherish all year long.

Whatever you choose, your family will cherish these special moments forever!

This post originally appeared on Wealth of Geeks.


Author Lauren Tingley is a formerly stressed-out, working teacher-mom of two who tried to "do it all" and ended up losing herself in the process. Determined to find joy in modern motherhood she discovered simplifying was the answer. A certified parenting and homemaking coach, she shares her tips for fun family activities, minimalist homemaking, and simple parenting advice on Simply Well Balanced (https://simply-well-balanced.com/) for families looking to create more balance in their homes. Lauren's ideas and advice have been shared by Parents Magazine, Good Housekeeping, and Women's First. 

Applying For a Mortgage is Very Common

There are many reasons why as a borrower, you would want to apply for a mortgage. The most obvious is that you cannot afford to buy the house in cash and need to make installment payments on it over the next 15 to 30 years. However, even with a mortgage, real estate is one of the largest ways to build wealth.

That's why even Real Estate Investors use mortgages.  To execute the BRRRR Method of buying a house, improving the value through forced appreciation,  and refinancing the original equity out, they keep their initial investment low by using a mortgage.

Even if you are not buying an investment property and could afford to buy the house in cash, there are still valid reasons to apply for a mortgage. For instance, you'll have more cash on hand for other investment opportunities by having a mortgage.

Applying for a Mortgage: Choosing a Fixed or Adjustable Rate

With an adjustable-rate mortgage, your rate starts lower than a fixed rate. It then adjusts based on a predetermined index. Most adjustable-rate mortgages have a few terms:

• Introductory rate

• Period of the introductory rate

• The maximum rate increase per adjustment

• Maximum total rate increase

• Amortization period

• Period per-adjustment after the introductory period

These terms are often abbreviated by saying it is a 5/1 or 3/3 arm. They mean a 5 year and 3-year introductory period and a 1 year or 3 year adjustment period. So for 5 and 3 years, the loans would be a fixed rate, then every 1 and 3 years, they will adjust to the index over the life of the loan.

When Applying for a Mortgage, Which is better?

Like most things in life, it depends.

No, adjustable-rate mortgages are not the worst product ever introduced and created only for suckers. Even though that is what many pundits want you to believe. That does not mean they are a better deal or better for everyone. However, there are a few specific situations when adjustable loans are a good choice.

Sometimes, especially with a 5/3 ARM, you would make the same payment as you would have on the fixed loan for the entire introductory period. Then applied the excess towards the principal, you would end up paying such a large portion of the loan off by the time the monthly payment became much different than the fixed loan that it becomes a moot point. But, of course, that is considering maximum adjustments for each adjustment period.

Adjustable loans have their downsides too. One major downside is that you will still have to make higher payments if the rate adjusts, even if you pay down the loan.

Applying for a Mortgage: Conventional Vs. Portfolio Lenders

You might have heard the terms conventional mortgage or conforming mortgage. These terms refer to mortgages that lenders can issue, then package up and sell to another company.

For those lenders to sell them to a secondary market for the best rate, they must conform to Freddie Mac or Fannie May standards, such as your loan percentage of the overall home value. These types of loans are notorious for needing more documentation or re-sending updated files as the mortgage goes through underwriting. But, again, this is because the bank has to make sure they have everything to meet the standards.

If you do meet all the standards for getting a conforming loan, then great. However, if you do not, this is where portfolio lenders come in. Portfolio lenders are institutions, typically banks or credit unions, that offer loans they intend to hold on their own balance sheet or portfolio. Since they are not selling them off, these institutions make their own rules and loan requirements.

Because the institutions are not forced to check off all the underwriting standards of a conforming loan, their requirements are different. That is not to say they are necessarily taking wild risks. However, they can look at the loan's risk profile and determine if they still want to take on that risk.

It is less likely that you will find low 30 year fixed rates from a portfolio lender. They often are shorter-term or adjustable mortgages. The rates are usually a bit higher, though the closing costs can often be lower.

Applying for a Mortgage: 6 Steps

Because the prospect of getting a mortgage can be daunting, it helps to break down the process of applying for a mortgage into steps. It is really a process, and each step has a few things that need to be done by you, the borrower.

1. Pre-approval

2. Getting property under contract

3. Application

4. Underwriting

5. Commitment

6. Closing

Pre-Approval

The pre-approval stage of getting a mortgage is typically relatively pain-free. First, a loan officer will ask you some questions and get basic verification of your income and credit score.

During the pre-approval, the loan officer will tell you the total loan amount you will qualify for.

During the pre-approval, it is a good time to ask questions about what is required by the bank to close on the loan. Getting a clear understanding at this point can help alleviate surprises or disappointments later on in the process.

Getting a Property Under Contract

Getting a property under contract is a prerequisite to moving forward with the lending process because the bank will need to consider the property you are buying. So after you've found a home, made an offer that both parties have agreed to, you can move to the next step in applying for a mortgage.

Application

I Canada it is best to work with an independent mortgage broker rather than with a bank. Mortgage brokers work quickly and have your best interests in mind and will shop around to find you the best rate. 

In the US, most lenders will use what is called a 1003 Uniform Residential Loan Application. If you do not see this application and are going through a conforming loan process, there is a good chance that you are going through a bank's questionnaire and filling out details so that their software can fill out the form for you.

