How to Insure Jewelry and Expensive Valentine's Day Gifts

Whether you’re giving your sweetheart a gorgeous diamond ring for Valentine’s Day or you’re the one who gets to wear the bling, don’t forget about protecting it with insurance. I know looping in your insurance agent may not seem romantic, but it can prevent a lot of heartaches if that expensive piece of jewelry gets damaged, lost, or stolen.

How to insure your valuables

Today, you’ll learn how to keep your Valentine’s Day gift or any valuables safe.

1. Get insured before you buy it

Anytime you’re thinking about making a big purchase, such as expensive jewelry, watches, or electronics, make sure you have a plan to insure it. Think about how devastated you’d be if you bought diamond earrings for your sweetie, and they got stolen or lost. I’m sweating just thinking about it!

Anytime you’re thinking about making a big purchase, make sure you have a plan to insure it.

Before you buy something valuable, communicate with your existing home or renters insurance representative or company. Find out if you need additional coverage—it’s likely that you do! In just a moment, I’ll give you some recommendations if you don’t already have a home or renters policy.

Let your insurer know what you’re planning to buy and how much it costs. If you’re still negotiating on price or you’re buying a second-hand item with an unknown value, start with your best estimate.

2. Get a certified appraisal

If the value of your Valentine’s Day jewelry is over a certain amount, your insurer will ask you to submit an appraisal. It must come from a gemologist who uses a variety of tools and their expertise to identify and value gems. It includes photos of your item and an estimated value.

Your insurer needs an appraisal to know precisely what they’re insuring. The document also protects you in case you need to make a claim.

The retailer who sells you a new piece of jewelry should provide you with an appraisal. However, an insurer may want an independent appraisal to verify the value. If you purchase heirloom or estate jewelry, it may not come with an appraisal.  

You can find an appraiser by getting recommendations or doing some research online. The cost varies depending on how intricate the item is and how long the work may take.

For instance, an antique ring with many stones and old-fashioned gem cuts will take longer to analyze than a brand-new diamond solitaire. For a relatively simple piece, the appraisal may cost in the range of $150 to $250. But I’ve had heirloom pieces that cost nearly $500 to appraise.

While your great-grandmother’s wedding ring or a necklace from your valentine might be priceless to you, insurers will only pay you its appraised or actual value.

It could take a gemologist several weeks to complete your appraisal, and they need to have the item in their possession the entire time. So, don’t wait until the last minute to find out what’s required to get a Valentine’s Day gift insured.

Also, note that you can’t insure the sentimental value of any item. While your great-grandmother’s wedding ring or a necklace from your valentine might be priceless to you, insurers will only pay you its appraised or actual value.

3. Don’t assume you already have coverage

If you assume you have coverage for a lavish Valentine’s Day gift simply because you have homeowners insurance, that could be a big mistake. The amount of insurance on your home is different than the amount of coverage for your personal belongings.

Most standard home and renters policies include coverage for personal items like jewelry. However, specific categories of belongings come with coverage limits or caps. Jewelry, watches, and furs typically have a low insurance cap, such as $1,000 or $2,000. If you’re a big spender, that could be a fraction of the cost of your gift.

For example, if you buy an engagement ring worth $4,000, and your homeowners or renters policy only covers $1,000, you’d come up $3,000 short of replacing it. Plus, the cap applies to an entire claim, not individual items. If you had multiple pieces of jewelry stolen, you’d only receive up to the policy limit.

Jewelry, watches, and furs typically have a low insurance cap, such as $1,000 or $2,000. If you’re a big spender, that could be a fraction of the cost of your gift.

Other types of personal belongings that have insurance caps include silverware, computers, firearms, musical instruments, collectibles, and antiques. Keep reading to learn how to make sure your expensive items are adequately insured.

4. Get an insurance rider

If your existing homeowners or renters insurance doesn’t have a jewelry limit high enough to cover your posh purchase, one solution is to “schedule it.” You’ll also hear this called a rider, floater, or an endorsement to your policy. Scheduling an item means that you add more detail about it to your existing insurance policy.

One benefit of scheduling an item, such as jewelry, is that you’re covered for all types of losses. For instance, if you accidentally lose a wedding ring swimming in the Caribbean ocean on your honeymoon, you’re covered up to your limit. When your valuables are covered by a standard home or renters policy, without being scheduled, you typically only have coverage for specific events, such as loss from a fire or theft.

One benefit of scheduling an item, such as jewelry, is that you’re covered for all types of losses.

Also, don’t forget that you must pay a deductible when you make a claim. So, if you have a $500 deductible and a jewelry limit of $1,000, the most you’d receive from a claim is $500.

But a scheduled item doesn’t require a deductible. That means you wouldn’t have to pay any amount out-of-pocket to replace a Valentine’s Day gift that gets lost or disappears mysteriously.  

Having a rider increases your premium, but it’s usually worth it. The cost might be $5 to $15 per $1,000 of insured value. So, an engagement ring that’s worth $6,000 could mean paying an additional $30 to $90 per year on your homeowners or renters insurance premium.

