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 Bureauâs 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
Ads by Money. We may be compensated when you click on this ad.Ad
The first step to a new home is doing the numbers and finding out how much you can afford.
Mortgage Experts are available to get you started on your home-buying journey with solid advice and priceless information. To find out more, click on your state today.
View Rates
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:
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.
The personal loan consultant contacts the borrower to talk about important information, determining personal needs and locking in a rate.
The loan is processed, and credit approval is communicated.
The closing date is set with a builder representative, while the loan processor coordinates necessary actions.
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 itâs 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®.
Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.
Take a moment. Think about being your best self â living your best life.
What do you really want to do with your life? Raise a happy family? Travel the world? Buy a nice house? Start your own business?
Reality check: To accomplish any of those things, youâre going to need to know how to save money.
Unfortunately, Americans are bad at saving money, and weâre getting worse. Thanks to rising costs, stagnant salaries and student loan debt, weâre saving less than ever.
Table of ContentsÂ
Step 1: Develop Savings Goals and Strategies
Step 2: Pick Budgeting and Debt Repayment Methods
Step 3: Choose a Financial Institution and Accounts
Step 4: Automate Your Finances
Step 5: Establish a Budget-Conscious Lifestyle
Step 6: Make More Money
Here Are Our Best Tips to Save Money
Are you ready to actually start saving money? What youâre reading is a step-by-step guide on how to do it â how to come up with savings strategies, choose a budgeting method, pick the right financial institution, automate your finances and live a budget-conscious lifestyle.
Pour yourself a cup of coffee and buckle up. Itâs time to get serious about this.
Step 1: Develop Savings Goals and Strategies
Youâre probably asking yourself, âHow much should I save?â
Your first move is to set specific savings goals for yourself â emphasis on specific. Naming your goals will make them more real to you. Itâll help you resist the temptation to spend your money on other stuff.
Think Long Term and Short Term
What exactly do you want to save money for? How much will you need to save? And what do you need to save for first? Think short- and long-term:
Short-term: Save for a real vacation or nice holiday gifts. But first, save enough to have a decent emergency fund â three to six monthsâ worth of living expenses, in case you run into an unexpected car-repair bill or lose your job, for example.
Long-term: This involves big-picture thinking. Here, youâre saving money for things like your childrenâs college fund or for your retirement plan.
Analyze Your Income
How much can you realistically save for these goals, now that youâre making them a priority?
Write down your income and expenses â all of your expenses, from utility bills to your Netflix subscription. There are probably more ways to save money than you realize. Donât forget your student loans or credit card debt. Make sure you know what youâre spending in every budget category. Pay special attention to what youâre spending on non-essentials, such as eating out.
An easy way to automate this process is to use Trim, a little bot thatâll keep track of all your transactions.
Connect your checking account, credit card and savings account for a big-picture look at your spending habits. Then, take a closer look by checking out each of your transactions. Set alerts thatâll let you know when bills are due, when youâve hit a spending cap or when youâve (hopefully not) overdrafted. This will help you stick with your savings plan.
Check in on Your Credit
Do your own credit check. Keeping tabs on your credit score and your credit reports can help guide you to a financially healthier life â especially if you use a free credit-monitoring service like Credit Sesame. It gives you personalized suggestions for improving your credit.
The better your credit, the better off youâll be when youâre getting a home or car loan. Credit Sesame can estimate how big a mortgage you might qualify for, for example.
Hereâs our ultimate guide to using Credit Sesame.
Step 2: Pick Budgeting and Debt Repayment Methods
Itâs time to start making a monthly budget and sticking to it â especially if you have debt.
This way, you can put savings right into your budget. Itâs never an afterthought.
Here are five different budgeting methods. We canât tell you which one to choose. Be honest with yourself, and choose the one you think is most likely to work for you. This is how to save money on a tight budget.
The 50/30/20 Rule
This one was popularized by U.S. Sen. Elizabeth Warren, a bankruptcy expert, and her business-executive daughter Amelia Warren Tyagi.
Split your income into three spending categories: 50% goes to essential bills and monthly expenses, 20% toward financial goals and 30% to personal spending (all the stuff you like to spend money on but donât really need). Put the money earmarked for your financial goals into a separate savings account.
