What Are the Best Loans If You Have Bad Credit?

If you need to borrow money but your credit is less than stellar, it’s possible you’ll wind up with a bad credit loan. These loans are geared toward individuals with imperfect credit histories who can prove their income and ability to repay the loan. As a result of their bad credit, however, consumers who use bad credit loans typically pay much higher interest rates and loan fees. Bad credit loan customers may also be limited in how much they can borrow as well as the terms of their loan’s repayment.

From our perspective, LendingClub is the overall best option when it comes to getting a loan when you have bad credit.

Borrow Money with LendingClub

What To Do If You Think You Have Bad Credit

Step 1 — Get Your Actual FICO Score

The only way to find out if you have bad credit is to take a look at your FICO score, which isn’t difficult since many companies offer online access for free. While your FICO credit score isn’t the only credit score you have, it’s the one used by most lenders that offer personal loans.

According to myFICO.com, the credit score ranges are as follows:

  • Exceptional: 800 and up
  • Very Good: 740 to 799
  • Good: 670 to 739
  • Fair: 580 to 669
  • Poor: 579 or below

If your credit score falls below 579, there’s a good chance you could only get approved for a bad credit loan. If your credit is just “fair,” on the other hand, there’s still a chance you’ll wind up with a loan for bad credit.

Get My FICO Scores

Step 2 — Compare Multiple Offers

Once you have determined your credit score, you’ll want to start comparing offers from different lenders to see what fits your needs. You can use this tool to start that process.

Continue reading to find out how Good Financial Cents breaks down the best loans for bad credit and what you should watch out for.

Best Bad Credit Loans of 2021

If you feel you’re a candidate for a bad credit loan, it still makes sense to compare loan options to find the best deal. Loans for bad credit may come with higher interest rates and more fees, but some are still better than others.

For the purpose of this guide, we compared all the bad credit lenders to see how their loan products stack up. The following loans are the best of the best when it comes to loans for poor credit:

  • LendingClub
  • Avant
  • LendingPoint
  • OneMain Financial
  • Upstart

Bad Credit Loan Reviews

Before you apply for a loan with one of the bad credit lenders above, it helps to have a basic understanding of their loan offerings, interest rates, and any other important details they offer. The following individual loan reviews can help you determine which lender offers loans that might work for your situation.

#1: LendingClub

lendingclub bad credit loans

LendingClub is a peer-to-peer lender that operates outside of traditional banks. This means loans funded through the platform are initiated by private investors instead of banks, and it also means you may be able to get funding through LendingClub if you can’t get approved for a loan elsewhere.

Investors in search of higher returns on their money can agree to offer loans to consumers with bad credit who present a higher risk. As a result, LendingClub personal loans come with APRs that range from 6.95% to 35.89%. Obviously, loans with rates on the higher end of the scale will go to those with low credit scores.

Before you apply, it’s important to be aware that LendingClub charges an origination fee that can equal up to 6% of your loan amount. You can repay your loan anywhere from 36 to 60 months, and there’s no prepayment penalty if you pay your loan off early.

  • Pros: No minimum credit score requirement: check your rate online without a hard inquiry on your credit report
  • Cons: Potential for a high origination fee and interest rate

Get a Loan from LendingClub Today

#2: Avant

avant bad credit loan

Avant is another lender that often extends personal loans to consumers with low credit scores. With Avant, your interest rate will fall somewhere between 9.95% and 35.99% and you can repay your loan from 24 to 60 months. A loan funding fee of up to 4.75% of your loan amount is required as well, which will push up the cost of borrowing.

Avant claims that they have loaned $4 billion dollars to more than 600,000 consumers so far and that they have a 95% customer satisfaction rate. You can apply for a personal loan through Avant online, and you can even check your rate without a hard inquiry on your credit report.

  • Pros: No minimum credit score requirement; you can check your rate online without a hard inquiry on your credit report
  • Cons: High APRs and loan fees for bad credit

Borrow Better and Faster with Avant

#3: LendingPoint

lendingpoint bad credit loan

LendingPoint is another bad credit lender that offers personal loans to consumers who are willing to pay whatever APR it takes. Loans from LendingPoint come with APRs between 15.49% and 35.99%, and your loan origination fee can be as high as 6% of your loan amount.

You can repay your loan for anywhere from 24 to 48 months, and loans are offered in amounts up to $25,000. LendingPoint also lets you check your rate online without a hard inquiry on your credit report. You do need a minimum credit score of 585 to qualify for one of their loans.

  • Pros: Check your rate without a hard inquiry; low minimum credit score requirement
  • Cons: Pricey APRs and loan origination fee; loans not available in every state

Sign Up Today with LendingPoint

#4: OneMain Financial

one main financial bad credit loans

OneMain Financial offers personal loans in amounts between $1,500 and $20,000, and you can repay your loan for anywhere from 24 to 60 months. Interest rates range from 18.00% to 35.99%, and an origination fee may apply as well.

You can apply for a bad credit loan with OneMain Financial online, and you can get your loan approved and funded within a matter of days. You can even check your rate and gauge your ability to qualify without a hard inquiry on your credit report.

Finally, note that OneMain Financial has 1,500 physical locations in 44 states. To have your loan funded, you’ll need to visit a OneMain Financial location and meet with a loan specialist.

  • Pros: No minimum credit score requirement; borrow up to $20,000
  • Cons: Potential for pricey APR and loan origination fee

Get Started with OneMain Financial

#5: Upstart

upstart bad credit loan

Upstart is a unique online lender that makes it easier for borrowers with poor credit to qualify for a loan. This company considers more than your credit score when approving you for a personal loan, meaning they may give more weight to additional factors like your income and how much education you have.

Borrowers who qualify can access between $1,000 and $50,000 in loan funds with a repayment period of 3 or 5 years. Interest rates range from 5.69% to 35.99%, however, depending on creditworthiness and other factors.

Fortunately, loans from Upstart don’t come with any prepayment penalties. You can also check your rate online without a hard inquiry on your credit report.

  • Pros: No minimum credit score requirement; borrow up to $50,000
  • Cons: Potential for pricey APR and loan origination fee

Get the Loan You Deserve with Upstart

How We Chose the Best Loans for Bad Credit

The lenders above offer loans that can be exorbitantly expensive when you factor in interest rates and fees. Since expensive loans are the norm for consumers with bad credit, however, these still represent the best loan options for people with risky credit profiles.