Filling out this form will probably take about 1-3 hours, depending on how organized you are and if you have all the information needed in front of you. For example, if it is your first property and you do not have many loans, bank accounts, or brokerage accounts to mention in the application, it should not take too long.

Besides the 1003 Uniform Residential Loan Application, most banks will ask for 2 years of tax returns, 6 months pay stubs, and 3 months of bank statements.

Once you apply, the loan officer will send it to the underwriter and order the home appraisal.

Underwriting

Most people do not like going through the underwriting phase. This phase is where the loan officer takes your completed application package with all the documentation and delivers it to an underwriter for review.

The underwriting process is where the lender seeks to understand you and the property as a borrower and get comfortable giving you a loan.

The problem with this phase is banks can be notorious for asking for more documents than they originally asked for.

Sometimes they want to see the inspection report and want repairs made before closing that they think could put their money at risk if not handled. If that happens and the seller does not want to do anything about the defect, it can put you in a complicated position. This is especially tough when the seller already disclosed the defect, and you intended to repair it at a later time, perhaps when you saved up enough money.

Since it is tough enough to estimate renovation costs in the best of times, you do not want to be forced to deal with it in the underwriting stage of the home buying process. However, if you know the house needs some renovations and repairs to be livable or assure its long-term value, it is usually best to apply for a loan that includes a renovation or construction portion inside the loan.

Loan Commitment

Once the loan is underwritten and the lender has gone through their checklist of requirements for the loan to their satisfaction, they issue a loan commitment.

Some lenders wait for the appraisal to be completed before starting the underwriting process. Some of them do all the underwriting except the portion affected by the appraisal ahead of time and then wait for it to come in before giving the clear to close.

Once the loan commitment is issued, sometimes borrowers relax and maybe buy a car, get another loan, or open a credit card. Warning: do not do anything to affect your credit between the loan commitment and loan closing. The lender has the right to pull your credit on the closing day to make sure everything still looks good. For example, if they pull it and you have purchased a car, they could pull their commitment, and you will not be able to close on the house.

The best-case scenario if they do this is that you still qualify for the loan. It will likely delay closing because the bank will have to put the loan back through underwriting with the new debt information.

Closing

Getting to the closing table can be an exciting and nerve-racking time for a buyer. But, buying a house is a big deal, so that is understandable. Celebrate. You've successfully applied for a mortgage and are about to complete the process.

At closing, there will be a giant stack of documents to sign. The most notable documents will be the note and the mortgage. The note is what says you agree to pay the bank back. The mortgage is the document that secures their interest in the note to the property. If you do not pay the note, the lender will exercise their rights in the mortgage and start the foreclosure process.

Besides the note and mortgage, you will likely have to sign a whole bunch of disclosures. You will likely have to sign a document stating that you intend to be the owner-occupant of the property. You will have to sign a disclosure about the survey, bank privacy policies, title company privacy policies, indemnity agreements, and more.

This process can take an hour or two, so make sure you are not in a rush to get out the door to some other appointment.

Conclusion

The process of getting a mortgage can be time-consuming and feel cumbersome. But, in the end, there can be many benefits to the borrower. First, having a clear understanding of the process and the bank's requirements has the best chance of running smoothly.

This post originally appeared on Your Money Geek. 

Author Tyler Weaver is a real estate investor and blogger at Relentless Finance (https://www.relentlessfinances.com/). He has flipped over 50 homes and manages a real estate portfolio in the midwest. He strives to help others build wealth and add value to other’s lives through a constant pursuit of growth. 

Many don't know how to get out of it, but this article will show you what you need to do to get that weight off your shoulders! This post will give you some practical suggestions on how to save money and pay down debts.

It is possible for anyone, regardless of their situation, income level, or credit score. The first step is recognizing the problem and taking steps towards solving it. So let's get to the steps to answer how to get out of debt.

Why Is Getting Out of Debt Worth it?

90% of individuals say that money has an impact on their stress levels. A study found this entails impacts your health.

Having financial problems can cause it to be harder to save, budget in advance, or even start writing a list at a local store.

If extra debt money was available, it might be worth boosting financial confidence, morale, and opportunities to save. Financial experts regularly recommend two ways of reducing debt: the "avalanche" technique and the "snowball" technique. The two programs will help you focus on debt reduction. The snowball method is first to get your debts paid off, then take the next payday.

Both of these methods, however, require you to structure yourself and stick to a routine. If you would rather have support and someone to help you, it would be worth joining a service like Resolve to support you in solving your debt fast.

1) Stop Borrowing Money

This may seem pretty straightforward, but many people don't realize that borrowing money is the first step to accumulating more debt. So stop doing it! If you're in a situation where you need credit cards or loans for emergency purchases, then find other forms of financing, which we will cover later on in this article.

2) Resolve Your Debt, Affordably

If you've tried to resolve your debt but couldn't afford the high fees that come along with many solutions, there is still a way forward. Resolve is an app that connects people with experienced debt agents for a low monthly membership fee.  They will help you lower interest rates, stop collection calls, negotiate with creditors to refund fees, and provide budgeting tools, all for a monthly subscription that averages about $17. After resolving your debt, you can give a tip for completed services, but it is entirely optional. 

It feels good to be free from the stress of debt collectors calling all day long or worrying about how much money is left in your bank account at the end of each month.

Find out more about Resolve here.

3) Plan to Pay off Debt: Try a Debt Snowball

For getting rid of all of the bad debts within the fastest possible time, you should use the debt snowball method.