5. Get a stand-alone policy

Another option for insuring a precious gift is to get a stand-alone policy. This policy is separate insurance just for the item, not an add-on to an existing home or renters policy. Most insurers offer a valuable articles policy for specific items like jewelry, watches, furs, collectibles, and antiques.

Whether you own or rent your home, you’ll pay less for an insurance rider than for valuable articles insurance. The only exception would be if you have many expensive items to insure—so, shop and compare both options if you have a collection of valuables.

Most homeowners have insurance, but many renters avoid getting a renters policy because they mistakenly overestimate the cost. It’s surprisingly inexpensive; the average price is $185 per year. So, if you rent, get renters insurance first and then schedule an expensive item.

All the coverages I’ve mentioned protect your valuables at home or when they’re away from your home. Off-premise coverage kicks in when an item is stolen from your car or damaged while you’re traveling.

Additionally, home and renters insurance gives you liability coverage worldwide. It also pays living expenses, such as a hotel and meals, if you can't live in your home while repairs are made after a covered event, such as a natural disaster.

The bottom line is that if you rent and don’t have insurance, you’re putting your finances at risk. Take a few minutes to shop and compare quotes at sites such as Bankrate.com or Policygenius.com. But no matter your situation, you can always opt to insure a Valentine’s Day gift with a stand-alone policy.

6. Gift recipients are responsible for insurance

Many people are confused about who needs to buy insurance for a gift, the giver or the recipient? Well, it depends on who has the item. If you buy a gift to give, you need to have it insured while it’s in your possession.

If you have a receipt and appraisal, pass them along so the new owner has what they need to get proper insurance.

Once you give a gift away, the lucky recipient owns it and must insure it. If you have a receipt and appraisal, pass them along so the new owner has what they need to get proper insurance.

If you’re married or live together and have the same home or renters insurance policy, you don’t have to take any extra steps. But if you and your valentine have different households, the person who wears and enjoys the gift must make sure that it’s insured.

7. Keep an up-to-date home inventory

If you have home or renters insurance, but don't have a list of your personal belongings, it could be challenging to claim a loss. Imagine that your home or apartment got destroyed in a fire. Would you remember every item?

If you don’t have a home inventory, create one and add your Valentine’s Day gift to the list. At the least, have pictures or video of your belongings that you store in the cloud. While losing precious items can be devastating, the more documentation you have, the easier it will be to provide proof that you owned them and make an insurance claim.

If you got a cherished gift for Valentine’s Day or got engaged, congrats! Now make it a priority to protect it.

Source: quickanddirtytips.com

The Property Brothers’ Best Small-Space Renovations for 2021

Property BrothersHGTV

Drew and Jonathan Scott of “Property Brothers” know that nearly all of us could use more space (particularly as the pandemic drags on and on). Now that the new year’s first episode of “Celebrity IOU” has arrived, they’ve broken out their top tricks for opening up a small house without breaking the bank.

In the Season 2 episode, “Rainn Wilson’s Surprise,” the Scotts meet the actor Rainn Wilson, of “The Office,” who wants to give his beloved nanny, Leslie, a living-room makeover.

Leslie’s Los Angeles home could definitely use it, given that the space is seriously dated and undeniably cramped. With her kids (and nieces and nephews) often running around the house, Wilson knows that this living space needs to be more kid-friendly, too.

Read on to find out how Drew and Jonathan open up this small living space, which might inspire some upgrades around your own home, too.

Remove kitchen cabinets to open up more space

Rainn Wilson
Rainn Wilson shows Drew and Jonathan Scott how much work needs to be done in the kitchen.

HGTV

When Wilson brings Drew and Jonathan to Leslie’s home, one of the first things the brothers notice is the kitchen’s cabinets.

The row of cabinets blocks sightlines to the living space and makes the kitchen feel separated from the rest of the house. Jonathan explains that the style is typical of the era the home was built in, but says it’s not a great feature for those who are making the meals.

“Whoever’s in there, all of a sudden, it feels like a cave,” Jonathan says.

kitchen
This kitchen was so closed off that it wasn’t functional for a house with kids.

HGTV

So, the brothers remove some cabinets and, to make up for the missing cabinet space, add smarter storage to the rest of the kitchen (like adding lots of drawers to the island).

In the end, the kitchen is beautiful, functional, and flows with the rest of the living space. Leslie will never miss those cabinets!

kitchen
With the floating shelves out of the way, this kitchen is much more open.

HGTV

Create more storage with built-in benches and hutches

storage
The brothers know that a house with kids needs plenty of storage.

HGTV

Wilson knows that Leslie and her children could always use more storage.

“One thing is, there’s a lot of kids bouncin’ around in here,” Wilson tells the Scott brothers when they first tour the house.

Luckily, the brothers have a solution to help this family organize its stuff: stylish built-ins.

hutch
This hutch created convenient storage, but it was too small.

HGTV

Drew and Jonathan add some built-in benches under the living room window, providing plenty of storage space under the seats. Then, they expand on the built-in dining room hutch, making it twice as big, for holding twice as much.

These two built-in storage solutions are perfect, because they don’t take up space, as a bulky piece of furniture would, and they leave the whole room open as a kids’ play space. It’s a great workaround for this family’s storage issue.

hutch
This larger hutch is much more convenient.