With that in mind, here are the factors we considered to come up with the loans for this list:

Easy Rate Check

Having the ability to check your loan rate online without a hard inquiry on your credit report is beneficial for potential borrowers who aren’t quite ready to fill out a full loan application. We ranked lenders who offer this option higher as a result. With an easy rate check, you can get an idea of your interest rate and loan fees before you apply.

Check Your Credit Score for FREE

No Prepayment Fees

While loans for bad credit typically come with high interest rates and more loan fees, we think prepayment penalties cross the line. We looked for bad credit loans that don’t charge prepayment penalties since borrowers should have the option to pay their loans off early.

Ability to Apply Online

Lenders that let you apply for a personal loan online are considerably more convenient, so we gave a better loan score to loan companies that offer this option. Bonus points were applied if you can complete the full loan application online and have your loan funded electronically.

Loan Reviews

We also looked at individual loan reviews on company loan pages and websites like Trustpilot. While all lenders have their share of poor loan reviews, the lenders that made our list boast considerably more positive user reviews than bad ones. Most of the lenders that made the cut for our ranking have customer approval rates over 90%.

Loans for Bad Credit: What to Watch Out For

Bad credit loans are not ideal since they come with high rates and fees that push up the total cost of borrowing. However, some bad credit loans are also considerably “better” than others based on how they charge fees and the rates they offer. Here’s everything you should watch out for before you apply.

Consider the Impact of High Rates

First, it can be immensely helpful to check your rate with multiple lenders in this space before you apply. There’s a huge difference between paying 25.00% APR and 35.99% APR even though both rates aren’t great, so you’ll want to pay the lowest interest rate that you can.
How much difference can it make? Imagine for a moment you need to borrow $10,000 and repay it over 60 months. Here’s what your monthly payment would look like — and how much interest you would pay overall — if you repaid your loan over 60 months with three different rates:

Loan APR Monthly Payment Total Interest Paid
10.99% $217.37 $3,042.46
25.99% $299.35 $7,960.73
34.99% $354.84 $11,290.34

Avoid Origination Fees If You Can

Also try to avoid loan origination fees if you can, although this may be difficult if your credit score is on the low end of the scale. Loan origination fees are charged as a percentage of your loan upfront, so you can’t avoid them — even if you pay your loan off early. They also add unnecessary expense to your bad credit loan without any benefit for you, the borrower.

Check for Prepayment Penalties

Also, make sure to check for any prepayment penalties that may apply to your loan, and if you can, opt for a lender that doesn’t charge these fees. It would be nice to have the option to pay your loan off early without a penalty if you wind up having the money you need to do so. If you’re able to pay your loan off ahead of schedule, you could pay a lot less in interest over your loan’s term.

Bad Credit Loans: Should You Improve Your Credit First?

If you’re worried about the impact of a bad credit loan on your finances, it can make sense to spend some time improving your score before you apply. If you’re able to pay all your bills early or on time for several months, for example, you could have a positive impact on your score. That’s because your payment history is the most important factor that makes up your FICO score. According to myFICO.com, this factor alone makes up 35% of your score.

The same is true if you’re able to pay down debt to decrease your credit utilization. This advice is based on the fact that how much you owe in relation to your credit limits is the second most important factor making up your FICO score at 30%.

In the meantime, try to avoid opening and closing too many accounts since either of these moves can also ding your score.

If you were able to move the needle and boost your credit score in the “fair” or “good” range, there’s a very good chance you could qualify for a less expensive personal loan with better rates and terms. Of course, this isn’t always possible if you need to borrow money sooner rather than later.

The Bottom Line

Bad credit loans may come with pricey APRs, but they are often the only option of last resort for borrowers whose credit has taken a hit. If you’re in the market for a loan and know you’ll need to get a loan for bad credit, the best thing you can do is compare loan options to find the best deal.

Keep an eye out for bad credit loans with the lowest interest rate and origination fee you can qualify for.

Also, look for lenders that let you check your rate and get prequalified online and before you fill out a full loan application.

With enough research, you should end up with a bad credit loan that helps your finances instead of making them worse.

The post What Are the Best Loans If You Have Bad Credit? appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

Convince Your Spouse You Need To Get Out Of Debt

The post Convince Your Spouse You Need To Get Out Of Debt appeared first on Penny Pinchin' Mom.

Need to convince your spouse you need to get out of debt?  You can’t just tell him or her.  You need to address it in the right way.

How to Convince Your Spouse You Need To Get Out of Debt -- Without Fighting!!

Getting out of debt and taking control of your finances is important to your relationship.  Whether you are just starting out or have been together for 25 or  more years, you have to be in the same page financially, or you will be destined for failure.

So, what happens if your spouse is a spender and you are a saver?  Or, what do you do if you want to create a budget you both contribute to, but your spouse refuses to help?  What happens if you want to get out of debt, but your spouse thinks you are fine?

These are questions I get over and over again from readers just like you.  Get my answers on what you can do if you find yourself in any of the following situations.

CONVINCE YOUR SPOUSE YOU NEED TO GET OUT OF DEBT

I WANT TO GET OUT OF DEBT, BUT MY SPOUSE DOES NOT AGREE

This is a very common scenario.  One person feels that there is too much debt and their spouse or partner thinks that they are doing just fine.  What do you do in this situation?  I’ve got the things you can try to help get your spouse or partner onto the same page as you.

 

SET A DATE

Timing is everything when you are discussing debt with your spouse or partner.  If you casually mention it over dinner, it may not actually resonate that you are serious.

Set up a date with your significant other.  Carving out time to have a real, honest discussion about your finances can make all the difference.

 

USE “WE”  – NOT “YOU”

When you sit down to talk, your money and finances should be discussed as “we” and never as “you.”

For instance, instead of saying “You are spending more than you make” – say “We are just spending a bit too much money lately.”

When you are in a relationship, your money is no longer yours and mine, it is ours.  Addressing your debt should be addressed in the same way.

 

NAGGING NOT ALLOWED

If, after you have this discussion, your spouse is still reluctant to get started, take a break.  Circle back around a few weeks later and have another discussion.

The thing you do not want to do is nag him or her about it.  That will create more resentment and be much less successful in developing a plan you both can follow.

MAKE SURE YOU CAN STILL HAVE FUN

The main reason many people are reluctant to get out of debt is they fear that they will not be able to spend any money on anything at all.  That does not have to be the case.

Talk to your partner about your budget and show him or her how you can still leave money for dinner out or the weekly movie dates you love to have together.

