What Is a Mortgage Refinance? 5 Ways to Know If It’s a Good Idea

Jason says:

Hi, Money Girl. I’m interested in refinancing and getting a lower interest rate on my mortgage; however, I may need to sell my home and relocate in a year or so. In that case, does a refinance still make sense? If so, what factors should I consider?

Jason, thanks for your question! It’s a perfect time for homeowners to consider refinancing because interest rates are at historic lows.

If you’re a homeowner, your mortgage payment is probably your largest monthly expense, so it’s wise to stay alert for opportunities to reduce it by refinancing. Plus, your financial circumstances and needs today may be very different than they were when you originally got your mortgage.

It’s a perfect time for homeowners to consider refinancing because interest rates are at historic lows.

I'll answer Jason’s question by reviewing what a mortgage refinance is, explaining common reasons to consider doing one, and covering five ways to know if it’s a good idea for your situation.

What is a mortgage refinance?

Refinancing is when you apply for a new loan to pay off an existing loan balance. The new loan could be with your same institution or with a different lender. The idea is to swap out a higher-interest loan for a lower-interest one, which decreases the amount of interest you have to pay and may also reduce your monthly payments.

When you take out a mortgage to buy a home, various factors determine the interest rate you get offered. While your credit, down payment, and income history are critical, lenders base mortgages on the prevailing interest rates. 

An interest rate is simply the cost of money for borrowers. Rates in the U.S. fluctuate according to the monetary policy of the Federal Reserve or Fed, which is our central bank. 

A good rule of thumb is to consider refinancing when the current rate dips at least one percentage point below what you’re paying for your mortgage.

When interest rates are low, it’s like money’s on sale, as strange as that sounds! Banks should display a big banner on their front door or website that reads “bargain basement prices on dollars” or “we sell money cheap” because that’s what happens when interest rates go down. Low rates are great for borrowers, but not so good for lenders. 

The Freddie Mac website shows historical data for interest rates on 30-year mortgages since 1971. In August 2020, the average for a fixed-rate, 30-year mortgage was 2.94%. A year earlier, the same loan was 3.62%, and ten years before, it was 4.43%. 

Since interest rates change periodically, the rate you’re currently paying on a mortgage may be significantly different than the going rate. A good rule of thumb is to consider refinancing when the current rate dips at least one percentage point below what you’re paying for your mortgage.

What’s the cost to refinance a mortgage?

You need at least one percentage point between the going rate and yours because there’s a cost to do a refinance. Closing a loan means you must pay fees to various companies, including your lender or mortgage broker, property appraiser, closing agent or attorney, and surveyor. Plus, there are fees required by the local government for recording the mortgage, and maybe more costs, depending on where you live. 

The total upfront cost of a refinance depends on the lender and property location. It could be as high as 3% to 6% of your outstanding loan balance. The trick to knowing if it’s worth it is to figure out when you’d break even on those costs. In other words, when do you go from the red to black on the deal? 

If you pay for a refinance but don’t keep your home long enough to recoup the cost, you’ll lose money. But if you do keep the property beyond the financial break-even point (BEP), you’ll feel like a genius because you saved money in the long run!

If you pay for a refinance but don’t keep your home long enough to recoup the cost, you’ll lose money.

You may be able to roll closing costs for a refinance into the new loan, which means you would have nothing or little to pay out-of-pocket. But adding them increases the amount you borrow and may also increase the interest rate you pay for the life of the loan. For that reason, it’s essential to ask the lender for a side-by-side comparison of all the terms for each loan option so you can carefully evaluate them. 

So, how do you figure the BEP to know if doing a refinance is wise? Here’s a simple BEP formula: Refinance break-even point = Total closing costs / Monthly savings.

For instance, if your closing costs are $5,000 and you save $150 a month on your mortgage payment by refinancing, it would take 34 months or almost three years to recoup the cost. The calculation is $5,000 total costs / $150 savings per month = 33.3 months to break even.

For help crunching your numbers, check out the Refinance Breakeven Calculator at dinkytown.com.

Since how long you own your home after a refinance is critical for making it worthwhile, I’m glad that Jason brought it up in his question. For instance, if he finds out that he’d need to own his home for five years to break-even, but he only plans on staying in it for two years, that should be a deal-breaker.

How to get approved for a mortgage refinance

If you believe that doing a refinance could be wise, you’ll also need to consider if you qualify. Lenders have different underwriting requirements, but most require you to have a minimum amount of equity in your property.

Equity is the difference between your home’s market value today and what you owe on it. A critical ratio for refinancing is known as the loan-to-value or LTV.

For example, if your home value is $300,000 and you have a $150,000 mortgage outstanding, you have $150,000 in equity, an LTV ratio of 50%. But if you owed $250,000, that would be an LTV of 83%. 

You typically need an LTV less than 80% to qualify for a mortgage refinance.

You typically need an LTV less than 80% to qualify for a mortgage refinance. So, Jason should do some quick math to make sure he doesn’t owe more for his home than this threshold based on the current market value. Lenders may still work with you if you have a high LTV and good credit, but they may charge a higher interest rate.

If you have an existing FHA or VA mortgage, you may qualify for a “streamlined” refinance program that requires less paperwork and less equity than a conventional refinance. Check out the FHA Refinance program and the VA Refinance program to learn more.