Good for: People who worry they wonât have a life if theyâre on a budget. Hereâs our complete guide to 50/30/20 budgeting.
Envelope Budgeting
So-called envelope budgeting is traditionally a cash-only budget. Every month, you use cash for different categories of spending, and you keep that cash for each category in separate envelopes â labeled for groceries, housing, phone, etc.
Prefer plastic? Hereâs our review of Mvelopes, an app that lets you digitize this method.
Good for: People who know they need help with self-control. If thereâs nothing left in one envelope toward the end of the month, thereâs no more money to spend on that category, period.
Zero-Based Budget
Hereâs how you draw up this budget: Your income minus your expenses (including savings) equals zero. This way, you have to justify every expense.
Good for: People who need a simple, straightforward method that accounts for every dollar. Hereâs our guide to the zero-based budget.
Debt Avalanche
This debt-repayment method helps you budget when you have debt. Pay off your debts with the highest interest rates first â most likely your credit cards. Doing that can save you a lot of money over time.
Good for: People with a lot of credit card debt. Credit cards generally charge you higher interest than other lenders do. Learn more about the debt avalanche method here.
Debt Snowball
Money management guru Dave Ramsey champions the debt snowball method of debt repayment. Pay off your debts with the smallest balances first. This allows you to eliminate debts from your list faster, which can motivate you to keep going.
Good for: People who owe a lot of different kinds of debts â credit cards, student loans, etc. â and who need motivation. Hereâs how to use the debt snowball method to eliminate debt.
FROM THE DEBT FORUM
Eviction on credit report
Helping Covid-19 Victims
Struggling to pay debt or going bankrupt
Can’t afford car loan
See more in Debt or ask a money question
Step 3: Choose a Financial Institution and Accounts
You might be thinking, I already have a bank. And of course you do. If youâre like most of us, youâve had the same bank for years.
Most people donât give this a second thought. They figure itâs too inconvenient to switch. But itâs worth shopping around for a better option, because where you bank can make a real difference in how much you save.
What to Look for in a Bank Account
Does your checking account pay you interest? What are the fees like? What other perks does it offer?
Did you know the biggest U.S. banks are collecting more than $6 billion a year in overdraft and ATM fees?
Maybe itâs time to try another financial institution. Weâve found some great online bank accounts to help you avoid fees and get features you wonât find with the brick-and-mortar banks.
Hereâs one example: Thereâs a mobile baking app called Varo Money.
The FDIC reports that the average savings account pays a paltry .08% APY*, but when you open an online checking and savings account with Varo, it will pay you more than 20 times that amount on your savings account.Â
We know opening a new bank account isnât exactly everyoneâs idea of fun, but Varo makes it easy. You can open an account with just a penny, and more than 750,000 people have already signed up.
Oh, and there are no monthly fees.Â
Want more options? Hereâs our ultimate guide to help you choose the right account.
To free up more money for savings, try to spend less paying interest on your debts â especially if you have high-interest credit card debt.
These days, credit card interest rates often climb north of 20%. How can you avoid paying all that interest? Your best bet is to cut back on your expenses and pay off your balance as soon as you realistically can.
Start by using the right credit card for you, based on your situation and needs. Would you prefer a card that gives you cash back or travel incentives, a balance-transfer card, or a card thatâll help you build credit?
Also consider paying off your high-interest debt with a low-interest personal loan. Itâs easier than you might think. Go window-shopping at an online marketplace for personal loans. Here are some weâve test-driven for you:
AmOne allows you to compare rates side-by-side from multiple lenders who are competing against each other for your business. Itâs best for borrowers who have good credit scores and just want to consolidate their debt.
Fiona is also a marketplace but allows you to borrow more money and borrow it for a longer period of time â if thatâs what you want to do.
Upstart tends to be helpful for recent grads, who have a young credit history and a mound of student debt. It can help you find a loan without relying on only your conventional credit score.
Step 4: Automate Your Finances
Thatâs right. Weâre deep into the 21st century, here, so make technology do the work for you.
The best ways to save include automation. Youâll save time, and time is money. Here are a few money-management steps you can take today to ensure you wonât have to think about money for more than a few minutes every month.Â
Automate Bill Pay
Most bills are paid online now, reports the Credit Union Times. But you can take it a step further. Set it up so youâll receive and pay all of your bills online through your bank. That simplifies things so youâll never miss a payment.