What Is a Debt Snowball?

Debt Snowball is a debt repayment technique where you prioritize your debts and start with the smallest balance, paying off one at a time and moving to each larger balance. Personal finance author Dave Ramsey popularised the method, and it can be suitable for anyone who wants to build momentum in paying off debt.

How To Use the Debt Snowball Method To Pay Off Debt

If you want to try this method for getting out of debt, it's pretty easy to do, simply:

• List your debts from the smallest balance to the largest; consider student loans, personal loans, and credit card debt.

• Pay the maximum amount per month on your smallest debt while paying the minimum payment allowed on the rest.

• After the smallest debt is paid, continue applying the same principles to the second smallest debt.

• Continue this process until all debts are paid and you are debt-free!

4) Use the Debt Avalanche Strategy

An alternative method to the Debt Snowball method is the Debt Avalanche which is another good option for paying off your debt.

Getting out of debt with this method works like this:

• You make a list of your existing debt and sort them through the highest interest rates to the smallest.

• Pay off debt faster by setting aside extra money to pay off your debt on the highest interest rate. Make minimum payments on the rest of your debts until you pay off debt on the highest interest loan.

• By paying off debt that's the highest interest rate and then repaying your debts, you'll reduce debt and reduce the overall interest rate you pay.

• Continue to work through this method until you are debt-free.

Becoming debt-free in this method works exceptionally well as long as you have an additional amount of money in your budget to make extra payments.

5) Renegotiate Credit Card Debt

Many people in debt don't realize they can renegotiate their terms with credit card companies. If you can call up your bank and ask for more favorable rates, then it will be much easier to pay off the debt faster without having to worry about accruing interest on top of what you already owe.

All you need to do is ask! As long as your repayment history is solid, it would be best if you had an excellent chance of getting better terms.

You can apply this tip to other expenses to lower your overall bills, as credit companies aren't the only business that will want to keep your business. Try contacting the below too and trying this method:

• Your utility providers

• Any insurance providers you have

• Phone bills

• Any memberships that you are out of contract on (pretend to cancel and see what they are willing to offer you to stay)

It's always worth asking! Imagine what difference you could make toward your financial goals by saving 10% off each of your bills!

6) Consider Balance Transfers & Debt Consolidation

Debt consolidation and balance transfers can be helpful to see all of your debt in one place. They help you pay off the debt by putting all the companies you owe money to in one place.

If you struggle to organize your debt and want a manageable monthly payment, this option could be worth exploring.

Balance transfers on credit cards can also be worth exploring if you have a decent credit rating and have started to pay interest on an expired 0% credit card. For instance, if you have multiple credit cards with debt, you could use a balance transfer to transfer all credit card debt so that it is in one place and you are paying much less interest.

What to watch out for in this method:

• Balance transfer fees often apply, so make sure to check.

• Some credit card providers will only let you transfer a limited amount, so be sure to check before you apply.

• This method would support you to get out of debt, but to pay off debt fast, you will need to make extra payments on top of the monthly consolidated debt.

7) Create the Best Budget To Pay Off and Stay Out of Debt

The best budget for you might be quite different from another. Flexibility is a vital ingredient in success and will keep you in check during a crisis.

Use goal-setting to help guide your budget. Ask yourself questions like:

• When do you want to be out of debt?

• What are you willing to give up to get there fast?

Make sure there is freedom in your budget for savings so that you avoid going into further debt but don't have so much freedom so that you allow yourself to keep spending.

The easiest way to pay off debts fast is to make sacrifices. If you don't go without what you don't want, you will never be able to get rid of your financial debt. Use your learned experience to create a better budget than last time.

Steps You Should Take to Start a Budget.

1) You need to know where you stand today. Start by writing down all of your committed expenses and compare that to your current income.

2) Review your current committed expenses - are there any you can reduce? For example, gym memberships you don't use.

3) Read about some of the different budget methods and pick one that sounds the easiest for you to follow and what you will most likely stick to. My personal favorite is the 50/30/20 budget.

Make Sure To Avoid Past Mistakes When Setting a Budget.

People are creatures of habit, and spending money isn't an exception. We shop in the same markets, eat in the same restaurants and drive the same vehicle.

This will cost you in the long run if you don't make changes, affecting your ability to take responsibility in the future. If you don't modify your financial habits, you'll end up in debt forever. You cannot make do without taking that step. You have to make better decisions in what you do. You are likely to see a change in your spending habits immediately.

Think about what habits you have that could be costing you extra money on your budget. For example, how many times are you eating out per week?

Make Sure To Create a Family Budget

It is common to see a household member be responsible for all their family's financial affairs. Sometimes this means only that one individual knows the family's finances. If you are trying to succeed, it's crucial to have a strict budget to clear everything, and everyone knows where your debt goes.

It would be best to have everyone involved in the house as a participant in tracking and budgeting steps. Come clean with your partner and friends. But if they aren't familiar with your finances, then they cannot understand your situation. You must involve them in this process so they see the same thing. There might be some challenging discussions. Also have a discussion about investing your money for the future.

8) Work Side Hustles

Sometimes having a strict budget isn't enough. You might find that even on the most stringent budget, you are still living from paycheck to paycheck. If this is the case for you, it might be time to try a side hustle to generate extra cash.

