Getting divorced, well, that’s another thing.

Depending upon your situation, not only could there be custody arrangements to decide upon, but for most couples, property must be divided. You will need to divvy up things like the SUV and the flat-screen television—plus any debt that you’ve accrued together, such as your home’s mortgage. The process can be difficult and stressful, so it’s best to understand what needs to happen in order to protect yourself, your assets, and your finances.

When it comes to your mortgage, a lender holds all the borrowers responsible for the loan—even if they are divorced.

“The first question that someone needs to ask is what is actually going to happen to the house,” says Brian J. Blitz, an attorney in Chicago and co-chair of the American Bar Association Family Law Marital Property Committee. The two most common options? The house can be sold or one of the parties can keep it. (You could both remain as owners of the house, but most attorneys and financial professionals advise against this.)

If your marital residence is going to be sold—and you have a mortgage—you’ll need to pay off the loan at the closing. Make a profit by selling your home for more than what you originally paid? Fabulous. But if your house is underwater (meaning that the loan is larger than the value of the property), you’ll have to negotiate with your spouse to figure out who is going to pay for the shortfall, says Blitz. One person could agree to pay off the debt in exchange for receiving something else of equal value, for example. Or the marital estate could cover the deficit.

If you’re keeping the house and assuming responsibility for the loan, you will need to remove your soon-to-be ex’s name from the mortgage. This must be done so any house-related financial transactions are not associated with his (or her) credit report. Say you failed to make a payment or were late on several occasions. This would negatively affect his credit score.

But you can’t just get your lender to delete someone’s name from a loan. Instead, this happens most often by one party refinancing the mortgage, Blitz explains.

Even more problematic? Just because you already had a mortgage doesn’t mean that you’re going to be approved for a refinance. The person retaining the property will need to qualify just like any other borrower—meaning that he or she must have income and a good credit score.

It is possible, however, to retain the house if you’re a non-earner and haven’t worked in numerous years. In these situations, spousal maintenance and child support is viewed as a source of income. But undeniably, getting approved for refinancing will be more difficult.

In fact, you may need to get someone to co-sign the loan with you, says Blitz.

You’ll also need to use a quitclaim deed to transfer the title ownership from your ex-spouse into your possession. Take note: There can be fees of several hundred or even thousands of dollars associated with this and costs vary state to state.) Additionally, you may need to adjust your homeowner’s insurance coverage—decrease the value of your contents, increase your deductible—to fit your post-divorce lifestyle.

This all may sound complicated and, understandably, a bit overwhelming. Still, work with your lender—and, if needed, lawyer—and you should come through just fine.

The post A House Divided: Managing Your Mortgage During a Divorce appeared first on Credit Sesame.

Building a strong credit history takes time, diligence and discipline. Mistakes made now can have major implications on your ability to gain access to credit and loans for years to come.  Sounds overwhelming? Relax. Here’s your five-part guide to building a perfect base of credit. Follow these simple tricks and you’ll be rewarded in the long run.

Choose Cards Selectively and Apply Seldom

Credit card companies make their cards look attractive with rewards and other benefits—it can almost seem like free money. It’s not. Be selective about which cards you apply for and apply for one credit card at a time. Most credit applications result in a hard inquiry. If you have too many hard inquiries in a short period of time, you may be less likely to be approved by lenders when you apply for additional lines of credit in the future. Sure, it’s good to have some credit. Indeed, it’s the only way that you can effectively build credit. But you only want so much credit and you never want to use those cards to rack up a bill that you can’t repay when the bill comes at the end of the month.

Use Your Cards Wisely

To build strong credit, use your credit card to buy everyday items, preferably things that you’re getting rewards points and cash back for. Then, when you get the bill, you pay it off in full. Now is the time to teach yourself financial discipline—it will pay off in the long run.

Pay Down Your Student Loans

You’ll likely feel a bit daunted when you look at your monthly student loan payment. However, you have a number of options between paying it in full and not paying at all. Deferment and forbearance are two ways that you can kick the can down the road, but they’re not your best options. If you’ve got a student loan payment that’s too high, your best option is to negotiate with the company and try and make a reduced payment every month. You’ll be paying down the debt at a slower rate, but it’s a start. You may also consider consolidating all your loans into one, which may help you lower monthly payments and better manage your outstanding debt.