Reasons to consider refinancing your mortgage

There are a variety of reasons why it may make sense for you to refinance a mortgage. Here are some situations when doing a refinance may be a good solution.

  • Rate-and-term refinance. This is when you get a new loan with a lower interest rate, a different term (length of the loan), or both. It’s probably the most common reason why homeowners refinance their mortgages. 

    Example: If you have a 30-year, fixed-rate mortgage at 5%, you could refinance with a 30-year mortgage at 3%. That would reduce your monthly payments and the amount of interest you pay over the life of the loan.
     

  • Cash-out refinance. This is when you get a larger loan than your existing mortgage, so you walk away from the closing with cash. 

    Example: Let’s say your home’s market value is $200,000, and your mortgage balance is $100,000. If you need $25,000 to pay for college or renovate your home, you could do a cash-out refinance for $125,000. After paying off the original mortgage of $100,000, you’d have $25,000 left over to spend any way you like.  
     

  • Cash-in refinance. This is when you pay cash at the closing to pay off an existing mortgage balance. That could be necessary if you don’t have enough equity to qualify for a refinance, or you owe more than your home is worth. 

    Example: You might do a cash-in refinance if having a lower LTV qualifies you for a lower mortgage rate or allows you to get rid of private mortgage insurance (PMI) payments. Read or listen to How to Avoid PMI on Your Home Loan for more information.

You may also need to refinance a mortgage if you want to remove a co-borrower, such as an ex-spouse, from your loan. But if one spouse doesn’t have sufficient income and credit to qualify for a refinance on his or her own, your best option may be to sell the property instead of refinancing the mortgage.

5 ways to know if it’s the right time to refinance

Here are five ways to know if doing a rate-and-term refinance is a good idea.

1. You have an adjustable-rate mortgage (ARM)

Buying a home with an adjustable-rate mortgage comes with lots of advantages like a lower rate, a lower monthly payment, and being able to qualify for a larger loan compared to a fixed-rate mortgage. With an ARM, when interest rates go down, your monthly payments get smaller. 

Instead of worrying about how high your adjustable-rate payment could go, you might refinance to a fixed-rate loan.

But when ARM rates go up, you can feel panicked as your mortgage payment increases month after month. There are caps on annual increases, but your rate could double within just a few years if rates have a significant spike.

Instead of worrying about how high your adjustable-rate payment could go, you might refinance to a fixed-rate loan. That move would lock in a reasonable rate that will never change and make it easier to manage money and stick to a spending plan.

2. You could get a lower interest rate

If you bought a home when mortgage rates were higher than they are now, you’re in a great position to consider refinancing. As I mentioned, you need to do your homework to understand the cost and BEP fully. 

I recommend shopping for a refinance with the lender who holds your current mortgage, plus one or two different companies. Let your mortgage company know that you’re shopping for the best offer. They may be willing to waive specific fees if some of the necessary work, such as a title search, survey, or appraisal, is still current for your home.

3. You don’t plan on moving for several years

Once you know what a refinance will cost, make sure you’ll own your home long enough to pass the BEP, or you’ll end up losing money. For most homeowners, it typically takes owning your home for at least three years after a refinance to make it worthwhile.

4. You have enough home equity

As I mentioned, you typically need at least 20% equity to qualify for a refinance. If you have less, you may still find lenders that will work with you. However, unless your credit is excellent, you’ll typically pay a higher interest rate when you have low equity.

Also, if you don’t have 20% equity, lenders charge PMI. Adding that to your new loan could cut your savings and give you a much longer break-even point. 

5. Your finances are in good shape.

The higher your income and credit, and the lower your debt, the better your refinancing terms will be. If you’re unemployed or your credit took a dive due to a hardship, wait until your overall financial situation has improved before making a mortgage application. Good credit can save thousands in mortgage interest.

Good credit can save thousands in mortgage interest.

If you investigate doing a refinance and decide that it’s not worth the cost, another strategy to save money is to ask your lender for a mortgage modification on your existing loan. You may be able to negotiate modified terms, such as a lower interest rate, without having to pay for a full-blown refinance.

If you’re unsure how much home equity you have or know that you have very little, don’t let that stop you from inquiring about your refinancing options and saving money. Getting advice and refinancing quotes from your lender is free and will help you understand your range of financial options.

Source: quickanddirtytips.com

Ask the Readers: What Are Your Goals for 2020?

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Happy New Year! With the fresh new year ahead of us, now is the perfect time to take stock of your goals for 2020.

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Win 1 of 3 $20 Amazon Gift Cards

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How to File for Pandemic Unemployment Assistance in Every State

Note: This article has been updated to reflect the new programs and provisions in the second stimulus package.

For the first time nationally, independent contractors and gig workers can receive unemployment benefits — through Pandemic Unemployment Assistance. Millions of Americans have relied on this program since it was created by the first stimulus package in March 2020.

Depending on your state, PUA effectively expired on Dec. 26 or 27. At the 11th hour, lawmakers rallied to pass a second stimulus package, extending the program for 11 weeks. However, some states had to pause making PUA payments as they implemented the new rules.