HGTV

Brighten beams to make a room seem taller

ceiling
These beams were beautiful, but the brothers felt that they were too dark.

HGTV

Jonathan and Drew like the wood beams in Leslie’s living room, but they worry that the dark color makes the room feel more closed in.

“From the moment we walked in, we noticed the dark beams and that high, recessed, rough-ridged ceiling. It was sucking the light out of the space,” Drew says.

But the color isn’t the only problem. The brothers notice that this room doesn’t have any ceiling lights, which makes this room even darker.

ceiling
Painted white, the beams brighten the space.

HGTV

So Jonathan and Drew paint the beams white and add white shiplap-style ceiling panels.

“Not only do they add brightness,” Jonathan says of the panels, “but they’re also going to be dropped down to accommodate new recessed lighting.”

In the end, not only does the new color make the space feel brighter, but the added lights literally light up the room.

Large doors make a small house feel bigger

Rainn Wilson
Wilson discusses new doors with Drew and Jonathan.

HGTV

While Leslie’s living room is laid out well, the space is relatively small. Although the brothers can’t add to the square footage of the house, Jonathan has the idea to expand the living space by improving the flow into the back patio.

“We could do something really cool with these sliders,” Jonathan says of the existing doors. “We could swap them out for, like, collapsible glass panels. They could flow in and out. It would be great.”

door
All that natural light really brightens up the living room.

HGTV

The brothers open up the walls and install large, collapsible window doors from two sides, making both the family room and dining space open onto the backyard.

To complete the effect, they update the patio by adding new flooring and new furniture. In the end, the living space feels twice as big!

patio
Two doors open up to the patio, making the living room seem far more open.

HGTV

Don’t go overboard with too much white

fireplace
This fireplace needed a new look.

HGTV

While the Scotts know that it’s important to brighten up a space, they also know that with the walls, ceiling, and kitchen all in white, the space could use some contrast. So they redo the white fireplace with a unique brown finish.

“This is just made out of marble powder, lime, and sand,” Jonathan says, as he applies a clay mixture to the fireplace face.

Some techniques, he says, come from Italy, and from different regions of Europe, but this one, from Morocco, is called tadelakt.

fireplace
With unique materials, the brothers turn this old fireplace into a modern feature.

HGTV

The light-brown color looks perfect in the space. The finish adds dimension without darkening the area, and the modern fireplace shape is much better suited to children, because there’s no mantel to climb on or base to trip over.

Best of all, this modern fireplace looks clean and elegant.

“I love that it looks like a five-star hotel,” Drew says of the new finish. “That’s the kind of feature you want to have.”

When Wilson finally brings Leslie and her family back to the house, she’s amazed by how spacious and elegant her living room looks. Let this serve as a reminder that just a few small changes can make even small spaces feel huge.

The post The Property Brothers’ Best Small-Space Renovations for 2021 appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

Why Refinance Rates Are Higher Than Purchase Loan Rates

Mortgage interest rates dropped dramatically over the summer, to the point where home loans have never been cheaper in most of our adult lifetimes. With rates at historic lows, you might’ve considered taking advantage of them, either by purchasing a new home or refinancing your current mortgage.

Recent figures from Freddie Mac show that mortgage refinances surged in the first quarter of 2020, with nearly $400 billion first home loans refinanced. However, as it turns out, refinancing your mortgage might actually be more expensive than purchasing a new home. 

This surprised us, too — why would there be a difference at all? 

We investigated how refinancing rates and new purchase home loan rates are set, and found several reasons for this rate disparity. On top of the rate difference, mortgage refinancing is even more difficult to qualify for, given the current economy.

Before rushing to refinance your home, read on to gather the information you need to make the right financial decision for your situation.

Pandemic Effects on Home Lending

Just as mortgage rates have stumbled, banks and lenders have tightened the screws on borrowers due to COVID-19, requiring higher credit scores and down payment amounts. Chase, for example, raised its minimum FICO score requirements for home purchases and refinances to 700 with a down payment requirement of at least 20%. 

Low rates have also driven a massive move to mortgage refinances. According to the same Freddie Mac report, 42% of homeowners who refinanced did so at a higher loan amount so they could “cash out.”

Unfortunately, homeowners who want to refinance might face the same stringent loan requirements as those who are taking out a purchase loan. Mortgage refinance rates are also generally higher than home purchase rates for a handful of reasons, all of which can make refinancing considerably less appealing. 

How Refinance Rates Are Priced

Although some lenders might not make it obvious that their refinance rates are higher, others make the higher prices for a home refinance clear. When you head to the mortgage section on the Wells Fargo website, for example, it lists rates for home purchases and refinances separately, with a .625 difference in rates for a thirty-year home loan. 

There are a few reasons why big banks might charge higher rates to refinance, including:

Added Refinance Fees

In August of 2020, Fannie Mae and Freddie Mac announced it was tacking on a .5% fee on refinance mortgages starting on September 1. This fee will be assessed on cash-out refinances and no cash-out refinances. According to Freddie Mac, the new fee was introduced “as a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty.”

By making refinancing more costly, lenders can taper the number of refinance loans they have to process, giving them more time to focus on purchase loans and other business.

