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Pulte Mortgage Review

A wholly-owned subsidiary of PulteGroup since 1972, the third-largest homebuilder in America, Pulte Mortgage gives customers a financing option that differs from those of banks and online lenders.

As an imprint of the larger conglomerate, Pulte Mortgage leverages construction experience and a personal touch to take borrowers through the home purchase process, helping them understand their options and decide on the best mortgage loan for them. This is done through a personal loan consultant assigned to individual accounts.

While Pulte Mortgage does not have a profile on the Better Business Bureau’s webpage, the PulteGroup has an A- rating, though it is not accredited.

Pulte AT A GLANCE

Year Founded 1972
Coverage Area Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington
HQ Address 3350 Peachtree Road, NE, Atlanta, GA 30326
Phone Number 1-(866) 236-8165

Pulte Company Information

  • Part of the PulteGroup, the third-largest homebuilder in the United States
  • Based in Atlanta, the financing branch has served 400,000 borrowers across the country since 1972
  • Offers consumers a streamlined and integrated process, bringing a great deal of construction and lending experience
  • Has a broad menu of conventional, jumbo and government-backed loans, as well as specialty products
  • Assigns personal loan consultants to help guide borrowers understand mortgage rates and other specifics
  • Hosts a mortgage learning center for borrowers that includes a calculator, a glossary, and other resources

Pulte Mortgage Rates

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Pulte Mortgage Loans

Customers who are building homes through one of the approved PulteGroup builders can access loan products including:

Fixed-rate mortgages

Usually offered in 15- and 30-year terms, these mortgages feature a fixed rate throughout the life of the loan, ensuring a steady monthly payment that is easily budgeted for. Fixed-rate mortgages are generally best for homeowners who expect to settle down in their residence or just want the dependable structure. Pulte Mortgage has fixed-rate offerings with both low- and no-money-down payment requirements.

Adjustable-rate mortgages

Typically called ARMs, these mortgages have an interest rate that fluctuates with market conditions. These loans are ideal for borrowers with short-term housing plans who may move soon after closing.

Since interest rates are generally lower for ARMs, these products may be a good fit for those looking to make a profit, yet although rates are initially low with ARM loans and they remain fixed for a specified number of years, the risk of rates increasing with market fluctuations after the initial period exists.

The terms of these loans usually include a fixed rate for an introductory period that is rebalanced yearly, bi-annually or monthly. While traditional ARMs stay fixed for six months and are thereafter recalculated at the same interval, hybrid ARMs offer longer fixed terms, like 5/1 or 7/1 options, that are fixed for five or seven years respectively and rebalanced each year.

Jumbo mortgages

Sometimes consumers need higher loan amounts than traditional, conforming mortgages can offer, which are limited to $453,000. Homeowners who build their own homes or purchase homes in high-cost areas may need more robust financing options, which is where a jumbo loan comes in. These mortgages often cover loans between $453,100 and $2 million.

FHA mortgages

These loans are backed by the Federal Housing Administration (FHA), which allows for less strict qualification requirements to incentivize homeownership. With FHA mortgages down payments can be as little as 3.5 percent, while low credit isn’t an automatic disqualification.

VA mortgages

Veterans Administration-backed mortgages are intended for veterans, active-duty personnel, and qualifying spouses of those who have served in the military or armed forces. Little to no down payment may be required for these types of loans. 

Balloon mortgages

While most borrowers are familiar with mortgages that are paid for incrementally, balloon mortgages are the opposite. These types of mortgages are paid in lump sums over a shorter period of time typically spanning five to seven years but may feature a lower interest rate than a fixed-rate option. At the end of the mortgage, borrowers must refinance or sell their homes, which is something to be aware of.

Bridge loan

While Pulte Mortgage does not offer home equity loans or lines of credit, it can extend bridge loans. This product is a type of the second loan that uses the borrower’s present home as collateral, earmarking the proceeds for closing on a new house before the present home is sold.

Pulte Mortgage does not offer cash-out refinancing options or USDA loans, which are government-backed loans that incentivize rural homeownership through low down payments.

Pulte Mortgage Customer Experience

The idea behind Pulte Mortgage is to streamline the mortgage process for consumers, so it’s more effective and efficient. In that spirit, the mortgage process for borrowers is straightforward with lots of assistance available on the way. Pulte highlights its five-step process:

  1. The mortgage application is started either through a secure online portal or through the mail. A Pulte Mortgage team is also assigned at this point.
  2. The personal loan consultant contacts the borrower to talk about important information, determining personal needs and locking in a rate.
  3. The loan is processed, and credit approval is communicated.
  4. The closing date is set with a builder representative, while the loan processor coordinates necessary actions.
  5. The keys to a new home are ready!

Prospective borrowers who just want to do some research can also benefit from Pulte Mortgage’s resource library, which includes:

  • A calculator that helps determine the buying power
  • A glossary for mortgage terms you’re likely to encounter through the process and should be familiar with
  • A mortgage FAQ for specifics on homebuying and financing

Pulte Company Grades

Although Pulte Mortgage does not have a profile with the BBB, PulteGroup, its parent company, has am A- rating with the organization. Though the company is not accredited by the BBB, Pulte Mortgage has been in business since 1972.