Hereâs how: Go to your bankâs online bill-pay feature. Enter all the companies that bill you, and the account numbers for each. Arrange to receive e-bills from whichever billers will do that.
You can also have your bank send digital payments to individuals (like a landlord).
Automate Savings
Whatever you need done financially, thereâs an app for that. Weâve put several to the test.
Digit is an automated savings platform that calculates how much money you can save. Hereâs our review of Digit.
Long Game Savings combines online games and saving money.
Also, see whether your bank offers automatic savings transfers that will move money from your checking account to your savings account each month.
Automate Investing
You donât have to be Warren Buffett to be an investor. You donât even have to follow the stock market, read The Wall Street Journal or watch CNBC.
You can take advantage of these apps offering easy, automatic ways to start investing â the âset it and forget itâ method. Theyâre useful for tricking your brain into saving more. Youâll do it without even realizing youâre doing it.
Stash lets you start investing with as little as $5 and for just a $1 monthly fee for balances under $5,000. Bonus: Penny Hoarders get $5 just for signing up!
Acorns connects to your checking account, credit and debit cards to save your digital change. It automatically rounds up purchases with your connected cards and invests the digital change into your chosen portfolio. Bonus: Penny Hoarders get $5 just for signing up! Read our full review of Acorns here.
Blooom is a company that offers a free âhealth check-upâ for your 401(k). Then, for only $10 a month (Penny Hoarders get the first month free!), itâll optimize and manage your retirement savings for you. See how Blooom helped one Penny Hoarder make the most of her 401(k).
Automate Budgeting
You can automate your budget, too. Thereâs an app for that. Actually, weâve found several.
Charlie is a money-saving penguin who lives in your SMS text messages or Facebook Messenger (your choice, though Charlie is more fun and reliable on Messenger). He helps you save money through things like making sure youâre getting the best deals around (ahem, overpaying $24 a month on that cell phone bill?).
Mint lets you see all your accounts, cards, bills and investments in one place.
Medean for iOS ranks your finances based on how they stack up to those of people of similar age, income, location and gender. It calls itself a âhealth index for your finances,â and helps assess your situation and find ways to save money.
MoneyLion offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app. You can earn points in the rewards program by paying bills on time, connecting your bank account or downloading the mobile app.
Step 5: Establish a Budget-Conscious Lifestyle
Hereâs the harsh reality: To save more money, youâll need to spend less money. (Or make more money, but weâll get to that next.)
That doesnât mean you have to live like a monk. Nor do you have to survive on ramen noodles and the dollar menu, wear scuffed shoes and patchy clothes, or cut your own hair with hedge clippers.
You just have to be smart and strategic. Here are some of our best tips to help you spend less:
Save Money Around the House
Your home is your castle. But castles are so, like, expensive. Fortunately, there are lots of ways to save money around the house.
Your priciest purchases â like appliances and furniture â are a natural place to look for savings. Try repairing your appliances instead of replacing them. And hereâs a good list of other tricks for saving on furniture and appliances.
The cost of cooling, heating and lighting your home is massive. Try installing thermal curtains and a programmable thermostat. Or check out these creative, energy-saving ways to slash your utility bills.
Find Free Entertainment
Entertainment can cost an arm and a leg. But hey, we have to live, right? So do it for free! Next time youâre planning a night out, take advantage of one of these free date nights or group outings.
If youâre going to stay in, cut the cord. More and more people are doing this, because their cable bill has gotten so expensive.
If youâre thinking of switching to an online streaming service and youâre wondering which would be best, weâve got you covered with our comparison of Netflix, Prime Video and Hulu. We compared costs, type of content, number of available titles and more.
You also should reconsider that gym membership if youâre not really using it.
Cut Your Food Budget
Groceries are a huge part of everyoneâs budget, so theyâre a big target for savings. Next time youâre putting together your shopping list, make sure to check out our favorite tricks to save money at the grocery store:
Look for free printable coupons.
Compare your local grocery prices using this worksheet.