Pay Your Bills on Time

It might sound like a no-brainer, but it’s a mistake that a lot of people make when they venture out into the world of financial independence. Your payment history contributes to 35 percent of your credit score, and on time payments matter. Set up alerts and use online payments to help you stay current when it comes to your bills. Remember, any payment more than 30 days late will likely be reported to the credit bureaus as a delinquency. Do yourself a favor by staying on top of your bills. It’s one of the easiest, simplest things you can do to build your credit.

Check Your Credit Report

Check your credit report at least once every year. A recent report by the Federal Trade Commission found that 20 percent of consumers had an error on at least one of their three credit reports.  Errors may impact your ability to receive financing on things like a mortgage or car loan or limit your access to the best credit cards. You’re entitled to a free credit report from each of the major credit reporting agencies annually. You can stagger these out over the course of the year, allowing you to check your credit report for free three times every year. This allows you to see, in real terms, how your hard work is paying off in terms of your credit report. It also will let you resolve any outstanding issues that might be on your credit report, such as incorrect information or even bad debts that you aren’t aware of.

The best graduation gift that you can give yourself is the gift of good credit. This isn’t a one-time gift, but a series of behaviors that will pay dividends over time. For example, a 50-point difference in your credit score can save you thousands or even tens of thousands of dollars over the life of a car loan or home mortgage loan. Make smart decision now and you’ll be rewarded in the long run.

The post 5 Credit Tips for Recent College Grads appeared first on Credit Sesame.

Housing is off to a solid summer season. Sales of previously owned homes are at their highest level since November 2009 (and nearly 10 percent over one year ago). The percentage of foreclosure sales continues to shrink, further contributing to healthy price gains.

For homes sold in April, the median number of days on market was just 46 – down from 83 one year earlier.

U.S. employers have added new jobs for 31 straight months; families appear to be more confident in their finances and as a result, more willing to buy homes.

Prices are rising

The median existing home sale price in April was $192,800, 11 percent higher than one year earlier. In fact, home prices in the first quarter rose at their highest rate nationally since 2006. And in April, prices rose in all 20 cities on the Case-Shiller index.

The number of homes for sale rose for the third straight month, as sellers continue to take advantage of rising prices and a strong spring market. Although the inventory of homes for sale is still down, it grew 11.9 percent from March to April.

Homes near open spaces command some of the highest prices. A recent Colorado State University study found that residential real estate in conservation developments commands a 29 percent premium.

New home prices hit record highs in April, with an average price of $330,800 and a median price of $271,600.

Lending is competitive but rates are rising

Average mortgage rates have risen steadily for the last few weeks. The average rate for a 30-year fixed-rate loan was over 4 percent for the first time in a year. This isn’t expected to hinder housing activity, though, since rates are still extremely advantageous and historically low.

Some lenders have eased standards, helping more people get into homes or refinances. The Wall Street Journal and L.A. Times both recently reported that highly qualified borrowers find that lenders are more flexible now than in recent years. The lenders, however, are not likely to lower standards across the board. Rather, borrowers should find that one standard might ease if all others are met. In other words, a borrower with an excellent credit score might be allowed a higher debt ratio; a borrower with a sizeable down payment might be allowed a lower credit score.

Millions of homeowners whose mortgages were underwater are now back in the black. Many sellers who were waiting on the sidelines now see a healthy enough increase in value to warrant putting their home on the market. Bidding wars still ensue in many markets as buyers rush to snap up the best properties while interest rates remain low. But overall, the housing market is beginning to look more normal – fewer foreclosures, healthier prices, more new homes completed each month.

Courtesy of 413Carlisle

The post In the News: Housing Market Trends for this Summer appeared first on Credit Sesame.

For consumers that carry a balance on their plastic, these mailings certainly are tempting: Transfer an existing balance and you could end up paying a lot less in interest charges. But these offers aren’t for everyone. Here’s why you should give them a second though before applying.