Pulte Mortgage Underwriting

Pulte Mortgage does not publicly disclose its down payment or qualification requirements on its website. Customers who are building with Pulte Homes, or one of the associated PulteGroup brands, can access this information once they complete the mortgage application.

History of Pulte Mortgage

Not only is PulteGroup the third-largest homebuilder in the United States, but it’s also been financing mortgages since 1972. Thanks to a little horizontal integration, PulteGroup can assist homeowners from construction to mortgage closing through Pulte Mortgage, the wholly-owned subsidiary that offers loan products.

The selling point is Pulte Mortgage being a one-stop-shop for homeowners, informed by extensive residential construction and mortgage financing experience.

Pulte Mortgage finances new home construction for customers of Pulte Homes, Centex, Del Webb, DiVosta, and John Wieland Homes, which all fall under the PulteGroup umbrella. Personalization is a key focus, with personal loan consultants for each borrower.

It also has an extensive online learning center to help prospective homeowners become familiar with different loans it offers, including conventional, jumbo, FHA, and VA loans, as well as specialty products like balloon mortgages and bridge loans.

Bottom Line

PulteGroup can assist homeowners from construction to mortgage closing through Pulte Mortgage. Many customers enjoy the fact that Pulte Mortgage is a one-stop-shop for homeowners, informed by extensive residential construction and mortgage financing experience.

For more information visit their website.

The post Pulte Mortgage Review appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

An Eye-Opening Timeline of Tarek El Moussa’s Own Homes, From His First to Where He Lives Today

Tarek El Moussa's homesHGTV | Instagram | realtor.com

Tarek El Moussa is known for his impressive home renovations on his HGTV shows “Flip or Flop” and “Flipping 101 With Tarek El Moussa.” But what are his own homes like?

That depends, since this 39-year-old reality TV star has purchased, and rented, quite a few properties for his personal use over the years.

Each reflected where he was in life at the time, whether he was single (when his home had a shark tank), married to Christina Anstead (time to upgrade to a massive family mansion), divorced (hello, “dadchelor” pad!), or starting fresh with his fiancée, Heather Rae Young.

For a good look at how life changes can affect the home you have, check out this timeline of El Moussa’s many homes through the years, and how much his tastes have evolved.

Early 2000s: Tarek El Moussa’s first home

Even El Moussa had to start somewhere! Back when this HGTV star was just 21, he bought his first home—and spent way more than he expected. He set out to find a house for around $400,000, but ended up falling in love with a home that was listed for over $800,000.

“It was the perfect bachelor pad—1,400 square feet, massive master bedroom, man cave all to myself, and coolest of all, a 300-gallon shark tank—may I remind you I was 21 at that time?” he wrote for realtor.com®.

Let’s just say that El Moussa’s first home was a huge life lesson for him that you should never bite off more than you can chew—financially or otherwise.

“I was very, very broke,” he admitted. “With no money for furniture, I ended up living in an empty house for nearly nine months.”

2013–18: El Moussa’s first family home with Christina Anstead

Tarek's home
This Yorba Linda, CA, mansion was Tarek El Moussa and Christina Anstead’s family home when they were married.

realtor.com

By 2013, El Moussa was married to Christina Anstead, and they had their daughter, Taylor, so they needed a bigger family house. The couple’s hit TV show, “Flip or Flop,” had completed its first season, so they had the cash to upgrade.

Tarek's home
El Moussa and Anstead did a lot of work on their backyard.

realtor.com

And upgrade they did: El Moussa and Anstead’s home in Yorba Linda, CA, was purchased for an even $2 million at the end of 2013.

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Watch: Kate Gosselin Vacates Her ‘Kate Plus 8’ Pad

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With six bedrooms and 6.5 bathrooms, this property was already impressive, but the couple ended up spending an additional $1.5 million to improve the property, turning the backyard into an oasis, with a gorgeous dining area, swanky pool, and fire features.

Tarek's home
El Moussa and Anstead lounge at home in a Season 4 episode of “Flip or Flop.”

HGTV

Despite all that renovation equity sweat, when the pair split in 2018, they sold the house at a loss, accepting an offer for just $2,995,000—proving that renovations don’t always pay off.

2017: El Moussa’s Bad Decisions houseboat

View this post on Instagram

A post shared by Tarek El Moussa (@therealtarekelmoussa)

Originally, El Moussa and Anstead bought this yacht together, naming it Flip or Flop. But soon after they separated, El Moussa pointedly renamed it Bad Decisions.

The boat, which cost almost $1 million, has two bedrooms and two bathrooms—making it virtually as spacious as some of his flips.

With teak flooring and cedar-lined closets, the boat is stylish, and it has a kitchen and a washer and dryer. It is also convertible and can either be left open to the ocean breezes, or closed up so that the heater or air conditioning can make the ride more comfortable.

As it turns out, this boat played an important part in El Moussa’s meeting his fiancée in Newport Beach, CA.

“His boat was parked next to the boat I was on,” Young explained on Netflix’s “Selling Sunset.” “And my girlfriend happened to be on his boat.”