One way that my husband and I do this is that we have a “mad money” fund.  This is money which can be spent on whatever we each want.  We designate an envelope for each of us.  When our money is gone, we are done spending.  We actually have turned this into a challenge to see which of us can actually go the longest without spending any money!  After a few months, we agreed that we both won and then turned around and used that money in planning a Disney vacation.

You are a team and together you will need to work up your budget so it works for both of you.

 

BE WILLING TO COMPROMISE

When you sit down for your meeting, don’t have everything planned out.  As tempting as it might be to have the budget all mapped out and show it, that may actually result in your partner being more resistant.

When you talk, take the time to truly listen to what your partner has to say.  Once he or she voices concerns, you will also have a chance to make your case.

When you show that you really do want to listen and work together on this journey, he or she may be much more willing to join you.  However, if you shut him or her out of the conversation, you will not be successful.

 

CREATE A PLAN TOGETHER

Once you both are on the same page with your debt, it is time to make a debt payoff plan. It should include a list of your debts and a way to track your success.  You will work together to achieve your financial goals.  Go through everything together and make sure you both agree to how much you will pay on the debt, your budget and much more.

Putting it in writing will help you both focus on the big picture and give you accountability to one another.  Before you know it, you will be on the path to financial freedom.

 

 

The post Convince Your Spouse You Need To Get Out Of Debt appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

6 Cheap Super Bowl Snacks to Serve With the Big Game

Everyone knows that Super Bowl time is snack time.

But this year, given the ongoing coronavirus pandemic, you may be staying home to watch the game rather than heading to a big bash or going to a bar or restaurant and plunking down big bucks.

However you decide to watch the game, you can still enjoy some classic Super Bowl snacks.

6 Cheap Super Bowl Snacks to Enjoy With the Big Game

1. Chex Party Mix

Everyone loves this crunchy, salty snack. While there are thousands of different ways to make it, this time-tested recipe from The Spruce Eats is super easy and will appeal to the garlic lovers in your crowd.

Prep time: 15 minutes

Cook time: 60 minutes

You’ll need:

  • ½ cup butter
  • 2 tablespoons Worcestershire sauce
  • 1 teaspoon seasoned salt
  • 1 teaspoon garlic salt
  • ½ teaspoon onion powder
  • 3 cups corn Chex cereal
  • 2 cups wheat Chex cereal
  • 1 ½ cups mixed nuts
  • 1 cup small pretzels
  • 1 cup garlic-flavored bagel chips
  • 1 cup mini pretzel rods

Preheat the oven to 250 degrees. Melt the butter in a large pan and stir in Worcestershire sauce, seasoned salt, garlic salt and onion powder. Add everything else and toss thoroughly until well-coated. Bake for one hour, stirring the batch every 15 minutes. Let cool and store in an airtight container.

2. Honey Garlic Crockpot Meatballs

For a hearty main course, this incredibly easy meatball recipe from Family Fresh Meals will keep your crew happy. Serve them over noodles or rice for a main dish, or just let people enjoy them as an appetizer.

Prep time: 5 minutes

Cook time: 4 hours

You’ll need:

  • ¼ cup brown sugar
  • 1/3 cup honey
  • ½ cup ketchup
  • 2 tablespoons soy sauce
  • 3 minced garlic cloves
  • 1 (28 oz) bag fully cooked, frozen meatballs

Mix together the brown sugar, honey, ketchup, soy sauce and garlic. Next, place the meatballs in a three- or four-quart crockpot and cover in sauce, tossing to coat. Turn the crockpot on low for four hours and stir occasionally.

3. Baked Mozzarella Sticks

Enjoy the diner classic at home with The Spruce Eats recipe for baked mozzarella sticks.

Prep time: 15 minutes

Cook time: 5 minutes

You’ll need:

  • ½ cup brown rice flour
  • ¼ cup tapioca flour
  • 1/4 cup parmesan cheese, finely grated
  • 1/2 teaspoon garlic powder
  • 1/2 teaspoon salt
  • Freshly ground black pepper to taste
  • 2 large eggs
  • 6 sticks of low-moisture, part skim milk mozzarella string cheese (cut in half crosswise and frozen for 3-4 hours)
  • Grapeseed oil for frying
  • Marinara or other sauce for dipping

Add grapeseed oil to a skillet, and then mix the flours, parmesan, garlic powder, salt and black pepper in a shallow dish. Beat the eggs and add them to a separate dish. Coat the cheese, alternating between the dry mixture and the egg. Make sure to cover the entirety of the cheese pieces, including the ends.

Next, heat the oil in the pan to 360 degrees and then drop the frozen cheese into it. Turn them every 20 to 30 seconds until they are a golden brown color. Place the cheese on paper towels to absorb the excess oil, and then transfer them to a platter for serving.

4. Pigs in a Blanket

Prep time: 15 minutes

Cook time: 15 minutes

Go with the classic childhood favorite: buttery dough enveloping tasty mini-sausages. Pillsbury has a great recipe for pigs in a blanket. 

You’ll need:

  • 2 cans (8 ounces each) refrigerated crescent dinner rolls
  • 48 cocktail-sized smoked linked sausages

Preheat the oven to 375 degrees. Unroll all the dough and pull into 16 triangles. Cut each triangle into three narrow triangles. Roll a sausage link up in each triangle of dough. Place them on unlined baking sheets. Bake for 12 to 15 minutes until golden brown, rotating halfway through. Serve warm.

5. Crockpot Beer Cheese Dip

Prep time: 10 minutes

Cook time: 40 minutes

This snack from The Spruce Eats just may be the most indulgent one on this list. Have it with pretzels or tortilla chips — or even try something fancier like apples and vegetables.

  • 1/2 cup beer
  • 1/4 teaspoon Tabasco sauce
  • 1 pound processed cheese spread loaf, cut into 1-inch cubes
  • You’ll also need food to dip into it; The Spruce Eats suggests not only tortilla chips and hard and soft pretzels but also apples, crackers, bread cubes and assorted vegetables.

Combine the beer, Tabasco sauce and processed cheese spread in a slow cooker. Add more Tabasco sauce if you prefer a spicier treat. Cover and cook on high for 40 minutes. Once the cheese has melted, stir it to make it smooth. Keep it in the slow cooker on low and serve with the dippers.

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6. Restaurant-Style Buffalo Chicken Wings

It really is possible to enjoy restaurant-style buffalo chicken wings at home. This recipe from AllRecipes takes more time than others on the list, but that’s only because you need to chill the chicken before cooking it.