Ibotta pays you cash back on purchases if you take pictures of your grocery store receipts. Plus, youâll get a $10 bonus for signing up!
Scan grocery storesâ websites for deals and hit more than one store.
Not loving the supermarket? Nearly 70% of us say we spend too much on take-out or going out to eat. Hereâs how to save money at restaurants, too.
Find out If Youâre Wasting Money on Insurance
Buying insurance can be confusing and overwhelming, because there are so many options.
Hereâs how to find affordable insurance:
For Your Car: Auto Insurance
Here are the blunt facts about how to get lower car insurance premiums: Have fewer accidents, get fewer traffic tickets and boost your credit score.
Automotive experts also gave us the following tips:
Buy a used car.
Participate in your insurerâs safe-driving program.
Shop around for better rates. One easy way is The Zebra, a car insurance search engine that compares your options from more than 200 providers in less than 60 seconds. Hereâs how one guy is saving $360 this year on car insurance because of The Zebra.
For Yourself: Health Insurance
Letâs face it: Health insurance can be confusing and intimidating.
If youâre buying insurance for yourself, start with the federal health insurance marketplace at Healthcare.gov to see whether you qualify for any discounts or assistance.
Finding affordable health care coverage is a huge challenge for freelancers. Hereâs how to get covered if youâre self-employed.
For Your Family: Life Insurance
Life insurance pays your dependents a set amount of money if you die. Whether to buy it is a judgment call.
Life insurance is considered more important if youâre married or have children. You might also want a basic policy that would pay off your funeral, mortgage or other debt.
Youâll probably be asked to choose between two options: term or universal life insurance. If youâre like most of us, youâll choose term â the simplest, cheapest and most popular kind of life insurance policy.
To help you save money and navigate this complicated industry, modern companies are updating the old model:
Policygenius is an online-only platform that offers instant quotes from top carriers to help you make a quicker decision. Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
Haven Life can insure you quickly based just on the health information you provide online.
Ethos can get you term life insurance in less than 10 minutes â with no medical exam â for coverage up to $1 million. Ethos offers a digital application, and customer service is available if you have questions.
Step 6: Make More Money
How can you increase your income? Itâs easier to save money if youâre bringing in more money to begin with.
Here are a couple of simple ways to make extra cash at home:
Share Your Opinion
You wonât get rich taking surveys, but if youâre just vegging out on the couch, why not click a couple buttons and earn a few bucks? Weâve tried a lot of paid survey sites, and two of the best weâve found are My Points and InboxDollars.
Clear Your Closets
Sell your old stuff! Use the Decluttr app to get paid for your old DVDs, Blu-Rays, CDs, video games, gaming consoles and phones.
You can also sell nearly anything through the Letgo app. Just snap a photo of your item and set up a listing in about 30 seconds. If you have more free time, try selling items on Craigslist or eBay.
Find a Side Gig
For our best ideas to boost your bottom line, check out the following:
Unique ways to make money at home.
How to make extra money online.
How to earn passive income.
The Penny Hoarderâs continually updated page on open work-from-home jobs.
Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. Heâs slowly getting better about saving money.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Tarek El Moussa is known for his impressive home renovations on his HGTV shows âFlip or Flopâ and âFlipping 101 With Tarek El Moussa.â 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.
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 homeâand 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 padâ1,400 square feet, massive master bedroom, man cave all to myself, and coolest of all, a 300-gallon shark tankâmay 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 chewâfinancially 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.”
2013â18: El Moussa’s first family home with Christina Anstead
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.
El Moussa and Anstead did a lot of work on their backyard.
realtor.com
And upgrade they did:Â El Moussa and Anstead’s home in Yorba Linda, CA, was purchased for an even $2 million at the end of 2013.
___
Watch: Kate Gosselin Vacates Her ‘Kate Plus 8’ Pad
___
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.
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 $2,995,000âproving 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 bathroomsâmaking 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.
âHis boat was parked next to the boat I was on,â Young explained on Netflix’s “Selling Sunset.” âAnd my girlfriend happened to be on his boat.â
She jumped aboard, she recounted, and El Moussa turned around.
âAnd he was, like, âHi, Iâm Tarek,ââ she said. âThen we were just, like, texting and kept in touch.â
2018â20: El Moussa’s postdivorce ‘dadchelor’ pad
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 Moussaâwithout Anstead’s feminine touchesâit 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 challengeâwith 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®.