The Penny Hoarder looked at the application process in all 50 states, plus Washington, D.C. when the program was first created. We compiled the information into an interactive map that shows you how to file in each state, then updated the information based on new provisions laid out in the second stimulus package.

This guide will explain everything you need to know about Pandemic Unemployment Assistance.

What Is Pandemic Unemployment Assistance?

  • How the Second Stimulus Package Changes PUA
  • A 50-State Interactive Map to Help You Apply for PUA
  • Documents Needed to File for PUA
  • This $300 boost is known as Federal Pandemic Unemployment Compensation (FPUC).

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    How the Second Stimulus Package Changes PUA

    Initially, the CARES Act authorized PUA payments for a maximum of 39 weeks. The second stimulus package extended PUA to 50 weeks total — or 11 extra weeks.

    PUA now sunsets on March 14, 2021, unless extended by Congress and the Biden administration. Those who haven’t exhausted their PUA benefits as of March 14, 2021, may continue receiving benefits until April 5, 2021.

    One new and notable limitation: PUA used to be available retroactively as far back as January 2020. The new stimulus law tightens the window for retroactive PUA payments to Dec. 1, 2020, through March 14, 2021.

    All PUA recipients should be expecting to file more paperwork, too. To curb fraud, the second stimulus deal forces current and new PUA recipients to submit documents related to employment or self-employment, according to the DOL.

    The exact documents needed will be determined by your state agency, which is required to notify you. The deadline to file those documents is March 27, 2021. Defer to your state’s deadline if different.

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    How to File for Pandemic Unemployment Assistance, State by State

    Our interactive map includes PUA filing instructions for all 50 states and Washington, D.C.

    Based on The Penny Hoarder’s analysis, 35 states and D.C. process PUA applicants using the same application for general unemployment. Only 15 states have separate PUA applications.

    Here’s how we broke it down on the map.

    General Unemployment

    To determine PUA eligibility, most states funnel applicants through the Unemployment Insurance system first. Those states require you to file two applications: state unemployment first, then PUA.

    In such states, you must get denied Unemployment Insurance (UI) before applying for PUA. Only a handful of states have one streamlined, general unemployment application that determines your eligibility for both PUA or regular benefits.

    For simplicity — and because in both instances your first step is filing a general unemployment claim — both methods are categorized as “general unemployment (UI)” on the map, in dark  blue.

    To see if you need to file two applications or one streamlined version, click your state on the map for specific filing instructions.

    PUA

    States marked in light blue have a PUA application separate from the regular Unemployment Insurance system. If you are a resident of one of these states, you can file for PUA directly so long as you meet the eligibility criteria.

    [Back to top ↑]

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    Documents Needed to File for PUA

    If you’re ready to file for Pandemic Unemployment Assistance, you’ll need to gather several types of identification- and income-related documents.

    Your state may require a few additional documents, but here’s an overview:

    • State-issued ID card.
    • Social Security Number or Alien Registration Number.
    • Mailing and residential address (if different).
    • Bank account information for direct deposit, otherwise your benefits will arrive via a prepaid debit card or check.
    • Tax return: Form 1040, Schedule C, F and/or SE.
    • As many income statements as possible: bank receipts with deposit information, 1099 forms, W-2s, paycheck stubs, income summaries and business ledgers.

    Income statements and related documents are crucial to proving how and when the coronavirus affected your earnings. For freelancers and independent contractors, it may be difficult to compile everything. Include as much as possible.

    [Back to top ↑]

    Pro Tip

    Depending on which gig app you use and how much you earned, you may not have received any 1099 income forms in the mail. In that case, log on to the app and download your income statements.

    Expect Delays

    Due to new rules outlined in the second stimulus package, state labor departments are once again scrambling. Hiccups should be expected while applying for, asking about or submitting documents related to PUA. Many gig workers and independent contractors warn of website crashes, unavailable customer service, confusing questionnaires and more.

    Perseverance is key.

    Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, entrepreneurship and unique ways to make money. Read his ​latest articles here, or say hi on Twitter @hardyjournalism.

    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

    Greystone Mansion: the Most Familiar House You’ve Never Visited

    There’s this mansion in Beverly Hills that a large part of the world’s population has already seen, even though they might not realize it.

    It’s a historic house that’s been used in endless Hollywood movies, TV series, and music videos. After you finish reading this article, you might just realize that you’ve seen this house before, too. Well, now you will also know its history, and when you see it again on your TV screen (and more than likely, you will), you’ll recognize it. 

    The place we’re referring to is known as Greystone Mansion or Doheny Mansion, and it’s located at 905 Loma Vista Drive in Beverly Hills. The Tudor Revival mansion was originally completed in 1928, after three years’ worth of construction and a total cost of over $4 million — an insane amount at the time. 

    aerial view of Greystone Mansion
    Greystone Mansion aerial view. Image credit: Luxury Architecture

    The inception of Doheny Mansion

    The 55-room, 46,000-square-foot mansion lies on a 16-acre site within Trousdale Estates. It was designed by architect Gordon Kaufmann and built by the P.J. Walker Company. The land was actually a wedding gift from oil tycoon Edward Doheny to his son, Edward ‘Ned’ Doheny, and his new wife, Lucy Smith. 

