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Lowering Your Mortgage Interest Rate (After Purchasing a Home)

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Refinancing Your HomeSo, you’ve been living in your home for a few years since securing your home loan, and your credit score has increased! Now, it’s time to look into securing a better interest rate. First and foremost, it is important to understand how your credit initially impacts your mortgage rate.

Credit Score and Your Mortgage

Your credit score is a financial tool. It directly affects the ease at which you are able to secure financing. It also has a significant impact on your interest rate. It can be difficult to pinpoint what is and is not a good credit score for a low-interest rate. This is up to specific lenders, but it all comes down to the higher your credit score, the better the interest rate that you qualify for will be.

There are many calculators you can use to determine what a loan costs at different interest rates such as this one: Loan Comparison Calculator.

Mortgage Refinancing

A mortgage refinance is the process of taking out a new loan to pay off the previous mortgage loan that you took out on your house. Typically, if your credit score has improved, even by just a few points, you can qualify for a lower interest rate. This will help to save you a lot of money paid to interest over the many years of your mortgage length.

Simply put, if your credit score was low, or just lower than it is now when you bought the home, you are likely to have locked in a higher interest rate than you qualify for today. That is why many people will purchase a home with a lower credit score, make a series of on-time payments over the course of a year or two to establish the ability to pay the loan and boost their credit. This shows responsibility. They will then benefit from a refinance.

Current Interest Rates

It should be noted that it is also a good idea to take a look at the current market mortgage and refinance interest rates. Coupling an improved credit score with lower overall interest rates is a win-win. The overall goal is to lower that payment and doing so at the best time will save you cash in the long run.

You can always check the current mortgage interest rates HERE.

Mortgage Refinance Process

To refinance, take a look at where you would like to be and do your research to determine the feasibility of that number by taking into account your credit score and the current market analytics. Know what your exact credit score is. Look at what your equity in your home is in excess of what you owe the bank on your current mortgage. You can do this by checking your mortgage statements for your current balance. From here, you can work with a real estate agent to determine the current estimated value of your home.

It is important to note that after finding a lender that you would like to go with for your mortgage refinance, many lenders require an appraisal of your home. You will have a closing for this mortgage, similar to that of your first mortgage. It is not a terribly long process, but it certainly requires some assistance from the lender.

Mortgage Refinance Benefits

After all, is said and done, your mortgage refinance not only secures a better interest rate, but it helps to create more cash available to you each month after you pay your lowered monthly mortgage. You may have even been able to refinance into a lower term, allowing you to pay off the home faster. This was all made possible by boosting that credit score!

 

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Information You Need To Know About The $600 Stimulus

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As of this article’s publishing, millions of Americans have received their $600 stimulus check, the 2nd to be sent to Americans since the start of the COVID-19 pandemic.

So what is the $600 stimulus check? What is it for? Do you need to pay it back? These questions, and more, will be answered in this article.

If you have yet to receive your stimulus check, this article will tell you what you can do to make sure you get it.

Background of the December 2020 $600 Stimulus Check

In the latter days of December 2020, Congress reached a deal to provide a $900 billion COVID-19 stimulus package to individuals, businesses, and other organizations. This stimulus was part of a $1.4 trillion spending bill to outline how federal programs would be funded through September 30, 2021.

This deal was reached after Democrats fought for a $2,000 one-time stimulus payment, which was rejected by Senate Republicans.

This stimulus package includes a plan for COVID-19 vaccine distribution, unemployment aid, $525 billion in aid to small businesses, funding for schools, rent assistance, and improved broadband Internet access.

This also includes an extension to the eviction moratorium by an additional month. However, student loan forbearance is still scheduled to end at the end of January.

The $600 December 2020 stimulus check is an advance payment for the Recovery Rebate Credit, just like the first stimulus check. Learn more about the original COVID-19 stimulus check!

Who Qualifies For The $600 Stimulus Check?

Americans who earned less than $75,000 in 2019 will receive a $600 direct payment, plus $600 per dependent child in the household. Couples filing jointly who earned less than $150,000 per year will receive a $1,200 direct payment.

The benefit amount decreases by $5 for every additional $100 earned above $75,000 (or $150,000). Those who made $87,000 or more in 2019 (or couples filing jointly who made $174,000 or more) will not be eligible for the stimulus payment.

Recipients of the payment who meet the eligibility requirements will not need to pay it back.