Lenders Restraining New Application Volume

Demand for mortgage refinancing has been so high that some lenders are unable to handle all requests. Reluctant to add more employees to handle a surge that won’t last forever, many lenders are simply limiting the number of refinance applications they process, or setting additional terms that limit the number of loans that might qualify.

Also note that some lenders are prioritizing new purchase loans over mortgage refinance applications since new home buyers have deadlines to meet. With the housing market also on an upswing in many parts of the country, many major banks and lenders simply can’t keep up.

Rate Locks Cost Money

Generally speaking, it costs lenders more to lock the rate for refinance loans when compared to purchase loans. This is leaving lenders disinterested in allocating resources on the recent surge in mortgage refinance applications.

This is especially true since many refinancers might lock in a rate with one provider but switch lenders and lock in a rate again if interest rates go down. Lenders exist to turn a profit, after all, and it makes sense they would spend their time on loans that provide the greatest return.

Tighter Requirements Due to COVID-19

According to the Brookings Institute, Fannie Mae and Freddie Mac have been asking lenders to make sure any disruption to a borrower’s employment or income due to COVID-19 won’t impact their ability to repay their loan. 

Many lenders are also increasing the minimum credit score borrowers must have while making other requirements harder to meet. As an example, U.S. Bank increased its minimum credit score requirement to 680 for mortgage customers, and it also implemented a maximum debt-to-income ratio of 50 percent.

This combination of factors can make it difficult to save as much money with a refinance, or to even find a lender that’s willing to process your application. With this in mind, run the math and to see if refinancing is right for your situation before contacting a mortgage lender.

How Mortgage Purchase Rates Are Priced

Mortgage purchase rates are priced using a similar method as refinance rates. When you apply for a home mortgage, the lender looks at factors like your credit score, your income, your down payment and your other debt to determine your eligibility.

The overall economy also plays a giant role in mortgage rates for home loans, including purchase loans and refinance loans. Mortgage rates tend to go up during periods of speedy economic growth, and they tend to drop during periods of slower economic growth. Meanwhile, inflation can also play a role. Low levels of inflation contribute to lower interest rates on mortgage loans and other financial products.

Mortgage lenders can also price their loans based on the amount of business they have coming in, and whether they have the capacity to process more loans. They might lower rates to drum up business or raise rates when they’re at or nearing capacity. This is part of the reason rates can vary among lenders, and why it always makes sense to shop around for a home loan.

Many people believe that the Federal Reserve sets mortgage rates, but this is not exactly true. The Federal Reserve sets the federal funds rate, which lenders use to ensure they meet mandated cash reserve requirements. When the Fed raises this rate, banks have to pay more to borrow from one another, and these costs are often passed on to consumers. Likewise, costs can go down when the Fed lowers the federal funds rate, which can mean lower costs and interest rates for borrowers.

The Bottom Line

Refinancing your existing mortgage can absolutely make sense in terms of interest savings, but don’t rule out buying a new home instead. Buying a new home could help you save money on interest and get the space and the features you really want. 

Remember, there are steps you can take to become a more attractive borrower whether you choose to refinance or invest in a new place. You can’t control the economy or the Federal Reserve, but you have control over your personal finances.

Improving your credit score right away, and paying down debt to lower your debt-to-income ratio are just a couple of strategies to start. And if you’re planning on buying a new home, make sure you save a hefty down payment amount. These steps help you improve your chances at getting the best rates and terms whether you choose to move or stick with the home you have. 

The post Why Refinance Rates Are Higher Than Purchase Loan Rates appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

5 Renovations That Don’t Increase Your Resale Value

Couple renovating their home

The first major home renovation my husband and I ever undertook was insulating the walls of a 1921 Craftsman bungalow we shared in Columbus, Ohio. This project made the house a great deal more comfortable in the winter and the summer, since the existing insulation was the least expensive option available in the 1920s — making it completely inadequate for maintaining heat in the winter or coolness in the summer.

Unfortunately, despite the undeniable improvement to our comfort, we found that our new insulation did nothing for our resale value. Even though we had put nearly $5,000 worth of work and materials into this renovation, we didn’t see that money and effort reflected in our sale price when we had to move several years later.

Not all renovations are going to increase your resale value. That doesn’t necessarily mean you should forgo working on your home if you won’t see the value when it’s time to sell. For instance, I would definitely insulate that house again, even knowing that the money is only going to improve my comfort. 

But there are some home renovation projects that you just can’t expect to recoup your investment on. Knowing that, you should consider how long you intend to live in your house and whether you’re renovating just to increase your home’s value before jumping into any of these home improvement projects.

1. Invisible improvements

Insulating our bungalow was the kind of invisible improvement that had to be done, but didn’t appear to change the house. Unlike "sexier" improvements like updating a kitchen or bath, or even putting on a new roof, invisible improvements don’t change the look of the house. These are things like re-grading the yard to keep water from getting into the basement, updating the HVAC system, tuck-pointing bricks and chimneys, and replacing gutters.

While these improvements often have to be done to protect your house, the downside is that you may not recoup the cost of these improvements when it comes time to sell. It can be helpful to think of these renovation expenses as a way of protecting your home’s current value, rather than as a way to increase your future resale value.