She jumped aboard, she recounted, and El Moussa turned around.

“And he was, like, ‘Hi, I’m Tarek,’” she said. “Then we were just, like, texting and kept in touch.”

2018–20: El Moussa’s postdivorce ‘dadchelor’ pad

Tarek El Moussa's new home
El Moussa’s “dadchelor” pad

realtor.com

After El Moussa and Anstead split, El Moussa moved into a four-bedroom “dadchelor” pad”  in Costa Mesa, CA. A good mix of family-friendly and all-El Moussa—without Anstead’s feminine touches—it was only a couple of blocks from his ex-wife’s place, making shared custody of their kids much simpler.

The home had a pool, spa, and outdoor dining space. The interior was styled in bold colors, making it homey but masculine. With a modern fireplace and high ceilings, the space was perfect for El Moussa.

April 2020: El Moussa and Young’s first rental together

By April this year, El Moussa and Young were ready to move in together. They rented a snazzy Newport Beach home, just a block from the ocean. El Moussa and Young’s home had fun swivel chairs, a dining table perfect for a family of four, and lots of family photos.

This rental was temporary, but these two certainly looked comfortable!

September 2020: El Moussa’s beachside fixer-upper

View this post on Instagram

A post shared by Tarek El Moussa (@therealtarekelmoussa)

Of course, Young and El Moussa didn’t plan to rent forever, and in September, they bought a home in Newport Beach. Originally, El Moussa bought this house to flip, but after he proposed in July, they decided it would make a great home for both of them.

View this post on Instagram

A post shared by Heather Rae Young (@heatherraeyoung)

Unfortunately, it looks as if it will be a while before these lovebirds can move in to their new abode.

In November, El Moussa reported that his new house had flooded. “Ugh, when it rains it pours! We are now way behind schedule and way over budget lol,” he said.

It may take some work to get this place ready, but if El Moussa has proved anything, it’s that he can roll with the punches and is always up for a challenge—with his homes or otherwise.

The post An Eye-Opening Timeline of Tarek El Moussa’s Own Homes, From His First to Where He Lives Today appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

How to Create a Financial Plan in 11 Steps

Structure is the key to growth. Without a solid foundation — and a road map for the future — it’s easy to spin your wheels and float through life without making any headway. Good planning allows you to prioritize your time and measure the progress you’ve made.

That’s especially true for your finances. A financial plan is a document that helps you track your monetary goals to measure your progress towards financial literacy. A good plan allows you to grow and improve your standing to focus on achieving your goals. As long as your plan is solid, your money can do the work for you.

Thankfully, a sound financial plan doesn’t have to be complicated. Here’s a step-by-step guide on how to create a financial plan. 

What Is a Financial Plan?

Financial planning is a tangible way to organize your financial situation and goals by making a roadmap to achieve them. When determining where to start, you should consider what you currently possess, your long-term goals, and what opportunity costs you’re willing to take on to meet your money goals.

Financial planning is a great strategy for everyone — whether you’re a budding millionaire or still in college, creating a plan now can help you get ahead in the long run. If you want to make a roadmap to a successful future, here’s how to create a financial plan in 11 steps. 

1. Evaluate Where You Stand

Building your financial plan is similar to creating a fitness program. If you don’t have exact steps to reach your goals, you could end up doing random exercises without making progress. To create a successful plan, you first need to understand where you’re starting so you can candidly address any weak points and create specific goals. 

Determine Your Net Worth

One way to figure out your financial status is to determine your net worth. To do this, subtract your liabilities (what you owe) from your assets (what you own). Assets include things like the money in your accounts and your home and car equity, while liabilities can include any debt, loans, or mortgages. Here’s how to calculate your net worth using your assets and liabilities.

Determine your net worth by subtracting your liabilities from your assets.

Your ratio of assets to liabilities may change over time — especially if you pay off debt and put money into savings accounts. Generally, a positive net worth (your assets being greater than your liabilities) is a monetary health signal. You should regularly keep track of your net worth to monitor the trajectory of your financial plan.

Track Your Spending

Another way to evaluate your financial planning process is by measuring your cash flow, or how much you spend compared to how much you earn. Net worth is a great way to understand where you stand financially, but measuring cash flow is how you might ensure you’re heading in the right direction.

Negative cash flow means that you’re spending more than you make, leading to things like credit card debt and bankruptcy. Conversely, positive cash flow means you’re earning more than you’re spending — which is an excellent step towards achieving your money goals. 

Now that you have an idea of your net worth and cash flow, it’s time to set your financial goals. 

2. Set SMART Financial Goals

By setting SMART financial goals (specific, measurable, achievable, relevant, and time-bound), you can put your money to work towards your future. Think about what you ultimately want to do with your money — do you want to pay off loans? What about buying a rental property? Or are you aiming to retire before 50?

Start by putting together a list of your goals and dreams, from running a doggy daycare to living in Paris. Even if it feels outrageous, your financial plans should help you work towards your long-term goals.

SMART goals help you break down your more extensive financial planning process into actionable pieces. Remember that dream to move to Paris? Using SMART goals, you may make your dream to live on the Seine a reality. Here’s how to get started creating your SMART goals:

SMART goals are specific, measurable, achievable, relevant, and time-bound.