When you move an existing balance from one card to a new one with a 0% APR, you’ll probably be charged a balance transfer fee. This expense, which usually runs around 3%, could cost you hundreds of dollars. So you’ll need to do a bit of math to make sure that your savings in interest payments exceed the amount of the fee. If they don’t, you’re wise to stick with the card you already have.

A balance transfer fee isn’t the only expense you risk incurring, either. These 0% APR offers are commonly called “teaser rates,” meaning that they’re only available for a short amount of time. Once the introductory period is up, the interest rate will increase—often drastically. Failure to eliminate your balance before your introductory period ends could leave you stuck with an interest rate that’s higher than what you were previously paying.

And, if you’re not diligent, you could lose your 0% interest rate before its expiration date. A late payment—even by one day—can annul the deal and trigger the higher interest rate. Failing to make the minimum payment or going over your limit can also nullify the introductory rate, too.

Taking advantage of a 0% offer also has the potential to damage your credit score, too. Anytime you apply for a new credit card, the lender submits a request for your credit report in order to determine your credit worthiness. The greater number of inquiries, the greater credit risk you appear to be. How much your score ultimately drops depends upon your credit history—those with good credit will see their score reduced by just a couple of points; people with poor credit could see a bigger hit.

Lastly, some 0% APR credit cards are interest-free not only on balance transfers, but on new purchases as well. If you’re not disciplined, this could induce you to buy things that you ultimately can’t afford. Meaning once the introductory period ends, you’ll be right back where you started: Carrying a balance on a piece of plastic that charges a high interest rate.

The post Why 0% APR Offers May Not be Good for Your Credit appeared first on Credit Sesame.

But it’s not always all smooth sailing, and you can run into various problems when using credit cards abroad. Before you take off, follow this simple advice.

Understand Your Credit Card Fees

Some credit cards tack on fee of 2 to 3 percent to every purchase made using a foreign currency to cover the cost of converting the amount into dollars. Not all credit cards charge a foreign transaction fee, so check with your card issuers before you leave and try to use the card that doesn’t charge a fee or charges the lowest fee of the cards you carry. If your trip is still a few weeks away, you might be able to apply for a credit card that’s designed for international travelers and doesn’t charge this fee. The Capital One Platinum Prestige Card is often favored by travelers thanks to its lack of annual fees and foreign transaction fees.  So is the Capital One Venture Rewards Credit Card, which also offers no foreign transaction fee and offers excellent rewards for travelers. Whatever you’re preferred card issuer, they likely offer an excellent travel card option. Comparison shop and pick the one that is right for you.

Notify Your Card Issuer of Your Travel Dates

Always notify your bank and credit card issuers before you travel abroad. Otherwise, suspicious activity like that charge from a fromagerie in France or a walking tour in Thailand might trigger a fraud alert and you may find your credit cards frozen the next time you try to use them. It’s also a good idea to write down the international customer service number on the back of your credit cards and keep that information separate from your wallet in case it’s lost or stolen.

Research Credit Card Trends in Your Destination

Most Americans carry credit cards with a magnetic strip that contains account data. But in other parts of the world—particularly in Europe—chip-and-PIN cards (also sometimes called EMV smart cards) are an increasingly prevalent way to reduce credit card fraud. Chip and PIN cards have a computer chip embedded in a smartcard. Once the merchant’s point of sale system verifies the card, the consumer enters a 4-digit PIN.

If you’re trying to use a magnetic strip credit card and there’s a person to ask for help, they should be able to complete the transaction for you even if your card doesn’t have a chip or a PIN attached to it. But if you’re using your card at a train station or tollbooth that has automated credit card machines, you may run into trouble. Some credit card issuers in the United States now offer chip and PIN cards for cardholders who travel internationally, so depending on where you’re going, you want to look into this before you leave. If you don’t bring a chip and PIN card, try to carry some cash in the local currency for cases where your credit card doesn’t work.

Go Local and Know the Best Exchange Rates

Insist that all of your bills are charged in the local currency. At times, merchants will offer to run a charge in dollars rather than the local currency. Beware. You’re often giving the merchant free-range to determine whatever exchange rate they’d like—which is often too high. The better bet is to insist that the merchant runs the charge in the local currency.

The post 4 Tips for Using Your Credit Card Overseas appeared first on Credit Sesame.