2. Swimming pool

While homeowners in Arizona, Florida, Hawaii, and Southern California may find that having a swimming pool is a big selling point for their homes, this isn’t going to be the case nationwide. According to HomeAdvisor, the average cost to install a pool is over $27,000. That doesn’t include the annual maintenance costs, ranging between $500 and $4,000. It’s these maintenance costs, plus the work that homeowners will have to either do themselves or contract out in order to keep their pool sparkling clean that will turn off many potential buyers. Add in the additional insurance requirements that homeowners with pools will need to purchase, and it should be clear why many prospective buyers would rather not invest in a home that comes with a pool.

This is why you should only commit to the cost of installing a pool if you truly want to use it yourself and expect to stay in your home for at least five years. Otherwise, it might make more sense to invest in a membership to your local pool. 

3. Bathroom and kitchen upgrades

Remodeling your bathroom and/or kitchen is an excellent way to increase your home’s value, right? Yes and no. While replacing dingy tiling and updating old appliances will definitely help your home shine for potential buyers, there’s such a thing as going overboard with your bathroom or kitchen upgrades.

Specifically, if you add granite countertops, custom-made cabinets, stainless steel appliances, and ceramic tiles to your kitchen and bathroom, but the rest of the home is still an ordinary suburban home, potential buyers will see the house as a work-in-progress, rather than a home that feels move-in ready. Over-improving the bath and kitchen could make buyers think that it’s not worth the effort to try to get the rest of the house to match. (See also: 9 Home Improvements You Should Always Negotiate)

4. Built-in high-end electronics

We may all dream of living in a George Jetson house — where every possible electronic need you have is already built in — but committing to this kind of renovation may hurt your resale value. 

There are a couple of reasons for this. First, while your personal movie theater (with remote-controlled state-of-the-art projector) may be exactly what you want from your home, a potential buyer may just see a room that will need to be torn out and remodeled as soon as they move in. Plus, technology advances at a breakneck speed, so your cutting-edge electronics will soon look as dated as shag carpeting and harvest gold refrigerators.

If you need or want built-in high-end electronics in your home, make sure you’re installing them for your own pleasure and comfort, because it’s unlikely a buyer will appreciate them too.

5. Extravagant landscaping

Making improvements to your landscaping requires a gentle touch. On the one hand, landscaping is often touted as an important aspect of curb appeal, and making sure your yard and garden look attractive and welcoming is certainly a great way to draw in potential buyers. 

On the other hand, an elaborate landscaping remodel can turn off buyers. Those with black thumbs might look at your vast flowering garden with sculpted shrubs and pond and decide they are not up for the challenge of keeping it up, and those who do love to garden might not like your vision and want to start over.

If recreating the gardens of Versailles is how you make your house feel like a home, then there’s nothing wrong with investing in this kind of renovation. But make sure you’re doing this kind of work for yourself, and not because you hope to make back the money you spent once you’re ready to sell. (See also: 14 Ways to Make Your Yard Look Awesome for Under $100)

Renovate for the right reasons

While many experts focus on resale value as the deciding factor on whether to take on a home improvement project, the important thing to remember is that you live in your house now. Deciding which home renovations to work on based on what someone else might like is the way madness lies.

When you make improvements to your home, make sure you take your own comfort, your plans for living in the home, and the potential resale value into consideration. They all matter.


Source: feeds.killeraces.com

Freezing Your Credit

In the age of paperless transactions, identify theft is something that virtually all of us are susceptible to. If your identity is stolen, the consequences can be severe, and in some cases, can take years to recover from. One way to be proactive against fraud and defend yourself from identity theft, is to freeze your credit report with each of the three major credit bureaus—Experian, TransUnion, and Equifax. 

Placing a credit freeze on your credit report will stop identity thieves from being able to open new accounts, lines of credit, or make any large purchases in your name, regardless of whether or not they have your Social Security number or any other sensitive information. 

What a credit freeze means

A credit freeze is a process that shuts off access to your credit reports at your request. Without your verified consent, your delicate information cannot be acquired. This means that if someone were to attempt to apply for credit in your name, your report would come up as “frozen,” and therefore the creditor would not be able to see the information needed for the application to be approved.

You can unfreeze your credit at any time by using a PIN or a password. 

Reasons to freeze your credit

It might be a good idea to freeze your credit if you’re experiencing any of the following situations:

  • Your data has been compromised in a data breach: It happens. If you’ve been a victim of a data breach and personal information related to your identity has been leaked or made vulnerable to cyber criminals, a credit freeze can offer you some extra protection. 
  • You have reason to think you’ve been a victim of identity theft: Perhaps you’ve checked your credit recently and noticed open accounts that you don’t recognize. Maybe you’ve been getting phone calls from collections agencies requesting payments from accounts you know you didn’t open. While a credit freeze won’t be able to stop them from using accounts a thief has already opened, it can stop them from opening any more. 
  • You want to protect your child from identity theft: According to the Economic Growth, Regulatory Relief and Consumer Protection Act, parents and legally guardians of children 16 years old and younger have the right to open a credit account for their child with the sole purpose of putting a freeze on it to protect them from identity theft. 