Setting concrete goals may keep you motivated and accountable, so you spend less money and stick to your budget. Reminding yourself of your monetary goals may help you make smarter short-term decisions to invest in your long-term goals. 

It’s important to understand that your goals aren’t static. When your life goals change, your financial plans should follow suit.

3. Update Your Budget

Creating a budget may help you determine how to create a financial plan and achieve your long-term monetary goals. When you create a budget and stick to it, you can understand what areas you might afford to spend and where you should be saving. 

An excellent method of budgeting is the 50/30/20 rule, popularized by Senator Elizabeth Warren. To use this rule, you divide your after-tax income into three categories: 

  • Essentials (50 percent)
  • Wants (30 percent)
  • Savings (20 percent)

Pie graph shows how you can break down your budget with the 50/30/20 rule.

The 50/30/20 rule is a great and simple way to achieve your financial goals. With this rule, you can incorporate your goals into your budget to stay on track for monetary success. 

No matter what financial goal you’re working towards, it’s essential to have an updated budget and plan to achieve it. For example, if you’re planning for a wedding, you might eat out less to reduce your grocery budget each month.

What to Include in Your Budget

If you’ve ever tried to put together a budget, you’ve likely considered the basics like rent, loans, and groceries. But what other expenses should you consider? Over time, those daily lattes may start to add up — which is why it’s crucial to think about the many different costs you could incur during the month. When updating your budget, here are some of the most common items to include:

  • Rent
  • Groceries
  • Dining out
  • Household maintenance
  • Emergency fund
  • Subscriptions and memberships
  • Travel and transportation
  • Prescriptions
  • Bank account fees
  • Car registration or lease
  • Pet costs
  • Entertainment
  • Clothing
  • Personal care
  • Charity

So you know what you need to include in your budget. Now what? Check out our budgeting tips to get smart about creating your budget in line with your financial plan. If you’re ready to get the ball rolling on your future, try using a spreadsheet, a piece of paper, or a budgeting app to create your financial plan today. 

4. Save for an Emergency

Did you know that four in 10 adults wouldn’t be able to cover an unexpected $400 expense? With so many people living paycheck to paycheck without any savings, unexpected expenses might seriously throw off someone’s life if they aren’t prepared for the emergency. 

It’s important to save money during the good times to account for the bad ones. This rings especially true these days, where so many people are facing unexpected monetary challenges. Whether you’re just starting on your path to financial literacy or have been saving for years, it’s good practice to review your emergency finances to ensure they would adequately cover your current needs. 

You already know you should be storing away money in case something goes wrong. But did you know that you should be saving for both a rainy day and emergency fund? It’s important to have multiple backup funds to hold you over in case of an unexpected crisis. 

5. Pay Down Your Debt

It can be frustrating to allocate your hard-earned money towards savings and paying off debt, but prioritizing these payments can set you up for success in the long run. With two significant methods of paying off debt, it’s essential to understand the difference between them so you can make the smartest decisions for your financial future. 

A chart shows the differences between debt snowball and debt avalanche repayment. Debt snowballs start with the smallest, while the avalanche method targets the highest interest loans.

No matter the debt repayment option you choose, the key to successfully paying down debt is to be disciplined with your budget. Skipping even one or two months of debt repayments may throw a wrench in your financial plans, so it’s essential to create a realistic budget that you can stick to. 

6. Organize Your Investments

Investing may seem like a difficult topic to navigate, but you can put your money to work and passively grow your wealth when you understand the basics. To start investing, you should first figure out the initial amount you want to deposit. No matter if you invest $50 or $5,000, putting your money into investments now is a great way to plan for financial success later on. 

When deciding how to create a financial plan, you should consider budgeting a set amount each month to go directly into your investment portfolio — this will be your contribution amount. Over time, those small bits of money may begin to grow into increasingly larger sums. However, it’s important to note that investing is a long game. If you want to see serious results, you’re going to have to wait for at least five or more years. 

Ready to get started on your path towards long-term financial success? Check out our investment calculator to create goals, forecast metrics, and find opportunities to grow your wealth even further. 

7. Prepare for Retirement

When thinking about how to create a financial plan, it’s crucial to consider your goals far in the future. Although retirement may feel a world away, planning for it now is the difference between a prosperous retirement income and just scraping by. 

The earlier you can start saving for retirement, the better. If you start saving for retirement in your 20s, you’ll have 30+ years of consistent contributions to your funds by the time you retire. Generally, the older you are, the more you should try to contribute to your retirement fund. However, a good rule of thumb is to save around 10–15 percent of your post-tax income annually in a retirement savings account.

Retirement Plan Types

There are several types of retirement savings, the most common being an IRA, a Roth IRA, and a 401(k):

  • IRA: An IRA is an individual retirement account that you personally open and fund with no tie to an employer. The money you put into this type of retirement account is tax-deductible. It’s important to note that this is tax-deferred, meaning you will be taxed at the time of withdrawal.
  • Roth IRA: A Roth IRA is also an individual retirement account opened and funded by you. However, with a Roth IRA, you are taxed on the money you put in now — meaning that you won’t be taxed at the time of withdrawal.
  • 401(k): A 401(k) is a retirement account offered by a company to its employees. Depending on your employer, with a 401(k), you can choose to make pre-tax or post-tax (Roth 401(k)) contributions. 