However, before using a cash gift to help purchase a home, there are some rules that home buyers should be aware of.

Rule #1: Know the Tax Code

While this may not directly impact the home buyer, per se, it’s important that all parties involved in a cash gift—whether giving or receiving—understand the tax implications. Tax law currently does not allow for deductions for non-charitable donations. This means that parents or relatives aren’t going to be able to deduct the gift on their end. More importantly for the new home buyers, the current amount that can be received as a gift without paying taxes on it is $14,000. Here’s a loophole, though: The $14,000 exemption is per person. Talk to an accountant about the lifetime exclusion for passing on assets.

Rule #2: Document the Gift

Whether you have to pay taxes on the gift or not, you’re going to need to document it. This documentation is called a certified down payment gift letter, and it needs to have the amount of the gift, the property address that you intend to buy, the relationship between you and the person gifting the money and a note expressing that the money is not a loan. No additional information should be included. All parties involved in the transaction need to sign the letter. You can even get a fill-in-the-blanks version of the letter if you’re not comfortable writing your own.

Rule #3: Keep a Paper Trail on Both Ends

It’s not just the person receiving the gift who needs to keep track of the transaction. The person giving the gift also needs to keep a paper trail of the money. Any assets that are sold for the purpose of giving the gift need to be documented. They should also document any transfer of funds from one account to another. Avoid wire transfers—checks are easier to track. Make photocopies of checks as well to keep the paper trail strong.

Rule #4: Deposit the Money the Right Way

Once you’ve received the check to help you get your new home, you need to follow a careful process. Keep a photocopy of the check. It’s part of your paper trail. Then, deposit the check into the bank account that your entire down payment is going to come out of. This is one of those times to avoid your fancy banking smart phone app. Make a trip down to the bank to deposit the check. Keep all of this money in a single account. Further, when you make the deposit, have that be the only transaction that you make on this visit to the bank. Get a receipt for the deposit and keep that as well.

It is of the utmost importance that your deposit, the check and your letter all contain exactly the same figure. If they don’t, there’s a good chance that your lender will disqualify the funds.

It’s not the hardest thing in the world to get your gifted funds approved. You do, however, need to pay special attention to the little details to ensure that your mortgage application will be approved smoothly.

The post 4 Rules to Follow when Using a Cash Gift for a Down Payment appeared first on Credit Sesame.

— 39 Tips That’ll Save You Hundreds on Your Next Trip – POPSUGAR Smart Living

— How to Protect Yourself in Case Your Wallet is Stolen – Manilla

— Things I Wish I Knew Before I Bought My Second House – WiseBread

— Roth IRA vs 529 Plan: Which is Best for Your Child’s College Savings? – Nerdwallet

— Ready for a New Home? What to Know! – DailyWorth

The post Links We Love: Getting Ready for a Budget-Friendly Summer and More! appeared first on Credit Sesame.

For those who don’t have that option, secured credit cards, where you pay a deposit as collateral, offer an alternative. With a secured card, creditors limit their risk by only extending as much credit as would be covered by your deposit in case you default. “Typically there’s no cash back or travel rewards or points you can earn on a secured card,” says Howard Dvorkin, CPA and founder of Consolidated Credit Counseling. “It’s a bare bones credit product.”

Still, secured cards might make sense for those with poor credit or those starting out, such as college students. “In the year 2013, you need some source where you can charge a hotel, charge an airline, or rent a car,” Dvorkin says. “This is one way you can pretty much guarantee yourself access to credit.”

The typical deposit starts as low as $200 and can go as high as $2,500, he adds. Some creditors pay interest on your deposit but with interest rates so low, the amount is often negligible. Some secured cards also carry hefty fees so make sure you understand the product before signing up.

“Sometimes I’ve seen it where they charge you $250 just to open a secured card,” says Dvorkin. “There [can be] penalties if you’re late. Watch out for the interest rate, say, if you carry a balance. What is the interest rate you’re charged before they take your deposit? Not all secured cards are created equal.”