How to freeze your credit 

The process of freezing your credit is simple but does require a few steps. You will need to get in touch with each of the three major credit bureaus one by one and request a credit freeze:

  • Experian: Contact by phone at 800-349-9960 or go to their website.
  • Equifax: Contact by phone at 888-397-3742 or go to their website.
  • TransUnion: Contact by phone at 888-909-8872 or go to their website.  

The credit bureaus will ask you for your Social Security number, your date of birth and other information to verify your identity.

Once you freeze your credit, your file will be unattainable even if a thief has sensitive information such as your social security number or date of birth. If you need to use your credit file, you can unfreeze your credit report at any time. 

How to unfreeze your credit

Once you’ve frozen your credit file, it will be remain blocked until you decide that you would like to unfreeze it. You will need to unfreeze your credit report in order to open a new line of credit or make a major purchase. 

Unfreezing your credit file is simple. All you will need to do is go online to each credit bureau website and use the personal identification number (PIN) that you used to place the freeze on the account. If you don’t want to complete this task online, you can also unfreeze your credit file over the phone or through postal mail. 

When the unfreezing process is done online or by phone, it is completed within minutes of submitting the request. However, if you send your request via mail, it will take much longer. 

Keep in mind that you don’t necessarily need to unfreeze your credit through all three of the major credit bureaus if you don’t want to. For instance, let’s say you plan to apply for credit somewhere. You can ask the creditor which credit bureau it will go through to pull up your report, and only unfreeze that one credit bureau. 

You may also have the option to unfreeze for a specific amount of time. Once the time is up, your credit file will automatically freeze again. 

Credit freeze pros and cons

There are a few reasons why you might want to freeze your credit in this day and age, but just like with anything else, there are pros and cons to credit freezing. Here is a general breakdown of the benefits and downfalls of putting a freeze on your credit report:

Pros:

  • It prevents thieves from opening new lines of credit: With a credit freeze placed on your account, no one will be able to open a new line of credit or any other type of account requiring a credit check using your personal data. Anyone trying to commit fraud will be stopped in their tracks as soon as lenders notice that the report is frozen. 
  • It won’t affect your credit score: Freezing your credit report will not damage your credit score. Additionally, if you’ve been a victim of identity theft, freezing your credit report could actually protect your credit score from being damaged due to fraud. 
  • It’s free: It used to be the case that some credit freezes would cost a fee, but that is no longer the way it works. 

Cons

  • It requires some effort: Putting a credit freeze on your credit report takes some effort. You will need to get in touch with all three credit bureaus. 
  • You will need to remember your PINs: A PIN is required to lift or freeze your credit report. If you lose it, you will need to jump through extra hoops to create a new one.

It can’t stop thieves from accessing your existing accounts: Credit freezes can only stop fraudsters from opening new accounts using your information. If you’ve already been a victim of identity theft, a credit freeze can’t block thieves from committing fraud with your current accounts. This means that thieves can still make a purchase using a credit card they stole from you.

Freezing Your Credit is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Tips to Consolidate Credit Card Debt

Tips to Consolidate Credit Card Debt

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

If left unchecked, extensive amounts of credit card debt can cripple your finances. The good news is there are many ways to handle debt, though each requires a dedicated effort on your part. But if you can manage to consolidate credit card debt, you will reduce your burden relatively quickly. In the process, you’ll avoid the exorbitant interest rates that accompany most credit cards. Below we take a look at some of the most effective techniques you can use to make this goal a reality.

Find Out Your Credit Score

Before you can work on improving your credit and minimizing your debt, you have to know where you currently stand.

Many credit card issuers allow cardholders to see their FICO® credit score free of charge once a month, so check out if any of your cards include that free credit score. The three major credit bureaus – TransUnion, Experian and Equifax – also give out free annual credit reports. If that’s not enough, websites like Credit Karma™ and Credit Sesame provide a free look at your credit score and reports as well.

It is vital to review your credit report with a fine-tooth comb to ensure the accuracy of the information. If you find errors be sure to let the credit bureau in question know so the issue can be eradicated as soon as possible.

Zero Interest Balance Transfer Cards

Although it might seem counterintuitive to apply for another credit card to lessen your debt, a zero interest balance transfer card could really help. These cards typically include an introductory 0% balance transfer Annual Percentage Rate (APR) for six months or more. This ultimately allows you to move debt from one account to another without incurring more interest. However, once the introductory offer concludes, any leftover balances will revert to your base APR.

These offers aren’t totally free, though. Most cards also charge a balance transfer fee that’s usually between 3% and 5% of the transfer. Even with this initial payment, you will almost always still save money over leaving your debt where it stands currently.