If the task of doing another job seems exhausting, make the job a short-term job where you can earn enough money for paying down debts. You can also do jobs at home, such as selling old clothes online or renting out a room at Airbnb.

9) Use the Power of Extra Payments

Making extra debt repayments can reduce your credit utilization ratio, which can improve your credit score. Combine this method with either the debt avalanche or snowball method mentioned earlier in this article so that your extra payments are strategic.

10) Reduce Your Spending

The average cost per month for impulse purchases was $155 and then rose to $183 a month when the pandemic occurred. This amount is about $1800-2700 annually if you pay it off. How can this be improved?

The only way to get out of debt is to cut down on your expenses. It prevents new debt from accumulating and gives you an incentive to buy something to pay down your debt. Start small by not buying too much coffee per day. For example, make coffee at home for less than $20 a week, totaling $1,000 per year. It will become easier for you to curb your spending.

11) Face the Music

If you're trying to have unopened bills disappeared, the first step is to admit you're wrong. It's time to face the music and accept you need to make some changes to get your financial life back in order.

If your expenditure regularly exceeds your net income, either you must dramatically change your lifestyle (sell your home, buy a smaller apartment, take part in a second job) or declare bankruptcy. And sometimes, you might want to look at another step depending on where you are going. Start introducing money to your budget, or you may have to file for bankruptcy. However, there are ways to improve your finances before taking that step. 

12) Consider Becoming a One-Car Household

The average owner of a car spends more than $9k per year on buying and operating. If you decide that you'll sell your second car, even taking the occasional cab may still be cheaper than owning a second car.

Plus, you could use the money you get from your car sale to help you pay off some debts, and if you have your car on a monthly loan, by selling it, you will free up more of your monthly budget!

13) Create an Emergency Fund

Immediately after paying off debt, you should start setting up the emergency fund. If you just saved 10% of your salary each month in 10 months, you would have a month's salary saved. Think about that if you ever got into a situation where you lost your job, how beneficial it would be to have a month's salary saved to get you back on your feet.

14) Get Out of Debt by Living Below Your Means

Trying a simpler life will help you get rid of a lot of debt as fast as possible. Living below your means enables you to save money to build your emergency savings account and helps you get out of debt, as you will be able to use any money saved to make extra debt payments.

Making frugal choices with coupons, using existing items rather than new, sticking to your list of groceries, and refraining from impulse purchases can help you get rid of debt sooner. When you live below your means, shop frugally even if your wage allows you to shop for more expensive items.

Some actions you could take to live below your means, meaning you spend less, include:

Get Rid of Your Cable

The average cost of cable is $64 a month. If you struggle to make ends meet every month and want to become debt-free, you need to cut back on not essential items.

A cable is one of those non-essential things in life. You could save money by replacing your cable subscription with an online subscription service like Netflix, which is a fraction of the cost.

Use the money saved on cable to pay over minimum payments or build up your emergency fund.

Cut Up Your Credit Cards

Make steps to stop your impulsive spending by cutting up your credit cards. This is more a preventative measure, but it will also prevent you from making any impulse purchases.

Do a Grocery Brand Swap

Swapping all of your branded groceries for non-branded (generic) groceries is an easy way to live below your means and an easy switch to make to save money.

Have a No Spend Month

Have a month where you agree not to spend anything apart from essential purchases like food shopping. This will help you get into the mindset of living below your means.

Write down at the start of the month what you are giving up. At the end of the month, compare this list which what you missed. You might be surprised that you haven't missed out on as much as you think.

How To Get Out of Debt Fast: Bottom Line

It's hard to get out of debt and can take years if you don't know how to do it. Fortunately, there are a few simple steps that will help you pay off your bills faster than ever before. Whether you want to pay off a student loan or are seriously in debt, the tips in the article can help you get back on the right track.

We hope these tips have been helpful, and we wish everyone the best of luck on their journey towards being free from debt!

This post originally appeared on Wealth of Geeks and has been republished with permission.

Author Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.

Our homes are essential pieces of our lives, and if something were to happen to them, it would need to get fixed. Issues vary from minor fixes to major problems. These major issues can keep some people up at night as they can get extremely costly; this is where homeowners insurance comes in.

What Is Homeowners Insurance?

At its core, homeowners insurance is an insurance policy that covers losses and damages to your home and assets in the house. A typical homeowners policy typical covers:

• Damages to the exterior of a home

• Damages to the interior of a home

• Loss or damage to personal assets

• Injuries that occur on the property

In addition to these coverages, if you live in an area prone to natural disasters, also known in the insurance business as "Acts of God," you may also have policy coverage for disasters such as:

• Earthquakes

• Floods

• Tornados

• Other uncontrollable events

Of course, with these extra protections/coverages comes additional cost. As a result, most people choose not to include coverage for such events as they do not happen enough or at all in the areas in which they live.

Another rarely used coverage (at least in the US) is the "War Risk" coverage, which would cover damages incurred from events such as war, invasions, insurrections, riots, strikes, and terrorism.

Homeowner insurance policies typically include additional living expenses (ALE) coverage. One might incur extra costs from living away from home if it becomes uninhabitable due to damage from an insured scenario.

Three Types of Homeowners Insurance

There are different types of insurance coverages in the US, and depending on which one you choose, it will change the amount you might receive from a claim.