The number of dependent children that a household can claim is not capped, so a family with 3 dependent children and 2 parents filing jointly will receive up to $3,000.

All American citizens that paid tax in 2019 are automatically eligible. If you did not pay tax in 2019 (or if you didn’t use the IRS non-filers tool for the 1st payment), you can claim the Recovery Rebate Credit when you file your 2020 return.

Resident aliens are eligible for the stimulus payment provided they meet the eligibility criteria. Also, mixed-status couples (couples where one party does not have a Social Security number) are also eligible for the stimulus payment.

I Did Not Receive My Stimulus Check: What Happened?

In early January, it was reported that millions of eligible recipients did not receive their stimulus check. The problem was found to be linked to those who have filed with TurboTax, Jackson Hewitt or H+R Block. These providers create temporary accounts for taxpayers so they can deduct their preparation fee from the client’s tax return. These temporary accounts may have received the payment.

To check if this happened to you, go to the IRS’s Get My Payment tool. If the payment has been issued but you don’t recognize the account number, then it’s likely one of those temporary accounts.

If you filed your taxes with TurboTax, H&R Block, or Jackson Hewitt, you have two options. The first is to get in contact with your tax preparer and see if you can recover the payment. The second is to file your 2020 tax return as soon as the tax package is released and claim your Recovery Rebate Credit.

As of January 12, 2021, most of the checks have either been mailed out or sent through direct deposit.

In Summary

  • The $600 stimulus check was issued as part of a $900 billion relief response to economic conditions created by the COVID-19 pandemic.
  • All Americans earning less than $75,000 per year are eligible for the full $600. Americans earning more than $75,000 but less than $87,000 per year are eligible for partial payment.
  • You will also receive an additional $600 per dependent child claimed on your 2019 tax return.
  • If you have not received your stimulus check, you may simply have to wait, contact your tax preparer, or claim the credit through the Recovery Rebate Credit on your tax return.

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Information You Need To Know About The $600 Stimulus

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Information You Need To Know About The $600 Stimulus

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What is the $600 stimulus check? What is it for? Do you need to pay it back? These questions, and more, will be answered in this article.

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Jason M. Kaplan, Esq.

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The Credit Pros

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Options for Student Loan Repayment in 2021

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Back in March, the US government announced that it would be suspending all payments on federal student loans. This moratorium on payments was extended until January 31, 2021.

Although we don’t rule out the possibility of this moratorium’s extension by the Biden administration, we wanted to teach you about your options for student loan repayment in 2021.

What Are My Options For Student Loan Repayment in 2021?

Income-based repayment

Income-based repayment is a great way to get started on paying down your student loans without making it impossible for you to afford basic living expenses. So what are income-based repayment programs, and how do they work?

With an income-driven repayment program, you only have to pay a small amount every month, less than your typical payment would be.The way they assign your payment amount is based on a percentage of your discretionary income. The US Federal Student Aid website defines discretionary income as “the difference between your annual income and 150% of the poverty guideline for your family size and state of residence”.

There are several different types of income-based repayment plans, and all of them will differ depending on your situation. To figure out which one is the best for you, you’ll want to apply for income-driven repayment by going here (directs you to the Federal Student Aid website).

Income-based repayment options may not be available for privately held student loans, such as loans issued by Sallie Mae.

For more information about income-driven repayment plans, go to the US Government Student Aid website.

Deferment and forbearance

After the moratorium ends, you may still be able to put your loans in forbearance. Forbearance is when you and the lender agree that you will stop payments on the loan for a set length of time (usually 3 months). Interest continues to accrue, but you don’t owe anything extra if your loan is in forbearance.

Deferment is a bit different, and usually you need to meet certain conditions to qualify for student loan deferment. Deferment is generally available to those who are current students, medical residents, or those who are working in professions such as teaching. In some situations, your interest may no longer accrue.

If you’re concerned about being able to make your payments in February, you may want to consider putting your loans in forbearance.

Refinancing or Consolidation

Many student borrowers find that their loan has an enormous interest rate, making it hard to afford the payments on them. Refinancing or consolidation can help you, providing low monthly payments with a fixed interest rate.

Refinancing and consolidation are similar, but they refer to different things. Refinancing is when you pay off one loan by taking a new one, often with lower payments and/or a lower interest rate. Consolidation takes multiple loans and bundles them together into one loan, often by using the new, large loan to pay off the smaller ones.