A chart shows the difference between IRA, Roth IRA, and 401K retirement options.

8. Start Your Estate Planning

Thinking about estate planning isn’t fun — but it is important. When figuring out how to create a financial plan, it’s crucial to start estate planning to outline what happens to your assets when you’re gone. 

To create an estate plan, you should list your assets, write your will, and determine who will have access to the information. Estate taxes can run up to a steep 40 percent, so having a plan for how to set up your estate may ease the financial burden of your passing on your loved ones. 

Using a Lawyer for Estate Planning

Using a lawyer for estate planning can solidify financial plans that you don’t want to leave to chance. By clearly outlining your estate plan, you can protect against potential legal battles or missteps that could occur when sorting out your estate. If you plan to use a lawyer for estate planning, here’s what you need to know:

  • Find an estate planning specialist: Just like doctors, lawyers specialize in all different fields. You wouldn’t expect a dermatologist to be performing knee surgery, so why would you expect a lawyer with a different specialty to create your estate plan?
  • Clarify legal fees: Estate planning fees may vary dramatically depending on the lawyer and your specific needs. Some lawyers charge based on the complexity of the plan; others charge a flat or hourly fee. There is no right or wrong with estate planning fees, but you should have an upfront conversation with your lawyer to determine which method would work best for you.
  • Find a lawyer you trust: Estate planning is a very personal matter, so you should find a lawyer with whom you feel comfortable sharing personal matters. 

9. Insure Your Assets

As your wealth grows over time, you should start thinking about ways to protect it in case of an emergency. Although insurance may not be as exciting as investing, it’s just as important. 

Insuring your assets is more of a defensive financial move than an offensive one. When determining how to create a financial plan, you want to have insurance to protect yourself from any unforeseen difficulties that could hinder your success. 

Types of Insurance

There are several types of insurance you might get to protect your assets. Here are some of the most important ones to get when planning for your financial future. 

  • Life insurance: Life insurance goes hand in hand with estate planning to provide your beneficiaries with the necessary funds after your passing.
  • Homeowners insurance: As a homeowner, it’s crucial to protect your home against disasters or crime. Many people’s homes are the most valuable asset they own, so it makes sense to pay a premium to ensure it is protected.
  • Health insurance: Health insurance is protection for your most important asset: Your life. Health insurance covers your medical expenses for you to get the care you need. 
  • Auto insurance: Auto insurance protects you from costs incurred due to theft or damage to your car.
  • Disability insurance: Disability insurance is a reimbursement of lost income due to an injury or illness that prevented you from working. 

10. Plan for Taxes

Taxes can be a drag, but understanding how they work can make all the difference for your long-term financial goals. While taxes are a given, you might be able to reduce the burden by being efficient with your tax planning. When planning for taxes, it’s important to consider:

  • How to reduce your taxable income: You can capitalize on tax savings investment options like a 401(k) or 403(b) to help you save money by reducing your taxable income (while putting more money away for your future). 
  • How to itemize your deductions: Tax deductions are a way to lower taxable income as a full- or part-time self-employed taxpayer. You can deduct incurred expenses from doing business to reduce your taxable income. 

11. Review Your Plans Regularly

Figuring out how to create a financial plan isn’t a one-time thing. Your goals (and your financial standing) aren’t stagnant, so your plan shouldn’t be either. It’s essential to reevaluate your plan periodically and adjust your goals to continue setting yourself up for success. 

As you progress in your career, you may want to take a more aggressive approach to your retirement plan or insurance. For example, a young 20-something in their first few years of work likely has less money to put into their retirement and savings accounts than a person in their mid-30s who has an established career.

Staying updated with your financial plan also ensures that you hold yourself accountable to your goals. Over time, it may become easy to skip one payment here or there, but having concrete metrics might give you the push you need for achieving a future of financial literacy. 

After you figure out how to create a monetary plan, it’s good practice to review it around once a year. However, this is just a baseline metric, so checking it more often may be necessary if a significant life event occurs. 

It’s always a good idea to reevaluate your financial plan if you get married, have kids, or quit your job. Every few months or so, take some time to look at your progress and assess problem areas. Take the time to celebrate milestones — it may help motivate you going forward.

Ask for feedback on your financial plan from people who know you. Your best friend might point out some things you’d forgotten about, like your desire to get a dog or live in a downtown loft. You can also run it by a professional, who can provide some objective insight and professional wisdom on how to create a financial plan.

It’s important to remember that the journey to financial success is a personal one, and should be taken at your own pace. However, the earlier you get started, the more prepared you may be for a strong financial future. Download Mint to get started taking control of your finances today.

Sources: CNBC | Federal Reserve | IRS | IRS

The post How to Create a Financial Plan in 11 Steps appeared first on MintLife Blog.

Source: mint.intuit.com

What Happens When You Pay Off Your Car Loan?

A man wearing sunglasses drives his car.