Actual Cash Value

With actual cash value coverage, you'd be covered for the cost (how much you paid) of your home and belonging after accounting for depreciation (how much the house and belongings are currently worth). Likely, this would mean you would receive less for your home and belongings than you originally paid.

Replacement Cost

Replacement value policies are the same as actual cash value except it does not take depreciation into account. This would mean you would be able to receive the amount you originally paid for both your home and possessions.

Guaranteed (or extended) Replacement Cost/Value

GRC is the most comprehensive type of coverage. This type of coverage will allow you to receive the total cost of repairing or rebuilding your home, even if it's more than your policy limit. The reason for this is that the prices of repairing or rebuilding have likely risen since you purchased your home, and this type of coverage will take that into account. There is a limit to how much over your policy limit you can receive, typically 20% to 25%.

Many experts believe homeowners should have GRC as costs almost always rise when repairing/rebuilding a home and many homeowners are stuck footing the bill if a total rebuild is needed.

How Much is Homeowners Insurance?

Like most insurance policies, the policyholder pays a premium each month to maintain the policy. The premium paid each month can vary based on many factors. Some of the more common factors are:

• Where you live

• The price of your home and the cost to rebuild it

• The amount of coverage

• Your home's age and condition

• Home security and safety features

• Your credit history

• Additional types of coverage

• Your deductible

• Bundling other insurance from the same company

• Your choice of insurance provider

Using these and other factors, insurance companies will determine how much of a monthly payment they will require to cover the cost of any potential damages to a home. For example, the more it will cost to rebuild your home, the higher your premium.

Conversely, choose a higher deductible, which is the amount you pay for any damages before insurance kicks in the rest. As a result, your monthly premium will be slightly lower.

How Does Home Owners Insurance Work?

Like other insurance policies, homeowners insurance will cover the costs of making any repairs due to covered damages after the deductible has been paid. For example, you can make an insurance claim if you incur water damage or damage from a fire.

Your insurance company will likely send a claims adjuster to your home to inspect the damage. The claims adjuster is there for several reasons. For one, they are the first line of defense against insurance fraud.

They will examine the damage and speak to any relevant people who may help confirm the claim happened the way the homeowner says it did. Claims adjusters will also determine if the homeowner's policy covers the damage and how much damage the insurance company is responsible for.

Once it is deemed everything is on the up and up, a homeowner will pay the deductible. The insurance company will cover the rest. Back to our fire/water damage example, if your deductible is $2,000 and it's been determined that you have $10,000 in damages, you'd pay the first $2,000. The insurance company would pay the remaining $8,000.

How and When to Get Homeowners Insurance

Most banks will require proof of insurance before lending money to potential homeowners. You can obtain policies through the bank or lending institution itself, or homeowners may choose to get the policy independently.

There are tons of insurance companies out there, both large and small. Each will have different packages and price ranges, so getting more than one quote is essential before agreeing to any policy.

Once the policy is in place, the mortgage lender can release the funds needed to purchase the property. The insurance premium is typically included in the mortgage payment and held by the lender in an escrow fund. When the bill comes due from the insurance company, the mortgage company will take care of payment from this fund. If you are lucky enough not to have a mortgage, you will pay the insurance company directly.

How Much Coverage Do I Need?

When determining the amount of coverage you'll need, it's crucial to make sure you are not only considering the current worth of your home. Most claims are for repairs, and the insurance policy will be more than enough to cover the costs. However, in the worst possible scenario, you might have to rebuild your home completely.

Many policies will fall short if proper consideration isn't taken. Many policyholders will only have the mortgage or the purchase price of the house as their covered amount. When a rebuild happens, these policies fall very short.

For example, let's say you purchased a home for $300k with 20% down for a mortgage of $240k. Now the price of the home has risen to be $340k. If you took out a policy with $300k in coverage, you'd fall 40k on rebuilding. If you took out only the mortgage amount at $240k, you'd fall 100k short of the rebuilding costs.

Unless you have the GRC coverage mentioned earlier, you could be stuck with a smaller house or getting stuck adding additional funds to your mortgage.

It's Not the Same As a Home Warranty

Homeowners insurance and a home warranty are commonly confused, but they are not the same thing. While homeowners insurance covers the damages to your home, a home warranty typically covers the cost of replacing/repairing different appliances or systems in your home. Appliances could include your washer, dryer, dishwasher, oven, or water heater. A home warranty would typically cover systems like your heating and cooling systems.

Home warranties can vary in price depending on the duration of the warranty and what is being protected. Unlike homeowners insurance, home warranties are not required when potential owners are looking to secure a mortgage. They are simply an optional policy to cover any "wear-and-tear" costs owners might incur. They usually are more popular with landlords of investment properties.

How to Keep Your Premiums Lower

Obviously, everyone would like to keep their insurance premiums as low as possible. However, don't cheap out on coverage as anything you save there. You'll pay tenfold if any should ever happen. Here are some better ways to keep your premium costs down.

Have a Higher Deductible

As mentioned above, having a higher deductible will lower your premium. Basically, the more you cover, the less the insurance company needs to, so you are less liable to them. Make sure not to go too high, though, as then you'll be paying for most minor repairs on your own as you won't reach the deductible.

Get a Home Security System

Again, you'll be seen as less of a liability to an insurance company by having a home security system. Not only will you be less likely to be burglarized, but security systems are also typically connected to local police and fire departments. These departments will automatically be alerted to any emergency that may be taking place in your home, whether you are there or not.