    Edward Doheny was an American oil tycoon who drilled the first oil well in Los Angeles in 1892. His story was depicted in the Academy Award-winning movie There Will Be Blood, starring Daniel Day-Lewis. Interestingly enough, the movie was actually filmed at Doheny Mansion. 

    Ned Doheny’s house became known as Greystone because it was built mainly of stone, and has a grey, stone-cold appearance. The house took roughly three years to build, and included stables, kennels, tennis courts, a gatehouse, a swimming pool and pavilion, a lake with babbling brooks and waterfalls, and even a fire station. 

    old photo of the Greystone Mansion driveway
    Greystone Mansion driveway. Image credit: Friends of Greystone Mansion

    A bittersweet move-in for the Dohenys

    Unfortunately, Ned Doheny didn’t get to enjoy his new home for too long. Just four months after moving into Greystone Mansion, Doheny was found dead in the house, alongside his secretary and friend, Hugh Plunkett. The case was ruled a murder-suicide, however, some claim that there’s more to that story.

    Doheny was killed by his own gun, and he was not buried with the rest of his family, but in a different cemetery, just a few yards away from where Plunkett was laid to rest. This has led some to believe that Doheny might have committed suicide, however, this is just a theory that certainly adds a bit of mystery to Greystone Mansion. 

    Greystone Mansion exterior
    Greystone Mansion exterior. Image credit: The City of Beverly Hills

    Following Ned Doheny’s death, his wife Lucy remarried and lived in the house with her children until 1955. Greystone Mansion was later sold to Paul Trousdale, the developer of Trousdale Estates, who then sold it to Henry Crown of Chicago. The businessman never actually lived in the house, but leased it out to film studios — and that’s how Greystone’s prolific movie career started. 

    Greystone Mansion, Hollywood’s favorite filming location

    Over the decades, Greystone Mansion has been featured in numerous Hollywood movies and TV series, including classics like The Big Lebowski, Eraserhead, The Witches of Eastwick, Death Becomes Her, Batman & Robin, The Bodyguard, Dark Shadows, The Prestige, The Social Network, and X-Men.

    The mansion has also made appearances in TV series, including Alias and The Young and the Restless, and it also played the part of Chilton Academy in Gilmore Girls

    Gilmore Girls scene filmed at Greystone Mansion
    Gilmore Girls scene filmed at Greystone Mansion, featuring the home’s famous staircase

    Last but not least, Greystone Mansion has been featured in commercials and even music videos. You might have already toured the house alongside Robert Downey Jr., in the music video for Elton John’s single I Want Love. Let us refresh your memory:

    In 1965, the City of Beverly Hills purchased Greystone Mansion, and a few years later, the property became a public city park. It was added to the National Register of Historic Places in 1976, as Doheny Estate/Greystone.

    The mansion continues to be used as a filming location and a destination for special events such as music festivals, fundraisers, and even weddings. Greystone Mansion houses the Beverly Hills Flower & Garden Festival, the yearly Catskills West drama camp, and The Annual Hollywood Ball, among others. 

    Greystone Mansion public gardens
    Greystone Mansion public gardens. Image credit: Love Beverly Hills

    A carefully preserved slice of L.A. history

    Greystone Mansion is a remarkable feat of architecture, and most of its original features have been carefully preserved over the years. The property features hand-carved oak banisters, balustrades and rafters, seven chimneys, each designed by a different artist, a movie theater room, a billiard room, a hidden bar, and a two-lane original Brunswick bowling alley. The alley was renovated so that it could be used by the filming crew for There Will Be Blood. 

    The bowling alley at Greystone Mansion
    The bowling alley at Greystone Mansion. Image credit: The City of Beverly Hills

    There’s a grand hall with distinctive, black-and-white marble floors and a very famous staircase. In fact, the staircase at Greystone Mansion has been featured in numerous productions, due to its majestic appearance. 

    The grand hall and staircase at Greystone Mansion
    The grand hall and staircase at Greystone Mansion. Image credit: Love Beverly Hills

    Greystone Mansion also included a servant’s quarters that took up two entire floors on the east wing and was built to accommodate a live-in staff of 15.

    Greystone Mansion plan. Image credit: The City of Beverly Hills

    There was also a living room with a balcony where musicians performed at special events, and a kitchen pantry with a secret wall safe that held the family’s silver and gold kitchenware.

    Greystone Mansion interior
    Greystone Mansion interior. Image credit: The City of Beverly Hills

    This stunning, stone-clad Beverly Hills mansion continues to attract filming crews, and we’re definitely going to be seeing it again on the big screen. At the same time, its beautiful, lush gardens and its rich history will continue to attract visitors from around the world.

    Here’s a further glimpse into the mansion’s history, to keep you occupied until you get a chance to visit in person:

    Featured image courtesy of The City of Beverly Hills

    More stories you might enjoy

    Here’s the Estate that Served as Inspiration for “The Great Gatsby’s” Opulent House in the 2013 Movie|
    The Beverly House, where Jackie O & JFK Honeymooned and where Coppola Shot “The Godfather”
    Richie Rich’s House is Actually the Biltmore Estate, America’s Largest Home
    Where to Find the Real Carrington Manor from ‘Dynasty’

    The post Greystone Mansion: the Most Familiar House You’ve Never Visited appeared first on Fancy Pants Homes.