Prep time: 60-90 minutes (includes time to chill ingredients before cooking)

Cook time: 15 minutes

  • ½ cup all-purpose flour
  • ¼ teaspoon paprika
  • ¼ teaspoon cayenne pepper
  • ¼ teaspoon salt
  • 10 chicken wings
  • oil for deep frying
  • ¼ cup butter
  • ¼ cup hot sauce
  • 1 dash ground black pepper
  • 1 dash garlic powder

Mix flour, paprika, cayenne pepper and salt in a small bowl. Put the chicken wings in a nonporous glass dish or bowl and then sprinkle the flour mixture on top, evenly coating the wings. Cover the dish and refrigerate it for 60-90 minutes.

Heat the oil in a deep fryer to 375 degrees. Mix butter, hot sauce, pepper and garlic butter in a small saucepan and then put it over low heat. Stir until the butter melts and blend the mixture thoroughly. Then remove it from the heat.

Remove the wings from the refrigerator and fry them in the hot oil for 10 to 15 minutes. Remove them from the heat, put them in a serving bowl, add the hot sauce mixture and stir before serving.

Kristen Pope is a contributor to The Penny Hoarder. Editor Sushil Cheema contributed to this post.

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.

Source: thepennyhoarder.com

What is a credit card statement credit?

A recent trend in credit card rewards is increased flexibility in how you can redeem your cash back, points or miles. You can book travel, invest, get gift cards and more – but one of the most common ways a credit card company will issue rewards is as a statement credit.

Statement credits may seem simple, but they’re handled a little differently by each rewards program, and there’s a lot to consider when you’re trying to decide if they’re the best way to redeem cash back or other rewards.

See related: What is cash back?

What is a statement credit?

Put simply, a statement credit is money credited to your account. In its most basic form, a statement credit is not much different from a payment. Like a normal monthly payment, a statement credit is deducted from your card balance, reducing the amount of money you owe. But where cardholders are responsible for payments, credits come from either a merchant or card issuer.

rewards cards also allow you to redeem the points or miles you’ve earned as statement credits. While some cards allow you to use a statement credit to reduce your balance with no restrictions, others only apply credits to your account after you meet certain criteria or make purchases in specific spending categories.

Statement credits on cash back cards

Cash back cards usually make it easy to redeem your points as a statement credit. In most cases, all you need to do is meet the card’s minimum redemption criteria, then choose a statement credit as your redemption method. Once a credit is applied to your account, your card balance decreases accordingly.

If, for example, you were to spend $3,000 with a flat rate 1 percent cash back card, you’d earn a $30 credit; and if you were to redeem this entire credit, $30 would be deducted from your account balance.

While many cards give you the option to request your cash back in the form a check, some only allow you to redeem as a statement credit – so be sure to read your issuer’s terms carefully. After all, when you get your cash back as a check or direct deposit, the money is yours to spend or save as you’d like. With a statement credit, however, the funds are “trapped” in your account and only impact your card balance. If you stop using your card or close your account, you could lose any cash back or points you haven’t redeemed.

Capital One Venture Rewards Credit Card, for example, allows you to book travel through the rewards center at a rate of 1 cent per mile. But if you redeem your miles for cash back as a statement credit, their value is cut in half to just 0.5 cents per mile.

If you prefer to redeem your rewards as a statement credit, make sure doing so doesn’t dilute the value of your points or miles, as each rewards program grants and values statement credits a little differently.

Statement credits for an introductory bonus

Statement credits also frequently appear as part of a card introductory or annual bonus, when issuers offer to reward you if you spend a certain amount of money within a given timeframe. The Blue Cash Preferred® Card from American Express, for example, offers a $250 bonus after you spend $1,000 with your new card in the first 3 months. Instead of simply sending you a check for $250, however, American Express credits your account $250 after you’ve met the conditions of the offer. Once received, the credit will cover the next $250 you charge.

Statement credits for card benefits

Many cards also award extra perks in the form of a statement credit. The United Explorer Card and Chase Sapphire Reserve, for example, each offer up to a $100 credit to cover the cost of a Global Entry or TSA PreCheck application.

In these cases, a statement credit is applied to your account only after you make the eligible purchase and cannot be used for anything else.

How statement credits work with the major rewards programs

Here’s how some of the major rewards programs treat statement credits:

Rewards program Can you redeem rewards as a statement credit? Minimum redemption Rewards rate when redeemed as a credit
Discover cards Cashback Bonus Yes None 1:1
Bank of America Cash Rewards Yes None ($25 for automatic redemptions) 1:1
American Express Membership Rewards Yes $25 1:0.6
Chase Ultimate Rewards Yes $20 1:1

Should I redeem my points as a statement credit?

Once you know what a statement credit is and how it’s treated by your rewards program, you’ll probably wonder if it’s smart to redeem your points or miles in this form. While the answer will depend on your spending habits, goals and financial situation, it makes more sense in certain circumstances.

If you’re trying to decide whether you should redeem your points as a credit statement, consider the following:

  • Are you going to carry a balance? If you’re not sure whether you’ll be able to pay off your balance in full by the due date, redeeming your points as a statement credit makes sense. You’ll knock a chunk off your balance and make it easier to pay in full and avoid interest charges. Keep in mind, however, that statement credits are not usually considered payments, so if you can’t help carrying a balance, you’ll still have to make a minimum out-of-pocket payment.
  • Does your card offer an incentive for redeeming points as a statement credit? Some cash back cards offer redemption bonuses when you opt for a statement credit over “true” cash back in the form of a check or direct deposit. If that’s the case, and you plan to continue using the card, go with a statement credit to get more mileage out of your cash back rewards.
  • Are your points worth less when redeemed as a statement credit? If you’re using a card with a more flexible rewards program, redeeming your rewards as a statement credit is likely possible, but not necessarily wise. Check your issuer’s terms to see if your points lose any value when redeemed as a statement credit. If 1 point is worth 1 cent when used for travel purchases, but only 0.5 cents when redeemed as a statement credit, you’re missing out on a lot of the value you’ve earned. If you have no interest in travel, see if you can get full value out of your points in a roundabout way, like redeeming points for gift cards at stores you frequent.