Any other security measures will help as well. For example, simple updates such as installing smoke detectors, carbon monoxide (CO) detectors, or deadbolt locks can all help lower your premium.

Stick With One Insurance Company

Many insurance companies provide more than just homeowners insurance. By maintaining multiple policies with the same company, you'll be likely to get a discount on both, double savings!

Build With The Right Materials

When planning a renovation/addition or other home improvements, take the building materials into account. By doing home renovations or additions, you add value to your home, which could mean a rise in your premium. The materials used could change how much of a rise. More often than not, structures mostly made from wood are more expensive to insure than structures using concrete or steel. The logic is simple. Wooden structures are more susceptible to fire and other wear and tear than other materials. They are therefore more likely to need repairs down the road.

Pay Off Your Mortgage

Not exactly easy to accomplish, but insurance companies do take this into account sometimes. The reason is that many insurance companies believe that once a home is completely paid off, homeowners are more likely to take better care of it, simple as that.

Conclusion

Homeowners insurance is not only essential to have when owning a home; it's required. It would be best if you never rushed into a policy. Make sure you not only have enough to insure the total cost of your home and belongings now but what it might cost to replace everything in 5,10, or 15 years. It will likely raise your premium, and hopefully, you never use it, but if you ever do, you'll be glad you did. You can reduce your premiums in other ways to help offset the costs of increased coverage.

This post originally appeared on Your Money Geek.

Author Jeff Cooper is a fan of all things finance. When he's not out there changing the world with his blog, you can find him on a run, a Mets game, or just playing around with his kids.

Fraudulent claims on loans and leases are the fastest-growing kind of identity theft in the United States. Incidents of identity theft for leases and loans more than doubled in the last year. That has been one of my worst fears for a long time, so I decided to look into options to keep my information safe from those looking to use data that does not belong to them for personal gain, and now I get to share my knowledge with you!

You need to protect yourself from criminals looking to harm your credit and use their identity for themselves. You can request a credit lock from all three national credit bureaus and block access to any person or agency trying to do a credit check on you.

Also known as a security lock, taking this step will keep you more in control of who can access your personal information. Credit freezes produce similar results, but it is faster and simpler to lock your credit. It also makes it easier to grant access to those whom you want to check your info.

What Is A Credit Lock?

Locking your credit is a preventative measure you can take to prevent any person or agency from accessing your individual information. By taking this step, you actively prevent identity theft and any other fraudulent acts on your credit. Knowing how to lock your credit and when it is essential will stop criminals from taking out a loan or opening any new lines of credit in your name because they will need a credit check.

Unlike a credit freeze which protects us with federal and state laws, credit locks are covered by the contract you have with each credit bureau. It may not be a law like the credit freeze, but it is the most protection you can provide yourself to stay safe from identity thieves.

How Do You Lock Your Credit?

When locking your credit, a vital element to know is that locking your credit with one credit bureau will not cause the other two reports to be locked. You will need to request locks for each credit report to prevent all credit checks as you navigate your way through, avoiding identity theft. When you request your credit locks, you will need to:

• Call Experian at (888) 397-3742 or request a freeze online at the Experian Freeze Center.

• Call Equifax at (888) 298-0045 or create/access an online account to manage your freeze manually.

• Call TransUnion at (888) 909-8872. You will be creating a pin that you will need to access, freeze and unfreeze your account, so make sure to keep it in a safe place!

The cost will differ for each company. -Experian offers a program called 'CreditWorks' that has a credit lock available and provides monthly access to all three of your credit reports.

You also receive up to $1 million in identity theft insurance and notifications about new credit activity on all three of your credit reports. Experian also provides phone access to fraud and credit experts to help you resolve any issues.

The cost is discounted to $4.99 for the first month, and after that, it costs $24.99 for the subsequent months you choose to keep your information locked.

Equifax has a program called 'Lock and Alert,' which is free to activate and use.

TransUnion offers credit monitoring bundles along with its TrueIdentity subscription with a credit lock option, up to $25,000 in identity theft insurance, and monthly access to your TransUnion credit report.

How To Unlock Your Credit

Each credit bureau will request that you create a user account on their website or app when you join their program. When you are ready to unlock your credit, you will be able to log in and unlock your file with only one click. That is a perk of credit locking that you don't get with a credit freeze because it is much faster and easier to unlock your information than unfreeze it.

When You Should Lock Your Credit

Sadly identity theft and credit fraud are significant causes of concern when it comes to financial safety. It is not getting better as time goes on, so it is as crucial as ever to keep your personal information safe. You can always air on the side of caution and freeze or lock your credit as a proactive measure. Still, in most cases, you will need to lock or freeze your credit when your personal information or social security number has been exposed due to a data breach.

RELATED:6 FINANCIAL TIPS FOR NEWLYWEDS

How A Parent Can Freeze A Minor's Credit

Usually, children are not the group to be concerned about when it comes to credit scores and reports, but also keep in mind that their credit is a blank slate. Many thieves know it, and if they get the chance to use your child's identity to open accounts, you may not know until they are an adult! Putting a freeze on your child's credit is a free way to restrict access to their personal information. It also provides the opportunity to give them the blank slate they deserve until they are 16. To freeze your child's credit, you will need to:

1.Organize All Necessary Paperwork

such as

• Your child's birth certificate or the legal documentation you have showing you have legal guardianship of the child.