    Source: fancypantshomes.com

    New PUA Rules: Don’t Miss These Unemployment Deadlines

    The second stimulus package is tightening the rules for millions of gig workers, independent contractors and self-employed workers receiving unemployment aid.

    On Dec. 27, the $900 billion stimulus package extended Pandemic Unemployment Assistance, a critical benefits program for folks who don’t typically qualify for regular unemployment aid. The deal lengthened PUA benefits for at least 11 weeks, but it also created new filing rules that affect current recipients and new applicants alike.

    Chief among the new rules: You will need to submit income documentation to your state’s unemployment agency if you are a gig worker or self-employed worker — or risk losing future benefits and having to return any benefits collected after Dec. 27.

    “I think they are a real pain,” said Michele Evermore, an unemployment policy analyst for the National Employment Law Project, regarding the new PUA filing rules. “Not just for recipients, but for state agencies to collect. Every burden we add to state agencies slows benefit processing for everyone.”

    The new requirements are intended to combat fraud. According to the Department of Labor, more than 7.4 million people are relying on PUA and are subject to the changes.

    New Pandemic Unemployment Assistance Rules and Deadlines

    The new deadlines established by the second stimulus package are different for current PUA recipients and new applicants.

    As a current PUA recipient, you have until March 27 to submit income-related documents to prove your PUA eligibility. If you apply for PUA before Jan. 31, you also have until March 27.

    If you apply for PUA Jan. 31 or later, you will have 21 days from the date of your application to submit income-related documents.

    Need to apply? Our 50-state Pandemic Unemployment Assistance filing guide includes an interactive map and the latest information from the second stimulus deal.

    The Department of Labor requires each state to notify you of your state-specific rules. Your state may have different deadlines. In that case, refer to your state’s instructions. The DOL is also leaving it to each state to determine exactly what documents are required to prove your eligibility.

    Here are some examples of documents your state may ask you to file:

    • Tax forms such as 1099s and W-2s.
    • Ledgers, recent pay stubs and earnings statements from gig apps.
    • Recent bank statements showing direct deposits.

    If you’re self-employed, you may be required to submit:

    • Federal or state income tax documents.
    • A business license.
    • A 1040 tax form along with a Schedule C, F, SE or K.
    • Additional records that prove you’re self employed, such as utility bills, rental agreements or checks.

    If you’re qualifying for PUA because you were about to start a job but the offer was rescinded due to COVID-19 related reasons, you may be asked to submit an offer letter, details about the employer and other information related to the job to verify your claim.

    Another new rule is that you will have to self-certify that you meet one or more of the following PUA eligibility requirements on a weekly basis:

    • You have been diagnosed with COVID-19 or have symptoms and are seeking diagnosis.
    • A member of your household has COVID-19.
    • You are taking care of someone with COVID-19.
    • You are caring for a child or other household member who can’t attend school or work because it is closed due to the pandemic.
    • You are quarantined by order of a doctor or health official.
    • You were scheduled to start employment and don’t have a job or can’t reach your workplace as a result of the pandemic.
    • You have become the breadwinner for a household because the head of household died due to COVID-19.
    • You had to quit your job as a direct result of COVID-19.
    • Your workplace is closed as a direct result of COVID-19.

    Self-certification means that you swear the reason(s) you are on PUA is or are true at the risk of perjury. Previously, PUA applicants had to self-certify only once at the time of their initial application.

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    Evermore says that since current PUA recipients weren’t asked to submit all this information when they were first approved, they might no longer have access to the requested documents.

    “People who were told they don’t need documentation may have lost it, and this will create panic resulting in more stress on people who have already had an unimaginably bad year,” she said.

    The good news, Evermore says, is that states have leniency to waive some of these requirements if you can demonstrate “good cause” for not being able to submit the requested documents. What’s considered “good cause” is also determined on a state-by-state basis.

    “People who got approved for benefits in the past won’t necessarily get cut off from benefits simply because they are unable to produce the requested documentation,” Evermore said. “Just follow all of the agency’s instructions carefully.”

    Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, remote work and other unique ways to make money. Read his ​latest articles here, or say hi on Twitter @hardyjournalism.

    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

    Who Can and Cannot Witness a Will?

    A will is notarized

    A will is an important part of your financial plan. When you create a will and testament, you’re creating a legal document that determines how your assets will be distributed once you pass away. You can also use a will to name legal guardians for minor children. When making a will and testament, it’s important to follow the rules in your state to ensure the will is valid. One of those rules centers on the requirements for witnesses. For more guidance on the intricacies of wills and estate planning, consider enlisting the services of an expert financial advisor.

    Why Wills Need to Be Witnessed

    A will is a legal document but in order for it to be binding, there are certain requirements that need to be met. For instance, although state laws regarding wills vary, states generally require you to be of legal adult age to make a will. You must also have testamentary capacity, meaning you:

    • Must understand the extent and value of the property you’re including in the will
    • Are aware that you’re making a will to decide who will inherit your assets
    • Aren’t acting under duress in making the will

    Having someone witness your will matters in case questions are raised over its validity later or there is a will contest. For example, if one of your heirs challenges the terms of your will a witness may be called upon in court to attest that they watched you sign the will and that you appeared to be of sound mind when you did so.