Other ways to redeem your credit card rewards

Many cards offer several other options for redeeming your rewards. In addition to statement credits, you may be able to redeem cash back, points, or miles for:

  • A direct deposit – You can link your bank account so that when you hit “redeem,” that money goes directly to your account. For some, this is more satisfying than receiving a statement credit.
  • A check – If you don’t mind waiting, many credit card issuers will mail a check for the value of your rewards.
  • Gift cards – Some credit cards allow you to exchange your points or cash back for gift cards. Make sure that you’re getting the same or more value before you choose this option – sometimes the dollar value of gift cards is different from what you would get redeeming for a statement credit or direct deposit.
  • Merchandise – Credit card issuers sometimes have shopping portals that give you the option to use your cash back or points to pay for merchandise. This is another option that you should approach with caution. Do the math to make sure you’re getting the same dollar value as you would with a direct deposit or statement credit.
  • Travel – Travel redemption options vary from card to card, but there are two main methods, one of which is receiving a statement credit for travel purchases you’ve already made. The other is using the issuer’s portal to book travel, such as flights or hotels, online.

Final Thoughts

A statement credit is just one way you can receive bonuses and redeem the rewards you’ve earned. If you’re using a cash back card, it could be a smart, low-maintenance way to reduce your balance and build good spending habits. If you’re using a more flexible rewards or travel card, though, make sure redeeming as a statement credit still gets you fair value for your points or miles.

Source: creditcards.com

The Half Payment Budget Method Explained

The post The Half Payment Budget Method Explained appeared first on Penny Pinchin' Mom.

The half payment budget method might be what you need.  If traditional budgets do not work, you really might want to consider this method instead.

 

half payment budget method

 

If you do any research, you will find many ways to budget.  However, many times, the options you find do not work for you.  That is why it is important to find the right budget for your needs.  A new one you may not have tried is the the half-payment budget method.

This system helps many people stop living paycheck to paycheck.  Simply explained, it is where you take your regular, recurring payments and divide them in half.  Each payday, you set aside the necessary money out of each check so that you have the full payment available when it is due.  The half payment is not paid at that time, but rather you hang onto it and pay it on the due date.

If you are just learning about budgeting, you will want to check out our page — How to Budget. There, you will learn everything you want to know about budgets and budgeting.

HOW TO USE THE HALF-PAYMENT BUDGET METHOD

In order to explain this in a simple manner, here is how this system might look for you:

Monthly income: $2,500 (paid $1,250 every other week)

Recurring monthly payments (other than utilities):

Mortgage/Rent: $900
Vehicle Payments: $450
Auto insurance: $100

When you apply the half-payment method, your weekly budget would look something like this:

Paycheck #1 – $1,250

Set aside $450 for rent/mortgage
Set aside $225 for vehicle payments
Set aside $50 for insurance

Leaves $525 out of your paycheck for other expenses

Paycheck #2 – $1,250

Take $450 from previous paycheck and add $450 and pay $900
Take $225 from previous paycheck and add $225 and make full $450 payment
Take $50 from previous paycheck and add $50 to make $100 payment

Leaves $525 out of your paycheck for other expenses from each check

 

Now, let’s compare this to the method that many use – to just pay when the bill is due:

Paycheck #1 – $1,250  

Rent – $900

Leaves $350 for all expenses

Paycheck #2 – $1,250

Vehicle payments – $450
Insurance – $100

Leaves $700 for additional expenses

If you do the math, you will notice that you still have the same to spend over the course of a month, however, you will see a difference in the amount from each paycheck.  You might show that you have more money left after your 2nd paycheck of the month, but will you really save that?  Most people do not. If they have extra month to spend, they just spend it.

 

How to Start

I would not recommend that you jump in and change all of your bills so that they are paid using this method.  That may be too much and you might quit before you even really get started!  Instead, select one bill, such as a car payment, and try using the half payment method for a few months.  Once you see it works, you can transition other bills into this same payment method.

 

Why it Works

So, why would you use the half payment method?  For many it works better because you have around the same income to spend out of every check, rather than cutting your spending in half like you see in the second example.  For many, there is always that paycheck that makes spending tough.  When you have to pay a few larger bills all out of one check, it often leaves little to no money left for other purchases.

By changing to the half method, you are still paying your bills, but you are just earmarking money to pay a bill due later in the month.  You still have the same income.  You still pay your bills on time. However, you have more disposable income every two weeks by doing it in this way.

What is great about this method is that it works no matter how you are paid.  If you are paid monthly or weekly you might try using a quarter payment method every week (breaking out your check to leave spending weekly).

 

If you want to learn more about understanding your money attitude, change your spending habits and get out of debt once and for all, check out the Financial Rebook eBook.

The post The Half Payment Budget Method Explained appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

How to Make Tough Decisions as a Couple

Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.

When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.

One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.

There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.

Tom says no.

Tough decisions and zero-sum situations

Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.

For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.

Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.    

For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.

Three ways not to make tough decisions as a couple

 First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:

Mistake #1 – Trying to convince your partner they'll be better off

The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there? 

No one likes to be told they’ll be happier if they just do things your way.

 Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."

Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing

The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.

Mistake #3 – Appealing to your partner's love

The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.

Marnie is no exception.

“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”

 “The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”

I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want. 

A better way to make tough decisions as a couple

The good news is there’s a much better method. There are three steps involved.

Step One:  Let’s make a deal

In business, this would be a no-brainer, right?  You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.  

In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?

Let’s see what happens when Marnie tries this approach.

One night in bed, just before they turn off the lights, Marnie turns over to face Tom.

“Tom, what can I give you to make you agree to move?” she asks.

Tom is silent.

“A promise to never complain ever again about you watching TV?”

Tom smiles. “It’s going to cost a lot more than that,” he says.

Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”

Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.         

“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."  

Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.

Time for Step Two.

Step Two:  The $64,000 Question

The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?”    Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.

To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.

Marnie thinks for a minute.  

“Let’s see what we can find,” she says.

Step Three: The Price is Right

Now comes the fun part.

The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.

Decision making builds strong relationships

 A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.

A good deal will have both of your dreams in it.

One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.

But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.

Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

As Yogi Berra famously said, “When you come to a fork in the road, take it!”

In the long run, how you settle the issue may matter more than which fork you take.

Source: quickanddirtytips.com

Secured vs. Unsecured Loans: Here’s the Difference

Whether you’re trying to buy a home or looking to get a college degree, you may need to take out a loan to finance your goals. If you’re seeking out your first loan, know that borrowing money is a common practice and you don’t need a degree in economics to understand it! Learning more about loans and the different types can help you make informed decisions and take control of your finances.

Loans take many forms but they all fall within two common categories: secured vs. unsecured loans. Whether you’re approved for either type of loan depends on your creditworthiness. Creditworthiness refers to how responsible you are at repaying debt and if it’s worthwhile or risky to grant you new credit. It’s helpful to be aware of your credit prior to seeking out a loan so you know where you stand.