• Your government-issued photo identification, such as your drivers' license

• Your birth certificate

• Your child's birth certificate

• Documentation showing your name and address, such as your utility bill or bank statement

*Be sure to make three copies. One to send to each bureau, and keep the originals for your records.

2. Download the Application

Each site has its own process. Follow the directions to get the applications you need. TransUnion has a letter to fill out rather than an application like the other agencies do.

3. Mail the documents, applications/letters, and wait for a response from each bureau.

Make sure you keep your records organized so you can reaccess them if you need to.

That is a practical option, but remember, this is not the be-all and end-all of identity protection. Make sure you keep your child's documentation, such as their social security card and birth certificate, locked away in a safe and secure location. Your children deserve the chance to start their financial journey from scratch.

Other Ways to Monitor Your Credit

If you have a credit history, you've most likely had a credit card number or account number stolen and used fraudulently. If you don't monitor your bills and lines of credit, you may not know that someone has booked airline tickets or gone on a shopping spree using your card and your name.

You have the option to place fraud alerts on your accounts also. There are programs for individual credit cards. You can also use a monitoring system that will notify you of any out-of-the-ordinary use on your lines of credit or social security number. Keeping track of your credit score and report regularly will help you prevent anyone from taking advantage of your personal information.

It is crazy to think that people take advantage of others this way. Still, unfortunately, the amount of fraudulent cases is continuing to go up daily. Consequently, it would help if you were ready to keep your finances safe. Monitoring your credit regularly and setting up fraud alerts for yourself are the first lines of defense for data safety.

If you think or know your personal information got comprised in a breach, the best option is to lock or freeze your credit to maximize your chances of keeping your information safe.

This post originally appeared on Your Money Geek.

Dana Wolk is a blogger with a master’s degree as a Literacy Specialist who has a long history of writing freelance articles for her blog, Debt Blogger, as well as writing for other companies and individuals who have needed content. She learned about finance and budgeting through her experience and years of tight budgeting and dealing with debt personally. Her professional and personal experience with sharing information and teaching others has made her blog a reliable source of information for those who want to improve their financial literacy skills.

However, just because the demand is high, that doesn’t mean you shouldn’t try to increase the value of your home by adding curb appeal for cheap. While some projects are more affordable than others, adding curb appeal to your home can be beneficial in many ways.

Today, we will share with you the best curb appeal ideas to keep in mind when looking to add value to your home or make it the best looking on the street! But first, what is curb appeal anyway?

First, what is Curb Appeal?

Curb appeal is what is referred to as the first impression by others when they see your home! Put another way, what type of appeal does your home offer from someone standing on the curb?

Curb appeal generally refers to things like your lawn, landscaping, and the exterior of your home! Aesthetics matter when you are selling, looking to maintain your home's value, and updating it.

The street view of your home will often indicate what to expect when you look on the inside!

14 Curb Appeal Ideas to Seriously Consider

Below you will find a quick list of common items used to spruce up the exterior of your home while adding that coveted curb appeal!

1. Fix that lawn!

Perhaps the first and most important step when it comes to adding curb appeal is making sure your home’s lawn is looking great. While this is sometimes easier said than done, a lush green lawn is one way to make your home stand out. However, this might mean you need to use a few of your weekends to get it in tip-top shape!

According to James Moeller of Moeller’s Lawn Service, you can follow these simple steps to make your lawn look great:

• Step 1: Be sure to keep grass 3.5-4 inches long to keep it greener in the summer
• Step 2: Water one time a week for about an hour to encourage more vigorous root growth
• Step 3: Use a pre-emergent and post-emergent weed control in the spring
• Step 4: Be sure to aerate and overseed in the fall

2. Make your door pop!

Simply adjusting the color of your front door or even replacing an old door is an effective way to increase your home’s curb appeal. You can paint your door yourself for under $45 or even have someone else do it for under $100.

If you think it is time to update your door and replace it, be sure to always check with your HOA for painting and door replacement guidelines! Also, be sure to check out #4 below for adding door appeal!

3. Consider updating siding & gutters

Depending on the age of your home, you might want to consider addressing the siding and gutters seriously.

With so many new technologies, such as fiber-cement siding and alternative siding, you can add more color and durability to your home with ease. While replacing your siding is a little pricey, if your home is approaching that 25 year plus mark, it might be time to consider remodeling to update the exterior seriously.

The cool thing about gutters is that they now come in countless colors, and you can estimate gutters online. Out of all the possible exterior remodeling updates - gutters, siding, windows, doors, and roofing - gutters are by far the least expensive. You can re-gutter your home for under $1,200 on average.

The trend right now is a blue or white siding with black gutters!

4. Add some door & window decor

Adding a few garden boxes to your windows if you live in a condo or townhome is a cheap way to add color to the outside of your home, thus creating some more aesthetics. Additionally, you can make or find cheap wreaths for each season or door decorations to hang on your front door.

With so many holidays and seasons, decorating your doors and windows is a simple way to spruce up the front of your home.

5. Remove overgrown trees & bushes

Overgrown trees and bushes don’t add to your home’s appeal. They take from it. Whether you trim down your trees and bushes or remove them, opening up the front of your home will give your home more appeal. Just like the trends inside of your home that change, landscaping styles do too. Be sure to stay with the trends and to keep your plants trimmed, or take them out!