    In other words, witnesses add another layer of validity to a will. If all the people who witnessed the signing of a will are in agreement about your intent and mental state when you made it, then it becomes harder for someone else to dispute its legality.

    Who Can Witness a Will?

    When drafting a will, it’s important to understand several requirements, including who can serve as a witness. Generally, anyone can witness a will as long as they meet two requirements:

    • They’re of legal adult age (i.e. 18 or 19 in certain states)
    • They don’t have a direct interest in the will

    The kinds of people who could witness a will for you include:

    • Friends who are not set to receive anything from your estate
    • Neighbors
    • Coworkers
    • Relatives who are not included in your will, such as cousins, aunts, uncles, etc.
    • Your doctor

    If you’ve hired an attorney to help you draft your will, they could also act as a witness as long as they’re not named as a beneficiary. An attorney who’s also acting as the executor of the will, meaning the person who oversees the process of distributing your assets and paying off any outstanding debts owed by your estate, can witness a will.

    Who Cannot Witness a Will?

    Two minors looking out a windowStates generally prohibit you from choosing people who stand to benefit from your will as witnesses. So for example, if you’re drafting a will that leaves assets to your spouse, children, siblings or parents, none of them would be able to witness the will’s signing since they all have an interest in the will’s terms. Will-making rules can also exclude relatives or spouses of any of your beneficiaries. For instance, say you plan to leave money in your will to your sister and her husband with the sister being the executor. Your sister can’t be a witness to the will since she’s a direct beneficiary. And since her husband has an indirect interest in the terms of the will through her, he wouldn’t qualify as a witness either.

    But married couples can witness a will together, as long as they don’t have an interest in it. So, you could ask the couple that lives next door to you or a couple you know at work to act as witnesses to your will.

    You may also run into challenges if you’re asking someone who has a mental impairment or a visual impairment to witness your will. State will laws generally require that the persons witnessing a will be able to see the document clearly and have the mental capacity to understand what their responsibilities are as a witness.

    Note that the witnesses don’t need to read the entire will document to sign it. But they do need to be able to verify that the document exists, that you’ve signed it in their presence and that they’ve signed it in front of you.

    How to Choose Witnesses for a Will

    If you’re in the process of drafting a will, it’s important to give some thought to who you’ll ask to witness it. It may help to make two lists: one of the potential candidates who can witness a will and another of the people who cannot act as witnesses because they have an interest in the will.

    You should have at least two people who are willing to witness your will signing. This is the minimum number of witnesses required by state will-making laws. Generally, the people you choose should be:

    • Responsible and trustworthy
    • Age 18 or older
    • Younger than you (to avoid challenges presented if a witness passes away)
    • Free of any interest in the will, either directly or indirectly
    • Willing to testify to the will’s validity if it’s ever challenged

    When it’s time to sign the will, you’ll need to bring both of your witnesses together at the same time. You’ll need to sign, initial and date the will in ink, then have your witnesses do the same. You may also choose to attach a self-proving affidavit or have the will notarized in front of the witnesses.

    A self-proving affidavit is a statement that attests to the validity of the will. If you include this statement, then you and your witnesses must sign and date it as well. Once the will is signed and deemed valid, store it in a secure place, such as a safe deposit box. You may also want to make a copy for your attorney to keep in case the original will is damaged or destroyed.

    The Bottom Line

    A last will and testamentMaking a will can be a fairly simple task if you don’t have a complicated estate; it can even be done online in some situations. If you have significant assets to distribute to your beneficiaries or you need to make arrangements for the care of minor children, talking with an estate planning attorney can help you shape your will accordingly. Choosing witnesses to your will is the final piece of the puzzle in ensuring that it’s signed and legally valid.

    Tips for Estate Planning

    • Consider talking to a financial advisor about will-making, trusts and how to create a financial legacy for your loved ones. If you don’t have a financial advisor, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool can help you connect with professional advisors in your local area in just a few minutes. If you’re ready, get started now.
    • A will is just one document you can include in your estate plan. You may also opt to establish a living trust to manage assets on behalf of your beneficiaries, set up a durable power of attorney and create an advance healthcare directive. A trust can help you avoid probate while potentially minimizing estate taxes.

    Photo credit: ©iStock.com/djedzura, ©iStock.com/SanyaSM, ©iStock.com/Spanic

    The post Who Can and Cannot Witness a Will? appeared first on SmartAsset Blog.

    Source: smartasset.com

    These Free TV Apps Will Let You Cut Cable but Keep Content

    As cable subscription prices rise higher and higher and customer satisfaction ratings dive lower and lower, cutting the cable has never been more popular.

    Sure, there are the usual big names in streaming services available for a monthly fee, but it’s possible to kick subscription fees entirely.

    Luckily, there are more options than ever for replacing your traditional cable setup. Many free streaming services have stepped up to offer access to content overlooked by subscription-based services.

    And you aren’t confined to squinting at your phone’s screen or gathering the family around the old iPad to watch your favorite TV series and movies — you can download apps to your Smart TV or even your Xbox or PlayStation consoles.

    Of course, there are some rather shady options out there that stream pirated content. But we’ve rounded up free, legal streaming apps that provide no-strings-attached cable-cutting solutions.