Now that you’re familiar with the role creditworthiness plays in getting a loan, let’s discuss the differences between secured and unsecured loans, the advantages and disadvantages of each, and which one may be right for you.

What’s the Difference Between Secured vs. Unsecured Loans?

What’s the Difference Between Secured vs. Unsecured Loans?

The main difference between secured and unsecured loans is how they use collateral. Collateral is when something of economic value is used as security for a debt, in the event that the debt is not repaid. Usually collateral comes in the form of material property, such as a car, house, or other real estate. If the debt is not repaid, the collateral is seized and sold to repay all or a portion of the debt.

Key Difference: A secured loan requires collateral, while an unsecured loan doesn’t require collateral.

What Is a Secured Loan?

A secured loan requires collateral as security in case you fail to repay your debt. If secured debt is not repaid, the collateral is taken. In addition to seizing collateral, lenders can start debt collection, file negative credit information on your report, and sue you for outstanding debt. This generally makes secured loans more risky for the borrower.

Conversely, collateral decreases the risk for lenders, especially when loaning money to those with little to no credit history or low creditworthiness. Less risk means that lenders may offer some leeway regarding interest rates and borrowing limits. See the list below to review other typical secured loan characteristics.

Characteristics of a Secured Loan:

For borrowers:

  • Presence of collateral
  • Typically more risky
  • May require a down payment
  • May sell property to repay loan
  • Generally lower interest rates
  • Longer repayment period
  • Higher borrowing limits
  • Easier to obtain for those with poor or little credit history

For lenders:

  • Typically less risky
  • Lender can take your collateral
  • Lender can hold the title to your property until loan is repaid

Secured Loan Examples

The most common uses of a secured loan are to finance large purchases such as a mortgage. Usually, these loans can only be used for a specific, intended purchase like a house, car, or boat. A home equity loan is another example of a secure loan. Some loans like business loans or debt consolidation can be secured or unsecured.

Secured Loan Examples

What Is an Unsecured Loan?

An unsecured loan doesn’t require collateral to secure the amount borrowed. This type of loan is granted based on creditworthiness and income. High creditworthiness makes an unsecured loan more accessible.

The absence of collateral makes this type of loan less risky for borrowers and much riskier for lenders. If unsecured debt is not repaid, the lender cannot seize property automatically. They must engage in debt collection, report negative credit information, or sue. As a result of the increased risk, unsecured loans have characteristics that attempt to reduce the risk. These may include higher interest rates or lower borrowing limits, and you can see more in the list below.

Characteristics of an Unsecured Loan:

For borrower:

  • No collateral required
  • Typically less risky
  • Qualify based on credit and income
  • Stricter conditions to qualify
  • Generally higher interest rates
  • Lower borrowing limits

For lender:

  • Typically more risky
  • Lender can’t take property right away if you default

Unsecured Loan Examples

Common unsecured loans include credit cards, personal loans, student loans, and medical debt. Debt consolidation and business loans can also be unsecured. In each of these instances, collateral is not required and you are trusted to repay your unsecured debt.

Unsecured Loan Examples

Advantages and Disadvantages to Consider

When it comes to deciding on the type of loan you need, it’s important to consider the advantages and disadvantages of each.

Secured Loans

Secured loans present advantages for repayment, interest, and borrowing amount, but have disadvantages regarding a borrower’s risk and limitations of use.

Advantages

  1. Bigger borrowing limits
  2. Less risk for lenders usually means lower interest rates for borrowers
  3. Longer repayment period
  4. Available tax deductions for interest paid on certain loans (e.g., a mortgage)

Disadvantages

  1. Risky for borrower (potential for loss of collateral like home, car, stocks, or bonds)
  2. Specifically for intended purpose (e.g., a home, but home equity loans are an exception)

Unsecured Loans

Unsecured loans can be advantageous for borrowers regarding risk and time, but they pose a disadvantage when it comes to interest rates and stricter qualifications.

Advantages

  1. Less risky for borrower
  2. Useful loan if you don’t own property to use as collateral
  3. Quicker application process than for a secured loan (e.g., a credit card)

Disadvantages

  1. More risky for lenders usually means higher interest rates for borrowers
  2. Hard to qualify for if you have low creditworthiness or inconsistent income (can qualify with a cosigner)

Take a look at the chart below to compare the key advantages and disadvantages between secured and unsecured loans.

Secured Loans

Unsecured Loans

Advantages

• Lower interest rates
• Higher borrowing limits
• Easier to qualify
• No risk of losing collateral
• Less risky for borrower

Disadvantages

• Risk losing collateral
• More risky for borrower
• Higher interest rates
• Lower borrowing limits
• Harder to qualify

Which Loan Type Is Best for You?

After considering the advantages and disadvantages of both loan types, it’s helpful to know which one is the best for certain circumstances. Here are some common contexts in which one may be better than the other.

  • A secured loan may be best if you’re trying to make a large property purchase or don’t have the best credit. The piece of property that you are purchasing can be used as collateral if you don’t already own other property. Additionally, this loan is more accessible for you if you have low creditworthiness and may be more advantageous with lower interest rates.
  • An unsecured loan may be best if you have high creditworthiness and a steady income. High creditworthiness helps you meet strict qualification criteria and can also help you obtain better interest rates (given that this type is characterized by higher interest).

Overall, secured and unsecured loans are each useful in different situations. Remember that the key difference is that unsecured loans don’t need collateral, while secured loans do. Secured loans are less risky for the lender and may allow for some advantageous repayment conditions. On the other hand, unsecured loans are risky for the lender, and they often come with stricter conditions that try to lessen that risk.

It is important to make smart financial decisions such as repaying debt on time and maintaining a good credit history. High creditworthiness is the key to getting the best conditions on any loan. No matter your circumstances, identifying which loan type is best for you depends on your specific credit and goals. Visit our loan center for help in deciding which loan is right for you.

Sources: Consumer Financial Protection Bureau

 

The post Secured vs. Unsecured Loans: Here’s the Difference appeared first on MintLife Blog.

Source: mint.intuit.com

Things To Do While You’re Stuck In Your Apartment

Creating An Inspiring Home Office Space

Guest Post

Things To Do While Stuck In Your Apartment During the Coronavirus Pandemic

By now, almost everyone in the country is under some kind of shelter-in-place or stay-at-home orders from government agencies due to the coronavirus pandemic. Authorities stress that this is the main way to try to flatten the curve of new infections.