According to the Consumer Financial Protection Bureau, around 2.3 million car loans originate every year. Car loans can take years to pay off. So when you finally pay it off, you might be wondering—now what?

What happens when you pay off your car? What should you do with the money you were previously putting towards your monthly payments? We’ve got a few ideas, but keep in mind that everyone’s finances are different. So while our suggestions might work for some people, they probably won’t work for everyone.

What to Do When You Pay Off Your Car

Firstly, paying off your car loan is a huge accomplishment. So congratulations! Paying off any loan isn’t always easy. And now you finally own your car, which is a pretty big deal.

Luckily for you, the hard part is over. But there are still a few steps you should take after you pay off your car.

1. Get Your Car Title

You usually don’t have to take action for this step. In most states, your lender notifies the Department of Motor Vehicles—or BMV or other equivalent entity in your state—of the title change. Once the paperwork clears, the title is mailed to you.

There’s not much for you to do except keep an eye on the mail. If you don’t get your title a few weeks after paying off your loan, call your lender. You’ll need the title if you ever want to sell your car or use it for collateral when applying for credit.

2. Reconsider Your Finances

If you’re paying off a vehicle and not planning to buy another with a new loan, you’ll have a little more extra room in your budget. In 2019, new car buyers committed to an average monthly payment of around $550. So when you pay off your car loan, there’s a good chance you’ll have an extra $300 (or more) per month.

You might be tempted to splurge on fun stuff or to make large purchases you’ve been putting off. But unless your transportation situation is radically changing soon, you’ll always need a car. And that means you’ll eventually need to pay for the next one.

Plus, owning a car is expensive—even if you’ve completely paid it off. You’ll have to your oil changed, new tires and much more. And that’s just regular maintenance. If you get in even a minor accident, you could have a major repair expense on your hands.

That’s why it’s a good idea to put that some of that extra money in savings. If you end up getting a new car eventually, you can pay for all or part of your next vehicle with cash. That reduces how much you have to finance, which can significantly reduce the total cost of your next vehicle. Another option is to use the money to continue to pay down other debt to put yourself in a better financial situation in the future.

It’s also worth putting part of that cash in your short-term savings. You could easily dip into those funds if you need to get any work done on your car. But whatever you plan to do with the money, take the time to look at your personal budget. That gives you a chance to see exactly where this extra money might make the most difference.

3. Notify Your Car Insurance Company

Notify your car insurance company when you’ve paid off your loan so you can remove the lien holder from your policy. You don’t need to wait until you have the title in your hand to make the call.

This step is important because if your financed vehicle were totaled in a wreck, the insurance payment would go to the lender. Once you’ve paid off the car and own it outright, the payment goes to you.

4. Consider Any New Insurance Options

Most states have requirements for what type of coverage you must carry on your car. At minimum in most states, you need bodily injury and property damage liability that will cover the losses of other people if it’s caused in a wreck that is deemed your fault. There are some exceptions to those requirements, though.

But your lender will likely require additional insurance coverage until you pay off the loan. Many lenders require you to also carry comp and collision coverage. This is the part of your insurance policy that pays for damage to yourvehicle if you get into an accident that is deemed your fault.

Lenders require this extra coverage to protect their investment. They want to know that if your car is totaled, they can recover the value that you owe them. Once you pay off the loan, whether or not you carry this level of coverage might be your choice.

Talk to your insurance agent to find out what your options are and if you can save money by changing your insurance coverage. Just remember that if you drop this coverage and get into an accident, you may have to cover the costs of repairs or a new vehicle on your own.

You can also check rates for auto insurance online. In addition to saving money on your monthly vehicle payment, you may be able to save a lot on your insurance coverage.

Does Paying Off Your Car Loan Early Hurt Your Credit?

To get out of debt or change your current car, you might decide to pay off your car loan early. Your credit isn’t penalized by making early payments on debt. However, paying off an entire account can cause a small dip in your credit score temporarily. That’s because open accounts with a positive payment history impact your score more than closed accounts with positive payment histories.

Your wallet might also take a small hit depending on how your loan is structured. Find out if your loan includes any penalties for paying off the principle early before you make a decision to go this route.

The post What Happens When You Pay Off Your Car Loan? appeared first on Credit.com.

Source: credit.com

How Gaps in Coverage Affect Auto Insurance Rates

A lapse in coverage increases your risk and your rates. It may be harder to find suitable and affordable car insurance and may mean that you need to make some sacrifices in order to keep those insurance premiums at an affordable level. But it’s not a complete disaster and is far from the worst thing you can have on your record.

What is a Gap in Coverage?

A lapse or gap in coverage is a period in which you were not insured. You owned a car during this period but you didn’t meet the state minimum insurance requirements.

In some cases, a gap in coverage can be the result of negligence on your part. You may have allowed your insurance policy to lapse without purchasing a new one or it may have been canceled because you failed to meet your payment obligations.

A lapse in auto insurance coverage can also occur when you are deployed, sent to prison or because you simply didn’t drive during that period. 

If you fall into the first group, your insurer will notify the Department of Motor Vehicles (DMV), telling them that your car insurance policy has lapsed and you are no longer insured. This will expose you to fines and a host of other problems (see our guide on the penalties imposed on uninsured drivers).