    12 Free TV Apps That Will Help You Cut Cable

    With so many free streaming options out there, it’s easier than ever to cut the cord and save big. Whether you’re looking to keep up with the news, find a good movie for date night or entertain your kids with educational content, a streaming service exists to ensure you can do so without paying a dime.

    Try these free TV apps out and see which works best for you.

    1. Crackle

    One of the go-to names not just in free streaming but in streaming video in general is Crackle. The cost-free service has a variety of content, ranging from classic TV shows like “Bewitched” and “Barney Miller,” as well as the newer “Snatch” series. It also has hundreds of films from major studios.

    For a free streaming service, Crackle’s library is truly impressive. Crackle even has a handful of original series to its name. Best of all, Crackle works on nearly all mobile devices, streaming boxes and smart TVs.

    2. Tubi TV

    A division of FOX Entertainment, Tubi TV has deals with major studios like Paramount Pictures, Metro-Goldwyn-Mayer (MGM) and Lionsgate. It also features lots of foreign and independent productions.

    Tubi TV’s library is updated regularly, and the service claims to add new content every week. The Tubi TV app works on more than 25 devices, including Android and iOS, Roku, Apple TV, Xbox, Samsung Smart TVs and Amazon Fire TV.

    The library is solid and has started offering popular Fox TV series like “The Masked Singer” and “Gordon Ramsay’s 24 Hours to Hell and Back.”

    Since the service is ad-supported, you can expect to watch a couple minutes of ads every 10 minutes or so. The experience is pretty similar to watching normal television.

    3. Pluto TV

    Pluto TV offers TV channels of linear content much like a cable package

    There are dozens of classic TV, movie and sports channels — and even some highly curated streams of niche content.

    If you’re looking for breaking news, you can choose from an assortment of major network news channels that are live streaming.

    The kids (or kids at heart) can check out Nickelodeon classics like “The Fairly Odd Parents” and “Dora the Explorer.”

    Pro Tip

    Got a library card? You have access to even more entertainment options (besides the obvious, books). Check out these library apps for free access to movies, TV shows and more.

    Or if you just want to veg out, switch over to their Binge menu for a seemingly endless stream of TV series, like “The Hills” and “Mystery Science Theater 3000.”

    Pluto TV boasts a large list of supported devices including iOS and Android devices, Amazon Fire TV, Roku, Apple TVand Chromecast devices and Android TV.

    Like Tubi TV, Pluto TV has advertisements similar to the ad load of normal TV.

    4. NewsON

    Streaming video isn’t always just about entertainment. The NewsON app provides hundreds of local and national news streams.

    Both live TV and on-demand news broadcasts can be streamed from over 275 local news affiliates in 160 markets. The broadcasts are available for up to 48 hours after they air, so even if you don’t catch the news as it happens, you can catch up later.

    Users can then select which news segments they want to watch from categories like sports, weather or entertainment. NewsON is compatible with iOS and Android phones and tablets, as well as Roku and Amazon Fire TV.

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    5. Funny Or Die

    The go-to streaming app for comedy programming is Funny or Die. Founded in 2007 by contemporary comedy giants Will Ferrell and Adam McKay, it has since grown to be a full-blown production house featuring original content from big names in show business.

    Pro Tip

    In 2018, the Funny Or Die began publishing on Vox Media’s Chorus and now uses the YouTube Player.

    Content on the app must be streamed and cannot be downloaded.

    6. PBS Kids

    Kids need free streaming content, too. PBS has a PBS Kids Video app that provides hundreds of hours of educational and enriching content for the youngest members of the family. The app has a colorful, child-friendly interface, which makes it easy for kids to take control themselves.

    You can even tap the “Live TV” button to watch what’s currently airing on your local PBS station.

    Pro Tip

    Almost all of the networks and cable TV channels have their own free apps for you to download — although many charge you to actually watch current content.

    Videos from many of PBS’s most popular series are available for streaming including “Curious George,” “Wild Kratts” and “Sesame Street.” The PBS Kids app is supported for Android, Windows and iOS phones and tablets.

    7. Xumo

    Whether you want it now or later, Xumo offers live TV and on-demand options.

    Like Pluto, you can choose from an assortment of major network news channels that are live streaming.

    But it also includes more than 160 free channels, including themed ones in case you’re in the mood for action movies or comedies — you can watch the Funny Or Die channel here, too.

    Xumo is available on most smart TVs and Roku and for download on iOS and Android devices.

    Pro Tip

    Many of the free TV apps offer “premium” channels — if you see that word, expect to pay for those services.

    8. Crunchyroll

    Anime and manga fans are likely already familiar with Crunchyroll. It specializes in mostly Japanese content, but it also features films and series from all over the world. Crunchyroll boasts a library of thousands of anime films and series, many of which are hard to find on other streaming services.

    There is a paid premium feature, but the free Crunchyroll service has thousands of hours of popular series like the “Dragon Ball” franchise, “Attack on Titan,” “Naruto” and “One Piece.”

    The Crunchyroll app is supported by Apple, Android and Windows mobile devices, as well as by gaming consoles, Chromecast, Apple TV and Roku.

    Crunchyroll is a great app for anyone with an interest in anime. Of course, when it comes to anime content, you have to be watchful with your younger children, as a lot of it is geared toward teens (and sometimes even adults).