OK, so what can you do while cooped up in your apartment. The options aren’t quite unlimited, but they are numerous. Take advantage of the space you have and undertake any activity that will be good for your mental or physical well-being. Here’s a look at some of the most popular:

1. Do a jigsaw puzzle

This has become quite popular around the country, with people finishing a jigsaw puzzle and then posting a picture of it on social media. The more pieces, the better, say, 1,000 or more. How long you’ll be able to do this to remain occupied depends on how many puzzles you have on hand, or how many times you’re willing to do the same puzzle over again.

If you don’t have jigsaw puzzles, maybe you have a Rubik’s Cube or a book of crossword puzzles. You can also find crossword puzzles online and in your daily newspaper, if you still subscribe.

2. Exercise!

If you have a set of weights in your apartment, use them. Or maybe you’re a packrat and still have exercise routines on VHS tapes or DVDs. If not, there are plenty of routines you can find for free online. 

If you can leave your apartment, go for a walk or a jog, as long as you observe the social distancing rules that are now the new normal. If you don’t want to go outside, walk up and down a stairwell or walk up and down your hallway. Again, give others their personal space.

Short of that, you can go old-school and do crunches, sit-ups and push-ups on your floor. You can also do isometric exercises using a rolled-up bath towel. For a refresher on the techniques, check out these workouts you can do in your apartment and then get to work. 

Whatever you chose, mix it up and keep it fresh as you stay in shape. 

3. Binge-watch

OK, the first two suggestions will put your mind and body to work. At some point you’ll feel like being a couch potato, so why not catch up on a series you’ve been meaning to watch on Netflix, Disney Plus or one of the many streaming services available? You’ve never had a better excuse than now. 

“Tiger King: Murder, Mayhem and Madness” has become all the rage on Netflix. It was released in mid-March and has given people something to do in the age of coronavirus. It is a true-crime documentary television series about the life of former zoo operator Joseph Maldonado-Passage.

If that’s not your thing, there are favorites such as “Narcos: Mexico” and “Stranger Things” on Netflix. If you’ve already seen them, what’s the harm in starting over? On Disney Plus you can watch “The Mandalorian,” “Star Wars: The Clone Wars” and “The Simpsons.”

4. Spring cleaning

It’s spring, and you have a lot of unexpected time on your hands. Now’s a great time to get in some spring cleaning of your apartment. Cut through the clutter and organize your closet and dresser. Most importantly, regularly clean and disinfect important areas such as kitchen surfaces and appliances that are used often. You should also keep your bathroom clean. 

5. Other stuff

There are plenty of other things you can be doing, such as catching up on your reading, playing a musical instrument, writing emails to friends and family and getting plenty of rest.

Read Things To Do While You’re Stuck In Your Apartment on Apartminty.

Source: blog.apartminty.com

How to Buy a Second Home that Pays for Itself

Recent data from the U.S. Census Bureau shows that home sales were up more than 17% in June 2020 from the month before, and up more than 13% compared to the year prior. Those who have the means to buy a second home are wise to take on mortgage debt (or reorganize their current debt) in today’s low interest environment.

With low 30-year mortgage rates, owning a rental property that “pays for itself” through monthly rental income is especially lucrative with a significantly lower mortgage payment. If you’re curious about buying a second home and renting it out, keep reading to find out about the major issues you should be aware of, the hidden costs of becoming a landlord, and more. 

Important Factors When Buying a Short-Term Rental

The issues involved in buying a rental home varies dramatically depending on where you plan to purchase. After all, buying a ski lodge in an area with seasonal tourism and attractions might require different considerations than buying a home in a major metropolitan area where tourists visit all year long.

But there are some factors every potential landlord should consider regardless of location. Here are a few of the most important considerations:

  • Location. Consumers rent vacation homes almost anywhere, but you’ll want to make sure you’re looking at homes in an area where short-term rentals are popular and viable. You can do some basic research on AirDNA.co, a short-term rental data and analytics service, or check competing rentals in the area you’re considering.
  • Property Management Fees. If you plan to use a property management company to manage your short-term rental instead of managing it yourself, you should find out how much other owners pay for management. Also, compare listing fees for your second home with a platform like Airbnb or VRBO.
  • Taxes. Property taxes can be higher on second homes since you don’t qualify for a homestead exemption. This means higher fixed costs each month, which could make it more difficult to cover your mortgage with rental income.
  • Competition. Check whether a rental area you’re considering is full of competing rentals that are never full. You can find this information on VRBO or Airbnb by looking at various rentals and checking their booking calendars.
  • Potential Rental Fees. Check rental sites to see how much you might be able to charge for your second home on a nightly, weekly, or monthly basis. 

5 Steps to Rent Your Second Home

Before purchasing a second home, take time to run different scenarios using realistic numbers based on the rental market you’re targeting. From there, the following steps can guide you through preparing your property for the short-term rental market.

1. Research the Market

First, you’ll want to have a general understanding of the rental market you’re entering. How much does the average short-term rental go for each night or each week? What is the average vacancy rate for rentals on an annual basis? 

Research your local rental market, the average price of rentals in your area, various features offered by competing rentals, and more.

Action Item: Dig into these figures by using AirDNA.co. Just enter a zip code or town, and you’ll find out the average nightly rate, occupancy rate, revenue, and more. Although some of the site’s features require a monthly subscription, you can find out basic information about your rental market for free.

2. Know Your Numbers

You need to know an array of real numbers before renting your second home, including the following:

  • Average nightly rate
  • Average occupancy rate
  • Fixed costs, such as your mortgage payment, taxes, and insurance for the rental
  • Property management fees and costs for cleaning between tenants
  • Additional fixed costs for things like trash pickup, internet access, and cable television
  • Costs for marketing your space on a platform like VRBO or Airbnb, which could be a flat fee or 3% of your rental fee depending on the platform

You’ll use these numbers to figure out the average monthly operating cost for your second home, and the potential income you might be able to bring in. Without running these numbers first, you wind up in a situation where your short-term rental doesn’t pay for itself, and where you’re having to supplement operating expenses every month. 

Action Item: Gather every cost involved in operating your specific short-term rental, and then tally everything up with monthly and annual figures that you can plan for.

3. Buy the Right Insurance

If you plan on using your second home as a short-term rental, you’ll need to buy vacation rental insurance. This type of homeowners insurance is different from the type you’d buy for your primary residence. It’s even unique from landlord insurance coverage since you need to have insurance in place for your second home and its contents.

Some vacation rental policies let you pay per use, and they provide the benefits of homeowners insurance (like property coverage, liability, and more) plus special protection when your property is rented to a third party. 

Action Item: Shop around for a homeowners insurance plan that’s geared specifically to vacation rentals. See our top picks for the best homeowners insurance companies out there.