As for members of the military, they can suspend their car insurance coverage when they are on active duty, thus avoiding any rate increases and other problems. The same applies to students studying abroad, although in their case, they will need to contact their DMV first.

What Happens Following a Car Insurance Lapse?

Many states require you to have continuous insurance, which means your auto insurance policy has not lapsed for any period of time. As soon as it lapses, your license and registration may be revoked, and you will need to pay a fee to have these reinstated. These fees, as they apply in each state, are listed below, but it’s worth noting that you may also be hit with additional court fees and fines if you are found to be driving without insurance:

  • Alabama: Insurance Lapse Fee = $200 (first offense); $400 (second offense)
  • Alaska: Insurance Lapse Fee = $100
  • Arizona: Insurance Lapse Fee = $50
  • Arkansas: Insurance Lapse Fee = $50
  • California: Insurance Lapse Fee = $14
  • Colorado: Insurance Lapse Fee = $40
  • Connecticut: Insurance Lapse Fee = $200
  • Delaware: Insurance Lapse Fee = $100 + $5 a day
  • D.C.: Insurance Lapse Fee = $150 + $7 a day
  • Florida: Insurance Lapse Fee = $150 (first offense); $250 (second offense); $500 (third offense)
  • Georgia: Insurance Lapse Fee = $25
  • Hawaii: Insurance Lapse Fee = $20+
  • Idaho: Insurance Lapse Fee = $85
  • Illinois: Insurance Lapse Fee = $100
  • Indiana: Insurance Lapse Fee = $150 (first offense); $225 (second offense); $300 (third offense)
  • Iowa: Insurance Lapse Fee = N/A
  • Kansas: Insurance Lapse Fee = $100 (first offense); $300 (second offense)
  • Kentucky: Insurance Lapse Fee = $40
  • Louisiana: Insurance Lapse Fee = $125 to $525 (depending on length of gap)
  • Maine: Insurance Lapse Fee = Up to $115
  • Maryland: Insurance Lapse Fee = $150 + $7 per day
  • Massachusetts: Insurance Lapse Fee = $500
  • Michigan: Insurance Lapse Fee = $75
  • Minnesota: Insurance Lapse Fee = $30
  • Mississippi: Insurance Lapse Fee = $30
  • Missouri: Insurance Lapse Fee = $20 (first offense); $200 (second offense); $400 (third offense)
  • Montana: Insurance Lapse Fee = N/A
  • Nebraska: Insurance Lapse Fee = $500
  • Nevada: Insurance Lapse Fee = $251 to $1,000 (depending on length of gap)
  • New Hampshire: Insurance Lapse Fee = N/A
  • New Jersey: Insurance Lapse Fee = $100
  • New Mexico: Insurance Lapse Fee = $30
  • New York: Insurance Lapse Fee = $8 to $12 per day
  • North Carolina: Insurance Lapse Fee = $50 (first offense); $100 (second offense); $150 (third offense)
  • North Dakota: Insurance Lapse Fee = N/A
  • Ohio: Insurance Lapse Fee = $160 (first offense); $360 (second offense); $660 (third offense)
  • Oklahoma: Insurance Lapse Fee = $400
  • Oregon: Insurance Lapse Fee = $75
  • Pennsylvania: Insurance Lapse Fee = $88
  • Rhode Island: Insurance Lapse Fee = $30 to $50
  • South Carolina: Insurance Lapse Fee = $550 + $5 per day
  • South Dakota: Insurance Lapse Fee = $78 to $228
  • Tennessee: Insurance Lapse Fee = $115
  • Texas: Insurance Lapse Fee = $100
  • Utah: Insurance Lapse Fee = $100
  • Vermont: Insurance Lapse Fee = $71
  • Virginia: Insurance Lapse Fee = $145
  • Washington: Insurance Lapse Fee = $75
  • West Virginia: Insurance Lapse Fee = $100
  • Wisconsin: Insurance Lapse Fee = $60
  • Wyoming: Insurance Lapse Fee = $50

Will My Car Insurance Rates Increase Following a Gap in Coverage?

In addition to the fines mentioned above, you can expect your auto insurance quotes to be a little higher than before, although this all depends on how long the gap in coverage was.

If it was less than 4 weeks, the rate increase may amount to a few extra dollars a month. If it was longer than 4 weeks, you could find yourself paying 20% to 50% more, depending on your chosen car insurance company. 

The exact rate of increase will depend on the state, high-risk status, driving record, car insurance discounts, and age of the driver. Insurance is all about measuring risk and probable claims, and an insurance company will look at everything from marital status to DUI convictions when measuring your risk and underwriting your new policy.

Bottom Line: Getting Cheap Car Insurance Quotes After a Lapse

In our research, we found that Progressive, Esurance, and State Farm offered lower rates than GEICO, even though GEICO typically tops the charts when it comes to insurance costs. You should also get much lower auto insurance rates with providers like USAA, providing you qualify.

To save even more, maintain a high credit score, aim for those good driver discounts, and try to secure bundling discounts, which are provided when you combine multiple different insurance products, such as homeowners insurance and car insurance.