    9. Twitch

    For anyone with even a passing interest in gaming and esports, Twitch is the go-to free streaming service.

    Twitch hosts user-created channels and streams focused on video games and other esports. It features a built-in chat feature, so users can chat with other streamers in real time.

    Pro Tip

    You’re there anyway — why not get paid to play video games? Here are four simple ways to start earning real cash for virtual play.

    While there are thousands of free streams, Twitch also features premium features for a monthly subscription. Twitch apps are compatible with PCs, iOS and Android devices, game consoles, Chromecast and Fire TV.

    While Twitch is popular with children, parents should beware: Twitch streams are somewhat unregulated and can sometimes contain adult language or content.

    10. IMDb TV

    Owned by Amazon, IMDb TV (formerly Freedive) features a host of full episodes of your favorite current and classic TV shows as well as an array of movies.

    The catalogue includes some binge-worthy sci-fi hits like “Lost” and “Fringe.”

    The free version of IMDbTV is ad-supported, so you’ll have to sit through a few commercial breaks.

    It is available in the United States on the IMDb app, the IMDb website, the Amazon Prime Video app and Amazon Fire TV devices.

    11. YouTube

    Yes, YouTube. YouTube apps are compatible with just about every device that has a screen, and the service features videos to choose from on nearly any topic imaginable.

    Most of those videos are not exactly premium content, but there are still plenty of full-length films, documentary series and curated channels that provide cost-free entertainment for the whole family.

    While there are ways to download YouTube content for offline viewing, proceed with caution: Many of these sites and apps are full of malware.

    12. Peacock

    NBCUniversal launched this streaming service, which includes over 7,500 hours of free content, in July 2020.

    Although Peacock offers paid premium options, the free version includes current and classic TV shows, movies, news, sports, kids’ shows, Spanish-language programs and even select episodes of Peacock originals.

    If you’re a fan of shows like “The Office,” “Law and Order: SVU,” or “Saturday Night Live,” you can watch them on this streaming service.

    Customers can stream Peacock on a variety of platforms, including LG Smart TVs, Vizio SmartCast TVs, Roku, Google and Apple devices and Playstation and Xbox consoles.

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    Chris Brantner is a contributor to The Penny Hoarder. Senior writer Nicole Dow contributed to this article.

    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

    How to Build a Photo Scanning and Digitizing Side Gig

    As simple as it sounds — and actually is — most people are overwhelmed by the thought of taking hundreds or even thousands of photos and organizing them into searchable, digital files.

    Then there are the videos filmed on various versions of clunky cameras over the decades.

    Perhaps the most daunting version of unorganized photographic memories are slides. Once the butt of so many jokes about boring dinner parties, now they are covered in dust with no hope of ever seeing the light of a projector again.

    Well, anyone armed with a $229 scanner and a computer can make searchable digital files of photos and slides. To turn videos into digital files, it takes the original camera they were filmed with or a VCR, an $87 adapter and a computer.

    Here’s how to make photo scanning and digitizing your new side hustle.

    Five years ago, professional photo curator Sabrina Hughes decided she could make a business out of helping people organize their photos, videos and slides. Her company, PhotoXO, has a compelling slogan: “Show your photos the love they deserve.”

    Her years as a photographer, plus a graduate degree in art history and experience as a curatorial assistant at the Museum of Fine Arts in St. Petersburg, Fla., combine to make her an astute photo archivist. But all of this expertise and experience is not required.

    “There’s a certain point when I’m not doing anything you can’t figure out on your own,” she said. “A college student or really anyone could do this to make extra money.”

    Hughes offers a self-paced online class called Disaster to Done for $297, which includes lifetime access to course materials. But she’s also sharing her tips with The Penny Hoarder.

    Get the Right Equipment

    • Scanner. There are hundreds of scanners out there, but she prefers the Epson v600, which sells for $229.
    • Video adapter. Hughes uses the Elgato Video Capture for digitizing VHS tapes. It can be bought online for $87.
    • Storage. “When I first started out, I was giving everything back on hard drives,” Hughes said. “I was trying to get away from DVDs, since most computers don’t even play those anymore.” She then offered flash drives filled with the photos. Though they are also becoming less common, this is still probably the best tool for beginners. Hughes now uploads everything to her website, which offers permanent storage.
    • Software. Hughes uses Adobe Lightroom ($119), which enables her to label photos so they can be searched and has photo editing functions. Software isn’t required to organize unlabeled photos into folders, however.
    A stack of old black and white photographs sits on a person's desk.

    Develop and Perfect Your Process

    The first step to starting your photo scanning business is setting aside a space in your home. It can be as small as a corner of your bedroom or a desktop if an actual office or spare room isn’t possible.

    Next, create a storage system for clients’ photos and video tapes while your work is in progress. Of course clear boxes that stack are great, but they come with a cost. Cardboard shipping boxes work just as well. Place white adhesive labels on the ends with the name of the client and the date the work started. You can place new labels over these when one project is done and the next client’s photos go into the boxes.

    To digitize photos and slides, scan each one with the scanner to upload it to your computer. Make files for certain years or topics such as “1970s beach trips” or “kids’ birthday parties.” Drag and drop the photos into the appropriate file.

    Passive Income Strategies

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