Structure is the key to growth. Without a solid foundation â and a road map for the future â itâs 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 youâve made.
Thatâs 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 doesnât have to be complicated. Hereâs a step-by-step guide on how to create a financial plan.Â
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 youâre willing to take on to meet your money goals.
Financial planning is a great strategy for everyone â whether youâre 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, hereâs how to create a financial plan in 11 steps.Â
1. Evaluate Where You Stand
Building your financial plan is similar to creating a fitness program. If you donât 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 youâre starting so you can candidly address any weak points and create specific goals.Â
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. Hereâs how to calculate your net worth using your assets and liabilities.
Your ratio of assets to liabilities may change over time â 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 youâre heading in the right direction.
Negative cash flow means that youâre spending more than you make, leading to things like credit card debt and bankruptcy. Conversely, positive cash flow means youâre earning more than youâre spending â which is an excellent step towards achieving your money goals.Â
Now that you have an idea of your net worth and cash flow, itâs time to set your financial goals.Â
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 â 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. Hereâs how to get started creating your SMART goals:
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.Â
Itâs important to understand that your goals arenât 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.Â
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:Â
Essentials (50 percent)
Wants (30 percent)
Savings (20 percent)
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.Â
No matter what financial goal youâre working towards, itâs essential to have an updated budget and plan to achieve it. For example, if youâre planning for a wedding, you might eat out less to reduce your grocery budget each month.
What to Include in Your Budget
If youâve ever tried to put together a budget, youâve 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 â which is why itâs 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 youâre 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.Â
4. Save for an Emergency
Did you know that four in 10 adults wouldnât 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 someoneâs life if they arenât prepared for the emergency.Â
Itâs 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 youâre just starting on your path to financial literacy or have been saving for years, itâs good practice to review your emergency finances to ensure they would adequately cover your current needs.Â
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? Itâs important to have multiple backup funds to hold you over in case of an unexpected crisis.Â
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, itâs essential to understand the difference between them so you can make the smartest decisions for your financial future.Â
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 itâs essential to create a realistic budget that you can stick to.Â
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.Â
When deciding how to create a financial plan, you should consider budgeting a set amount each month to go directly into your investment portfolio â this will be your contribution amount. Over time, those small bits of money may begin to grow into increasingly larger sums. However, itâs important to note that investing is a long game. If you want to see serious results, youâre going to have to wait for at least five or more years.Â
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.Â
7. Prepare for Retirement
When thinking about how to create a financial plan, itâs 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.Â
The earlier you can start saving for retirement, the better. If you start saving for retirement in your 20s, youâll 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 10â15 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. Itâs 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 â meaning that you wonât 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.Â
8. Start Your Estate Planning
Thinking about estate planning isnât fun â but it is important. When figuring out how to create a financial plan, itâs crucial to start estate planning to outline what happens to your assets when youâre gone.Â
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.Â
Using a Lawyer for Estate Planning
Using a lawyer for estate planning can solidify financial plans that you donât 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, hereâs what you need to know:
Find an estate planning specialist: Just like doctors, lawyers specialize in all different fields. You wouldnât 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.Â
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, itâs just as important.Â
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.Â
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.Â
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, itâs crucial to protect your home against disasters or crime. Many peopleâs 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.Â
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.Â
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, itâs 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).Â
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.Â
11. Review Your Plans Regularly
Figuring out how to create a financial plan isnât a one-time thing. Your goals (and your financial standing) arenât stagnant, so your plan shouldnât be either. Itâs essential to reevaluate your plan periodically and adjust your goals to continue setting yourself up for success.Â
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.Â
After you figure out how to create a monetary plan, itâs 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.Â
Itâs 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 â 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 youâd 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.
Itâs 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.
What if you could pay for your next date night or trip to the grocery storeâwithout having to dip into your budget? If you use cash back to your advantage, these benefits could become a reality.
In the past, you had to swipe a credit card to earn cash back. But with Discover Cashback Debit, you can earn cash back by spending with your debit card (you read that right: debit card), allowing you to reach your financial goals without the risk of going into debt.