If you want to consolidate credit card debt, here are three different balance transfer credit cards you could apply for, with varying introductory interest rates and transfer fees:

Balance Transfer Credit Cards Card Intro Balance Transfer APR Balance Transfer Fee Chase Slate 0% APR for first 15 months; then 16.49% to 25.24% Variable APR, depending on your creditworthiness No fee for first 60 days; then $5 or 5% of each transfer, whichever is greater Citi Double Cash Card 0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening; then 15.49% to 25.49% Variable APR, depending on your creditworthiness $5 or 3% of each transfer, whichever is greater BankAmericard® credit card 0% APR for first 15 billing cycles; then 14.49% to 24.49% Variable APR, depending on your creditworthiness No fee for first 60 days; then $10 or 3% of each transfer, whichever is greater Take Out a Personal Loan

Tips to Consolidate Credit Card Debt

The thought of taking out another loan probably doesn’t sound too appetizing to consolidate credit card debt. But a personal debt consolidation loan is one of the speediest ways to rid yourself of credit card debt. More specifically, you can use it to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.

The APR and length of the offered loan and the minimum credit score needed for approval are the main factors that should go into your final decision on a lender. By concentrating on these three components of the loan, you can map out what your monthly payments will be. As a result, you can more easily implement them into your financial life.

Applying for a personal consolidation loan can have a detrimental effect on your credit. Unfortunately, most institutions will run a hard credit check on you prior to approval. However, many online lenders don’t do this, which might ease your mind depending on the severity of your debt situation.

These loans are available through a wide variety of financial institutions, including banks, online lenders and credit unions. Here are a few examples of some of the most common debt consolidation lenders:

Common Debt Consolidation Lenders Banks Wells Fargo, U.S. Bank, Fifth Third Bank Online Lenders Lending Club, Prosper, Best Egg Credit Unions Navy Federal Credit Union, Unify Financial Credit Union, Affinity Federal Credit Union Auto or Home Equity Loan

If you own assets like a home or car, you can take out a lump-sum loan based on the equity you hold in them to consolidate credit card debt. This is a great way to reuse money you paid toward an existing loan to take care of your debt. When paying back your auto or home equity loan, you’ll usually pay in fixed amounts at a relatively low interest rate. Even if this rate isn’t great, it’s likely much better than any offer you’d receive from a card issuer.

Equity loans are technically a second mortgage or loan, meaning your house or car will become the loan’s collateral. That means you could lose your house or car if you cannot keep up with your equity loan payments.

Create a Budget

Tips to Consolidate Credit Card Debt

To build a budget, you first need to figure out your approximate monthly net income. Don’t forget to take into account taxes when you’re doing this.

You can then start subtracting your variable and fixed expenses that are expected for the upcoming month. This is where you will likely be able to identify where you’re overspending, whether it’s on food, entertainment or travel. Once you’ve completed this, you can begin cutting back where you need to. Then, use your surplus cash to pay off your debt one month at a time.

It shouldn’t matter if you’re dealing with substantial credit card debt or not. A monthly spending budget should always be a part of how you manage your finances. While this is likely the slowest way to eliminate debt, it’s also the most financially sound. At its core, it attempts to fix the problem without taking funding from an outside source. This should leave very little financial strife in the aftermath of paying off your debt.

Professional Debt Counseling

Perhaps since you’ve found yourself in serious debt, you feel like you want professional help getting out of it. Well the National Foundation for Credit Counseling® (NFCC®) is available for just that reason. The NFCC® has member offices all around the U.S. that are certified in helping you consolidate credit card debt.

These counselors won’t only address your current financial issues and debt. They’ll also work to create a plan that will help you avoid this situation again in the future.

Agencies that are accredited by the NFCC® will have it clearly displayed on their website or at their offices. If you’re not sure where to look, the foundation created an agency locator that’ll help you find a counselor nearby.

Borrow From Your Retirement

Taking money early from your employer-sponsored retirement account obviously isn’t ideal. That’s means borrowing from your retirement is a last-ditch alternative. But if your credit card debt has become such a handicap that it’s affecting all other facets of your life, it is a viable option to consolidate credit card debt.

Because you are technically loaning money to yourself, this will not show up on your credit report. Major tax and penalty charges await anyone who has trouble making payments on these loans though. To make matters worse, if you quit your job or are fired, you’re typically only given 60 days to finish paying it off to avoid incurring a penalty.

Tips To Consolidate Credit Card Debt

  • If you take the time to come up with a budget, don’t let it go to waste. While you might find it tough to stick to, especially if you’re trying to cut back, it is the best way to manage your money correctly. Even if a budget becomes habit, stay vigilant with where your money is being spent.
  • Although a financial advisor will cost money, he or she might be able to help you keep your finances in check while ultimately helping you plan for the future as well. However, if this isn’t an option for you financially, stay on track with your NFCC® debt counselor’s plan.
  • There are so many ways to gain access to your credit score that there’s virtually no excuse for not knowing it. It doesn’t matter if you do it through one of the top three credit bureaus, FICO® or one of your card issuers. Just remember to pay attention to those ever-important three digits as often as possible.

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

Photo credit: ©iStock.com/Liderina, ©iStock.com/ferrantraite, Â©iStock.com/cnythzl

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Credit 101: What Is Revolving Utilization?

Aerial view of a young woman with brown hair contemplating her revolving utilization. She has a pen in her mouth and an open notebook on her desk.

According to Experian, the average credit score in the United States was just over 700 in 2019. That’s considered a good credit score—and if you want a good credit score, you have to consider your revolving utilization. Revolving utilization measures the amount of revolving credit limits that you are currently using, and it accounts for a large portion of your credit score.