The car you drive is also key. A new car will generally lead to much higher rates than a car that is a few years old, as it will be more expensive to repair and replace.

However, a car that is a few decades old will cost more to insurance than one that is a few years old, as it may lack the safety features and anti-theft features needed to keep rates low.

 

How Gaps in Coverage Affect Auto Insurance Rates is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

How Much Should I Spend on a Car?

How Much Should I Spend on a Car?

The sad thing about cars is that like boats and diamond rings, they’re depreciating assets. As soon as you drive yours off the lot, it immediately begins losing value. Some people are lucky enough to live somewhere with a reliable public transportation system. And others can bike to work. If you don’t fall into either of those categories, however, a car isn’t something you can put off buying.

Check out our investment calculator. 

If you’re preparing to purchase a new or used vehicle, you might be wondering, how much should I spend on a car? We’ll answer that question and reveal ways to make sure you’re not overpaying when you buy your vehicle.

The True Cost of Buying a Car

Next to buying a house, buying a car is likely one of the biggest purchases you’ll make in your lifetime. And if you want a quality vehicle that isn’t going to break down, you’re probably going to have to pay a pretty penny for a new ride. The average cost of a brand new car was about $33,543 in 2015, compared to $18,800 for a used one.

When you buy a car, of course, you’re paying for more than just the vehicle itself. Besides the fee you’ll pay for completing a car sales contract (known as a documentation fee), you might have to pay sales tax. Then there are license and registration fees, which vary by state. In Georgia, for example, you’ll pay a $20 registration fee every year versus the $101 that drivers pay annually in Illinois.

The amount you pay up front for a car can rise by 10% or more when you add taxes and fees into the equation. And if you need a car loan, you might have to put 10% down to get a used car and 20% down to get a new vehicle. If you decide to roll the sales tax and fees into the loan, you’ll cough up even more money over time because interest will accrue.

Once the car is in your possession, you’ll have to pay for insurance, car payments, parking fees, gasoline and whatever other costs come up. In a 2015 study, AAA found that a standard sedan cost Americans $8,698 annually, on average. As convenient as having your own car might be, it’ll be a huge investment.

Related Article: The True Cost of Cheaper Gas

How Much Should I Pay?

How Much Should I Spend on a Car?

The exact amount that you should spend on a car might change depending on who you ask. Some experts recommend that car-buyers follow the 36% rule associated with the debt-to-income ratio (DTI). Your DTI represents the percentage of your monthly gross income that’s used to pay off debts. According to the 36% rule, it isn’t wise to spend more than 36% of your income on loan payments, including car payments.

Another rule of thumb says that drivers should spend no more than 15% of their monthly take-home pay on car expenses. So under that guideline, if your net pay is $3,500 a month, it’s best to avoid spending more than $525 on car costs.

That 15% cap, however, only applies to consumers who aren’t paying off any loans besides a mortgage. Since most Americans have some other form of debt – whether it’s credit card debt or student loans that they need to pay off – that rule isn’t so useful. As a result, other financial advisors suggest that car buyers refrain from purchasing vehicles that cost more than half of their annual salaries. That means that if you’re making $50,000 a year, it isn’t a good idea to buy a car that costs more than $25,000.

How to Buy a Car Without Busting Your Budget

If you’re trying to figure out how to make your first car purchase happen, know that you can do it even if your finances are currently in disarray. If you look at a website like Kelley Blue Book before visiting a dealership, you’ll have a better idea of what different makes and models cost. From there, you can set a goal and work towards reaching it by saving more and keeping your excess spending to a minimum.

Once you find a car you like (and that you can afford), you can save money by challenging or cutting out certain fees. For example, you can lower or bypass dealer fees for shipping and anti-theft systems. If you’re planning on getting an extended warranty, you can shop around and see if there’s another company offering a better deal on it than your car manufacturer.

Meeting with more than one dealer and comparing offers can also improve your chances of being able to find a vehicle within your price range. So can timing your purchase so that you’re buying a car when a salesperson is more open to negotiating, like near the end of a sales quarter.

Try out our budget calculator.

If you need financing, it’s important to make sure you’re not getting saddled with a car loan that’ll take a decade to pay off. Long-term car loans are becoming more common. In 2015, the average new car loan had a term of 67 months versus the 62 months needed to cover the average used car loan.

The longer your loan term, however, the more interest you’ll pay. And the harder it’ll be to trade in your car in the future, especially if the amount of the loan surpasses the car’s value. That’s why some experts suggest that buyers get loans that they can pay off in four years or less.

The Takeaway

How Much Should I Spend on a Car?

How much should you spend on a car? Only you can decide that after reviewing your budget and figuring out if you can pay for the various expenses that go along with owning a car.

Keep in mind that getting a new or used car will likely involve taking on more debt. If you can’t make at least minimum payments on the debt you already have, it might be a good idea to get a part-time job or concentrate on saving so you won’t have to take out a huge loan.

Update: Have more financial questions? SmartAsset can help. So many people reached out to us looking for tax and long-term financial planning help, we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

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The post How Much Should I Spend on a Car? appeared first on SmartAsset Blog.

Source: smartasset.com