6. Don’t be afraid to paint!

Anything you can paint on the outside of your home is a simple way to add some street appeal to your home. So whether you repent the fascia boards, trim around your windows/doors, or, as we stated, the doors themselves - you can add some quick appeal with a few paint strokes.

A fresh coat of paint on the trim is a good idea on any home over ten years old as a general rule of thumb. If your home is under ten years old, be sure to check out numbers eight and nine below!

7. Replace your windows.

On the list of curb appeal ideas, perhaps the most expensive option would be replacing your windows. The reason being is often, window replacement isn’t covered by insurance (unlike a roof) and is more of a cosmetic upgrade. However, just because it is expensive doesn’t mean upgrading your windows isn’t smart.

Pros to replacing your windows include increasing your home's energy efficiency, updating the window styles, and adding tons of flare as far as curb appeal goes! New window colors, frames, and styles are expensive but worth considering!

8. Spray paint your shutters!

You can spray-paint your shutters, and it is a quick way not only to add curb appeal, but it is one of the cheapest options too! Buying spray paint isn’t that expensive, and you can add some flare to the outside of your home by simply spicing up your shutter colors!

Be sure to take down your shutters and add 1-2 coats of spray paint to each shutter. Once they are fully dry, put them back on your house! If you ever watch the hit HGTV show, Good Bones, they often use spray paint to make the shutters look updated!

9. Pressure wash the outside of your home

You keep the inside of your home clean by vacuuming, dusting, mopping, and even going as far as shampooing your carpets, so why don’t we always keep the outside of our home clean?

Pressure washing the exterior of your home is something you can do yourself or hire a contractor, but it is vital to complete every few years. Mold, algae, grime, and organic buildup can appear on your walkways, driveway, siding, roof, and windows. Depending on the size of your home, you can pressure wash your home in just a few hours. Be sure always to know the following things first:

1. Never pressure wash your shingle roof.
2. Know the proper PSI per surface type to prevent any damage
3. Do your research before ever renting a pressure washer

10. Update your outdoor light fixtures

If you don’t have the money to get new siding, replace all your landscaping, or the time to paint your door - you can consider updating your outdated outdoor light fixtures. Outdoor light fixtures are easy to replace, and simply updating them can quickly add some curb appeal.

11. Ask insurance about your roof!

One of the most common homeowners insurance claims happens to be roof claims when storms impact shingles. Knowing this, simply having your roof inspected might mean you can get it replaced for filing a claim.

Now, you might be wondering why this is advantageous. A new roof typically has one of the highest returns on investments for starters, but new shingle styles look great. In addition, there are more color options and styles to choose from than ever before.

12. Complete the minor to-do list

Right now, I have a goal of touching up the trim around my front door, pulling the weeds in my yard, painting my shutters, and fixing one screen on a window.

This simple to-do list is nagging, but it is necessary when enhancing the outside of your home. So whether it is replacing lights, making those minor tweaks, or just moving some things elsewhere - go ahead and set out to complete your to-do list one weekend!

13. Add some color to your landscaping

Adding color to your landscaping with the help of some perennials is a cheap way to make your yard pop. The flowers you decide to use will mostly depend on a few factors:

• Where you live
• The season
• Climate and weather conditions

14. Declutter the outside of your home

A simple and effective way to add curb appeal that costs $0 is to make sure your home and yard are decluttered. Consider these easy and quick ideas:

• Keep trashcans on the side of your home or in a garage
• Kids toys and bikes should be in your garage or the backyard
• Old cars, boats, and other vehicles can be stored elsewhere
• Garden and landscaping tools shouldn’t be in the front of your house
• Take everything that is clutter off your porch
• Be sure your windows are clear for viewing and not blocked by boxes on the inside of your home.

Not only will these ideas save you money, but they will also add value to your home simply because of a cleaner, less cluttered appearance!

The Verdict -

The process is simple when it comes to adding curb appeal - do it! First, consider selecting one or two from this list, implementing the strategy, then picking another. For example, perhaps you can start by:

1. Fixing landscaping
2. Painting your front door
3. Getting a quote on your siding or roof

Tackle all the free curb appeal ideas first, followed by pricing out the others. Then, set a goal to do one or two curb appeal projects per year (one in the spring, one in the fall), and you will create a habit of continually adding curb appeal to your home.

This is a lot easier than waiting to sell and trying to do everything all at once. Trust me on this one!

Curb Appeal FAQ:

Does adding curb appeal have to cost money?

No! You don’t have to spend a fortune adding curb appeal to your home. There are ways to add free curb appeal, including mowing your grass, trimming your bushes, cleaning out your mulch bed, spray paint your shutters, wash your home, and trim back your trees! Of course, anything else you can paint/clean will help too!

Can you charge people for curb appeal?

Suppose you happen to own a landscaping company, exterior remodeling company, or even want to do curb appeal for others as a side hustle. In that case, you can charge money for your services. One of the best side hustles is landscaping. Adding curb appeal through landscaping is often the cheapest service homeowners will elect to go with too!

This post originally appeared on Your Money Geek.

About the Author:

Josh Hastings writes about ways to make money, pay off debt, and improve yourself. After paying off $200,000 in student loans with his wife in less than four years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, helping others with their debt and recommend using Personal Capital to track your finances.

View this recently sold Duplex or see all my home sales

View this recently sold Duplex or see all my home sales

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