4. Create a Property Management Plan

If you live near your second home, you might want to manage it yourself. There’s nothing wrong with this option, but you should plan on receiving calls and dealing with problems at all hours of the day. 

Many short-term rental owners pay a property management company to communicate with their tenants, manage each rental period, and handle any issues that pop up. Property managers can also set up cleanings between each rental and help with marketing your property. 

Action Item: Create a property management plan and account for any costs. Most property managers charge 25% to 30% of the rental cost on an ongoing basis, so you can’t ignore this component of owning a short-term rental. 

5. Market Your Space

Make sure you appropriately market your space, which typically means paying for professional photos and creating an accurate, inviting listing on your chosen platforms. Your property manager might help you create a marketing plan for your vacation rental, but you can DIY this component of your side business if you’re tech- and media-savvy. 

Action Item: Hire a photographer to take professional photos of your rental, and craft your rental description and listing. 

Risks of Purchasing a Short-Term Rental

Becoming a landlord isn’t for the faint of heart. There’s plenty that can go wrong, but here are the main risks to plan for:

  • Government roadblocks. In destinations from New York City to Barcelona, government officials have been cracking down on short-term rentals and trying to limit their ability to operate. New rules could make running your business more costly, difficult, or even impossible. 
  • Your home could be damaged beyond repair. If you read the Airbnb message boards and other landlord forums, you’ll find an endless supply of nightmare rental stories of houses getting trashed and rentals enduring thousands of dollars in damage. 
  • Housing market crash. If the housing market crashes again like it did in 2008, you might find you owe more than your second home is worth at a time when it’s increasingly difficult to find renters. 
  • Reliance on tourism. As we’ve seen during the pandemic, circumstances beyond our control can bring travel and tourism to a screeching halt. Since short-term rentals typically rely on tourism to stay afloat, decreases in travel can affect the viability of your business, quickly.
  • High ongoing costs and fees. Higher property taxes, property management fees, cleaning fees and maintenance costs can make operating a short-term rental costly in the long-term. If you don’t account for all costs and fees involved, you might wind up losing money on your vacation home instead of having the property “pay for itself”.

The Bottom Line

A short-term rental can be a viable business opportunity, depending on where you want to buy and the specifics of the local rental market. But there are a lot of factors to consider before taking the leap. 

Before investing hundreds of thousands of dollars, think over all of the potential costs and risks involved. You’ll want to ensure that you’ve done comprehensive research and have run the numbers for every possible scenario to make an informed decision.

The post How to Buy a Second Home that Pays for Itself appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

How to Buy a Home in Denver, Colorado

As one of the top five fastest-growing cities in the US, Denver is quickly becoming the place to be. The vibrant city life, the outdoor culture, and the growing economy are attracting numerous people looking to become Denver homeowners.

If you, like many others, have noticed how much this Colorado city has to offer, you might be wondering how home-buying works in Denver. We’ve got you covered. Here’s what every Denverite or potential Denverite needs to know about becoming a homeowner.

Start With a Budget

Before the hunt for your dream home can begin, you’ll need to determine how much you can afford. Get in touch with a lender to talk this through. Your lender will help you determine how much of a down payment you’ll need, as well as what kind of monthly payment you can expect.

Once you speak with a lender, you’ll know what kind of loan you qualify for, and you can narrow down your search to homes within your budget. Now you’re ready to really get serious about finding your future home.

When looking for a lender, many people start with their bank. Your bank isn’t a bad place to start, but don’t forget to shop around for the best rate. If you don’t check out all the options, you might miss out on deals from companies like Homie Loans. Homie Loans guarantees they can get you the best rate possible. In fact, if you find any lender with a better rate, they’ll give you $500 cash*.

Find the Right Agent

Most people work with an agent while buying a home, but not everyone knows how essential it is to find the right agent to work with. The right agent will be experienced and knowledgeable about the highly competitive Denver market.

Your agent should also understand your goals and interests as a prospective buyer. They’ll use their knowledge of your goals with their knowledge of different neighborhood vibes to help you find the perfect fit for you. If easy access to the mountains is one of your priorities, your agent will tell you which cities to look at. If downtown living is your thing, your agent can help you find a good deal in a vibrant, Denver neighborhood.

When you have an expert agent on your side throughout the whole home buying experience, you’ll never have to stress about missing out on important information or getting the bad end of a deal. There are a lot of pieces to the puzzle when it comes to real estate, but agents are there to make each step along the way easy on you. That’s why the sooner you bring an agent in to help, the better.

Check Out the Options

Now it’s time to start looking at homes. For many people, this is the fun part of buying a home. Your agent will help you find homes in the areas you’re interested in. It can be a lot of fun to visit potential neighborhoods and imagine yourself as a resident. If a home really catches your eye, don’t be afraid to visit more than once. You want to be sure that it’s the right one for you.

Be sure to be thorough when checking out your options. You don’t need to settle for something you’re not happy with. If you’re not looking for the extra work that comes with a fixer-upper, don’t skip the home inspection. Some homes have issues that you wouldn’t have noticed without an inspection. You want to find a home that’s in great condition.

When you’ve found the perfect home, your agent will help you determine if it’s listed at a fair price. A home could check every box on your wishlist, but if the price isn’t right, it may not be the right one for you. One of your agent’s main jobs is to help you negotiate to get a price that works for you. On the other hand, if the price is where you’d like it, your agent will help jump on that home faster than any of the other potential buyers.

Streamline the Process With Homie

Whether you’re a home-buying veteran or this is your first rodeo, Homie will make your experience the best it can be. Searching for your dream home is a breeze when you have our easy-to-use app.

When you work with Homie, you don’t only get access to the app, though. You’ll also have your very own, top-ranked licensed agent who will help you every step of the way. Our buyers’ agents are dedicated only to their buyers, so you’ll get the best quality service throughout the process.

To get access to amazing homebuying tools and some of the best agents in the state, you might think you’d have to pay top double, but not with Homie. We want to make homeownership accessible to everyone, which is why working with Homie is more affordable than working with any traditional realtor. We offer buyers a refund of up to $2,500 at closing. With those savings and those benefits, buying with Homie is a no-brainer. Click here to start the process.

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Get more tips on buying your Denver home!

5 Tips to Help You Afford Your First Home
Common Home Buying Fears and How To Overcome Them
Can You Buy and Sell a Home at the Same Time?

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The post How to Buy a Home in Denver, Colorado appeared first on Homie Blog.

Source: homie.com