The US Government offers a Direct Consolidation Loan which you can apply for here. You can choose to consolidate your loans using a private lender instead. Depending on the interest rate you get and the payments you will have, you may decide to choose one over the other.

If you refinance or consolidate federal student loans using a private company, you may lose some of the benefits of taking out federal student loans such as subsidized interest rates and income-based repayment. We recommend saving refinancing for private student loans or federal loans with higher interest rates such as PLUS loans.

Learn more about paying for education in our guide to student loans!

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Options for Student Loan Repayment in 2021

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Options for Student Loan Repayment in 2021

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What are my options for student loan repayment in 2021? Read this blog as we wanted to teach you about your options for student loan repayment in 2021.

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Jason M. Kaplan, Esq.

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The Credit Pros

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Credit Score Hacks for 2021

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It’s almost time for New Year’s Resolutions, and one of the biggest ones that people have is to get their personal finances in order. One big aspect of one’s overall financial profile is their credit score. Having a good credit score means that you’ll have access to lower interest rate loans. It’s also important for qualifying for mortgages and other large loans.

If you want to increase your credit score in 2021, we’ve got just the thing for you. In this article we will be going over some things that you can start in January to help you get a better credit score in 2021.

Although these aren’t so much “hacks” as they are “strategies”, we still feel it’s important to share these ways for you to improve your credit score in 2021.

Hacks To Improve Your Credit Score in 2021

Snowball your credit card debt

Your credit card debt is one of the biggest things holding your credit score back. If you have credit card debt, it should be the first debt that you tackle, as it’s the most impactful to your credit score and could cost you many times more than the principal in interest.

One of the best ways to see early credit score “wins” regarding your credit card debt is to snowball your debt. We wrote an entire article on snowballing debt, which we recommend that you read.

In short, to snowball your debt is to focus all your debt repayment efforts on the smallest balances in order to pay them off quickly. This does two things at once: first, it lowers your monthly debt repayment obligation as you snowball your debt (even though you’ll likely be committing the same total amount per month to your debt). Second, it reduces your overall balance which improves your credit score as you pay your debt balances down.

This strategy for reducing debt is one of the best ways to boost your credit score quickly while also taking care of a nagging debt obligation.

Remember: if you’re paying off your credit card debt, you want to keep old accounts open and available to you! There’s no need to close an old credit account; instead, keep them open and have statements sent to your email every month.

Refinance your debt

If you have debt with high interest rates, there are ways that you can refinance it. Refinancing is when you take out a new loan to pay off an old one. It’s commonly done when you can get lower interest rates to refinance a loan. It’s also done when consolidating multiple loans, which is a good way to get a handle on debt payments.

Refinancing your debt won’t increase your credit score right away: in fact, it may lower it in the short term. However, there are refinancing strategies that can help you increase your credit score this year. If you’re able to make payments whereas before you were unable to afford them, you should see your credit score slowly rise.

There are many different ways to refinance your debt obligations, including your mortgage, your student loans, and other large sources of debt.

The most important thing to remember when refinancing is to consider the long term implications. Refinancing your student loans could save you thousands of dollars over the lifetime of the loan.

Get your annual credit report & dispute items

If you don’t know what’s on your credit report, you might be an unwitting victim of fraud or clerical errors made by lenders or credit reporting agencies.

In 2020, the federal government was giving out unlimited copies of your credit report to make sure that people were able to get access to their credit history during these difficult times. You can still get one free credit report per year from each of the three bureaus from https://annualcreditreport.com. Check your credit report and see what’s on it: you might be surprised.

If you ARE surprised about anything you find on your credit report, it might be time to make some phone calls. First, you’ll want to contact the lender in question to see what they have on file in your name. This alone could clear up any mistakes. Next, you’ll want to call the credit bureau that issued your report (Experian, Equifax, TransUnion). They’ll then take you through the dispute process, which can take several weeks to resolve.

We at The Credit Pros can help you with the dispute process. Learn more about how the dispute process works!

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Credit Score Hacks for 2021

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Credit Score Hacks for 2021

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It is almost time for New Year’s Resolutions and having a good credit score means that you’ll have access to lower interest rate loans. Click to read more.

Author

Jason M. Kaplan, Esq.

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The Credit Pros

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