To best use this budget bonus, you might be wondering, âWhat should I do with my debit card cash back?” According to Eric Rosenberg, financial consultant and founder of the website Personal Profitability, âYou could put [your cash back] into savings or treat yourself to something from your wish list.”
Read on for things to do with cash back to help you achieve the right balance of responsibility and fun:
1. Save for a rainy day
Sometimes it seems like everything goes wrong all at once: You get a flat tire. The sink starts leaking (ugh, again!). You get a parking ticket. Since life can throw unexpected, costly curveballs your way, it’s important to have an emergency fund. Also known as a rainy day fund, an emergency fund is cash that’s set aside to cover unplanned, yet crucial, expenses.
âSo many people can’t afford the cost of an emergency from their savings,” Rosenberg says. If you don’t have this type of fund to fall back on, starting an emergency fund (or adding to an existing fund) could be a top priority when evaluating what to do with your cash back from a debit card.
When thinking about building an emergency fund as a thing to do with cash back, note that experts typically recommend putting aside at least three to six months of living expenses for this purpose. To maximize your emergency fund, you may want to consider moving these savings (and the cash back you’re putting toward this fund) to a high-yield savings account. That way, your emergency fund can steadily grow with interest until you need it. (P.S. More to come on how to automatically move your cash back into savings.)
2. Pay down your debt
If you owe, it can be tough to climb your way out of debt. Whether it’s from credit cards, student loans or a mortgage, interest is accruing and costing you money. Learning how to use your debit card cash back to offset debt can help you save on those interest payments down the road.
According to consumer money-saving expert Andrea Woroch, when you’re focusing on paying off debt, “It’s natural to cut back where you can. But you may eventually hit a wall where you can’t find ways to tackle expenses any further,” she says. That’s where learning how to use debit card cash back comes into play. Since a debit card with a cash back feature can allow you to earn for your everyday spending, those earnings can become a new source for paying down debt, Woroch adds.
3. Shore up for those special moments
You know you’d like to have more nights out, but they don’t come cheap. What to do with your cash back could include spending on special outings, Woroch says. Is there a restaurant you and your significant other have been dying to try? Is there a concert the whole family is super eager to see? There may also be larger events with family and friends to think aboutâplanning a milestone birthday or anniversary or that getaway with college buds. You can set aside your debit card cash back and earmark it for your relationships to create memories that will last a lifetime.
âYou could put [your cash back] into savings or treat yourself to something from your wish list.”
4. Support your children’s allowance
If you have kids, you’ve probably heard this one before: âMom, Dad, can I have some money?” Sometimes it can feel like you’re a walking ATM. One thing to do with cash back is to set aside an allowance for your kids. You can then use this cash to teach your children good savings habits and how to manage money on a monthly basis for the things they need and want, says Rosenberg of Personal Profitability. The best part: The money isn’t really coming out of your budget since you’re earning it for your everyday expenses and from money you’d be spending anyways. Win-win.
5. Stockpile funds for the holidays
In thinking about what to do with your cash back, spending it on gift-giving and holiday expenses may be a good goal. “Some people go into debt during the holidays. To help avoid that circumstance, use your cash back to get ahead,” Woroch says.
And, really do think ahead if holiday spending is on your list of things to do with your cash back. The earlier you stash your cash back away for the holidays, the longer it will have time to accrue if you put it in a savings account for safekeeping. Season’s greetings may be the last thing on your mind while you’re flipping burgers on the 4th, but planning ahead could really impact your end-of-year festive spending.
How to maximize your cash back
Now that you know what to do with your cash backâwhether it’s going to work for your emergency fund or funding emergency holiday giftsâconsider steps you can take to get the most out of your extra dough. For example, find a rewards program that matches your spending style. With Discover Cashback Debit, you can earn 1% cash back on up to $3,000 in debit card purchases each month.1 That’s up to $360 a year. Not too bad for just going about your daily debit card spending.
Get 1% cashback on Debit from Discover. 1% cashback on up to $3000 in debit card purchases every month. Limitations apply. Excludes Money market accounts.Discover Bank,Member FDIC.Learn More
To make the process of saving that extra cash even easier, consider opening a Discover Online Savings Account. If you sign up for Auto Redemption to Savings, your cash back will be automatically deposited into your savings account every month.