Also make sure you’re dealing with a card issuer that reports on-time payments to the credit bureaus so you can build your credit history and eventually work your way up to an unsecured credit card with fewer fees and a higher limit. Ideally, your payments should not be reported as a secured card because that can signal potential problems in your past, according to Dvorkin.

Some issuers of secured credit cards will eventually graduate you to an unsecured credit card, which is the ultimate goal for most people. This depends on the individual and the creditor, but Dvorkin says it can happen after six to twelve months of on-time payments.

The post Why a Secured Credit Card May Be the Right Fit for You appeared first on Credit Sesame.

While that’s true, if you’re financially responsible, using a credit card is often the wiser move. Here, the scenarios that you should choose credit over debit.

If you’re repairing your credit

Say you made a few money mistakes in college and now your credit score is lower than you’d like. Swiping your credit card can help your score inch upward, as long as your act responsibly. Debit card usage is not reported to the credit-reporting agencies. Using your credit card—and paying your bill in full, on time each month—helps you establish good, responsible credit history, increasing your score.

If you’re stockpiling rewards

Many credit cards offer excellent rewards programs where you can redeem points for air travel, hotel rooms, household electronics and appliances, or even college savings. Charging many (or even all) of your purchases—including recurring household expenses—can be a savvy way to rack up your earnings.

If you’re making a large purchase

Some credit cards offer extended warranty protection beyond what’s provided by the manufacturer or the retailer. Use your credit card to purchase your new refrigerator or flat-screen television and you’ll automatically receive this coverage. (Check your card terms for specifics.)

If you’re going on vacation

It’s best to pay with a credit card when booking a hotel and renting a car. Why? Many hotels and rental companies only accept credit cards when making a reservation. If they do accept debit cards, they may put a hold of several hundred dollars as a deposit. Until the hold is processed, you won’t have access to that cash.

Secondly, using a credit card for travel-related purchases can give you instant access to perks, such as earning additional rewards points or complimentary car insurance for your rental car.

If you’re shopping online

When you buy something from a brick-and-mortar store, you leave the merchant with the item in hand. If you make a purchase online, you’re taking a bit of a risk since can’t examine the actual product until it arrives on your doorstep several days later. Using a credit card to shop online protects you in case something arrives damaged, was misrepresented in its listing, or if it gets lost in transit. (Negotiate with the merchant to settle the situation or ask your issuer to withhold payment to the retailer.) Otherwise, once you enter your debit card account information to make the purchase, the funds are immediately withdrawn from your bank account. Leaving you without cash and with little or no recourse.

The post When You Should Opt for Credit Over Debit appeared first on Credit Sesame.

The Good Neighbor Next Door program

The Department of Housing and Urban Development (HUD) runs the Good Neighbor Next Door program. The program aims to make certain communities stronger and safer by offering substantial incentives to certain members of the community who choose to take up residence there. Buyers who contribute value to the community with their skills can buy a single-family home for half price in an area being revitalized. Plus the down payment may be as little as $100.

Who is eligible?

The Good Neighbor program is open to teachers (pre-Kindergarten through high school), police officers, firefighters and emergency medical technicians (EMTs). More details about eligibility can be found here.

How to buy a home through the Good Neighbor program

Visit HUD’s website to search for eligible properties in your area. (Enter “Good Neighbor Next Door” as the buyer in the search form and only eligible properties will appear in the results.) Properties are in a variety of conditions, including outstanding.

When you purchase a home through the Good Neighbor program, you can use any traditional lender, so long as your loan value meets the lender’s minimum. You may use any financing program you qualify for, such as FHA, VA or 203(k) loans.

What’s the catch?

The program is only available for homes in designated revitalization areas, and listed exclusively for sale by the program. Listings change daily.

Buyers must agree to live in the home for 36 months. Stated another way, buyers agree to own and live in the property as their sole residence for a minimum of three years. You will be required to certify annually that you live in the home, and enforcement is strict. After the three years have passed, you are free to do as you wish, including sell the home and pocket any profit.

Buyers are also required to sign a second mortgage and note for the discounted amount. At the end of the three year period, the second mortgage is released. No interest or payments are required on the “silent second” mortgage at any time, provided you fulfill the residency requirement. If you do not, then a pro-rata portion of the discounted amount becomes a debt that you must repay.

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