âThe hardest part about saving for many people is remembering to make a transfer or take the cash to the bank,” Rosenberg says. “If you can automate it, you are setting yourself up for success. It’s like saving while you sleep.”
If you’re still considering how to use your debit card cash back to the fullest, Woroch suggests paying for group purchases when you’re out with family or friends. “Whether you’re going to dinner or renting a condo, cover the entire expense on your card and ask friends and family to pay you back with cash or [via mobile payment],” Woroch says. “This way you can benefit from earning more rewards.”
When it comes to how to use your debit card cash back, the key is to make sure you have enough in your account and aren’t spending too much if you offer to temporarily foot the bill. You don’t want to overextend in order to earn, as you could be hit with overdraft fees or not have enough in your account to cover bill payments, Woroch says.
“Whether you’re going to dinner or renting a condo, cover the entire expense on your card and ask friends and family to pay you back with cash or [via mobile payment]. This way you can benefit from earning more rewards.”
Get ahead with a combination of strategies
If you’re looking for things to do with cash back, using these tactics can help you improve your financial foundation and have some fun along the way. Understand your needs and goals to help you create a cash back plan, and then maximize your strategy with tools to help you automatically direct your cash back to savings to limit the temptation to spend the money elsewhere.
“We are all so busy these days, and managing money is often pushed down on the to-do list,” Woroch says. Learning how to use your debit card cash back can help you put money management front and center. Start earning!
1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.
The post How to Use Your Debit Card Cash Back to the Fullest appeared first on Discover Bank – Banking Topics Blog.
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 wonderingânow what?
What happens when you pay off your car? What should you do with the money you were previously putting towards your monthly payments? Weâve got a few ideas, but keep in mind that everyoneâs finances are different. So while our suggestions might work for some people, they probably wonât 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 isnât 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 Vehiclesâor BMV or other equivalent entity in your stateâof the title change. Once the paperwork clears, the title is mailed to you.
Thereâs not much for you to do except keep an eye on the mail. If you donât get your title a few weeks after paying off your loan, call your lender. Youâll 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, youâll 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, thereâs a good chance youâll 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 expensiveâeven if youâve completely paid it off. Youâll have to your oil changed, new tires and much more. And thatâs just regular maintenance. If you get in even a minor accident, you could have a major repair expense on your hands.
Thatâs why itâs 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.
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.Â
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:
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.Â
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.
Â
How Gaps in Coverage Affect Auto Insurance Rates is a post from Pocket Your Dollars.
The sad thing about cars is that like boats and diamond rings, theyâre 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 donât fall into either of those categories, however, a car isnât something you can put off buying.
Check out our investment calculator.
If youâre preparing to purchase a new or used vehicle, you might be wondering, how much should I spend on a car? Weâll answer that question and reveal ways to make sure youâre 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 youâll make in your lifetime. And if you want a quality vehicle that isnât going to break down, youâre 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, youâre paying for more than just the vehicle itself. Besides the fee youâll 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, youâll 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, youâll cough up even more money over time because interest will accrue.
Once the car is in your possession, youâll 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, itâll be a huge investment.
Related Article: The True Cost of Cheaper Gas
How Much Should I Pay?
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 thatâs used to pay off debts. According to the 36% rule, it isnât 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, itâs best to avoid spending more than $525 on car costs.
That 15% cap, however, only applies to consumers who arenât paying off any loans besides a mortgage. Since most Americans have some other form of debt â whether itâs credit card debt or student loans that they need to pay off â that rule isnât 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 youâre making $50,000 a year, it isnât a good idea to buy a car that costs more than $25,000.
How to Buy a Car Without Busting Your Budget
If youâre 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, youâll 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 youâre planning on getting an extended warranty, you can shop around and see if thereâs 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 youâre 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, itâs important to make sure youâre not getting saddled with a car loan thatâll 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 youâll pay. And the harder itâll be to trade in your car in the future, especially if the amount of the loan surpasses the carâs value. Thatâs why some experts suggest that buyers get loans that they can pay off in four years or less.
The Takeaway
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 canât 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 wonât 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 youâll 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.
HGTV | Instagram | realtor.com