Find out more about what revolving utilization is, how to manage it, and how it impacts your credit score below.

What Is Revolving Credit?

To understand revolving utilization, you first have to understand revolving credit. Revolving credit accounts are those that have a “revolving” balance, such as credit cards.

When you are approved for a credit card, you are given a credit limit. If you have a credit card with a limit of $1,000 and you use it to buy $200 worth of goods, you now have a $200 balance and an $800 remaining credit limit.

Now, if you pay that $200, you again have $1,000 of open credit. If you pay $150, you have $950 of open credit. But your credit revolves between balance owed and how much open credit you have available to use. How much you have to pay each month—known as the minimum payment—depends on how much your balance owed is.

Other forms of revolving credit include lines of credit and home equity lines of credit. They work similar to credit cards.

What Isn’t Revolving Credit?

Unlike revolving credit, installment loans involve taking out a lump sum and paying it back in an agreed-upon fashion over a set term of months or years. Typically, you agree to pay a certain amount per month for a certain number of months to cover the amount you borrowed plus any interest.

With an installment loan, the amount of your monthly payment is determined by your loan agreement, not the balance due. Common types of installment loans include vehicle loans, personal loans, student loans, and mortgages.

What Is Revolving Utilization?

Revolving utilization, also known as “credit utilization” or your “debt-to-limit ratio,” relates only to revolving credit and isn’t a factor with installment loans. Utilization refers to how much of your credit balance you’re using at a given time.

Here’s how to determine your individual and overall credit utilization:

  1. Look at your credit reports and identify all of your revolving accounts. Each of these accounts has a credit limit (the most you can spend on that account) and a balance (how much you have spent).
  2. To calculate individual utilization percentage on an account, divide the balance by the credit limit, and multiply that number by 100.
    1. $500/$1,000 = 0.5
    2. 5*100 = 50%
  3. To calculate overall utilization (all revolving accounts), add up all of the credit limits (total credit limit) and all of the balances (total spent) on your revolving accounts. Divide the total balance by total credit limit, and multiply that number by 100.

If you have a credit card with a $1,000 credit limit and a balance of $500, your utilization rate is 50%, for example. For the same card, if you have a balance of $100, your utilization rate is 10%.

When it comes to your credit score, revolving utilization is typically calculated in total. For example:

  • You have one card with a limit of $1,000 and a balance of $500.
  • You have a second card with a limit of $4,000 and a balance of $400.
  • You have a third card with a limit of $3,000 and a balance of $600.
  • Your total credit limit across all three cards is $8,000.
  • Your total utilization across all three cards is $1,500.
  • Your revolving utilization is around 19%.

How Can You Reduce Revolving Utilization?

You can reduce revolving utilization in two ways. First, you can pay down your balances. The less you owe, the less your utilization will be.

Second, you can increase your credit limit. If you apply for a new credit card but don’t use it, you’ll have more open credit, and that can reduce your utilization. You might also be able to ask your credit card company to review your account for a credit increase if you’re an account holder in good standing.

Find the Right Credit Card for You

What Is Revolving Utilization’s Impact on Your Credit Score?

Your revolving utilization rate does impact your credit. It’s the second-largest factor in the calculation of your credit score. Your utilization rate accounts for around 30% of your score. The only factor more important is whether you make your payments on time.

Why is credit utilization so important to your score? Because to lenders, it can say a lot about you as a borrower.

If you’re currently maxed out on all your existing credit, you may be struggling to pay your debts. Or you might not be managing your debts in the most responsible fashion. Either way, lenders might see you as a riskier investment and be less inclined to approve you for loans or other credit.

How Do You Know If You Have a Revolving Utilization Problem?

Sign up for Credit.com’s free Credit Report Card. It provides a snapshot of your credit report and gives you a grade for each of the five areas that make up your score. That includes payment history, credit utilization, age of credit, credit mix, and inquiries. The credit report card makes it easy for you to see what might be negatively affecting your credit score.

You can also sign up for ExtraCredit, an exciting new product from Credit.com. With an ExtraCredit account, you get a look at 28 of your FICO scores from all three credit bureaus—plus exclusive discounts and cashback offers as well as other features—for less than $25 a month.

Sign Up Now

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What Is a Streamline Refinance?

Mortgage Q&A: “What is a streamline refinance?” While qualifying for a mortgage refinance is generally a lot harder than it has been in the past (now that lenders actually care how your home loan performs), there are less cumbersome options available. In fact, many lenders offer “streamlined” alternatives to existing homeowners to lower costs and [&hellip

The post What Is a Streamline Refinance? first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

Understanding Cash in Lieu of Fractional Shares

Woman on laptop

It’s not uncommon for publicly-traded companies to restructure based on changing market conditions or share prices. When companies merge, split their stock, or acquire competitors, it can raise the question of how to consolidate or restructure the company’s stock.

If such a corporate action generates fractional shares, the company’s leadership has a few options for how to proceed: They could distribute the fractional shares, round up to the nearest whole share, or pay cash in lieu of fractional shares.

What is Cash In Lieu?

stock price, or both.

There are several company events that can lead to investors receiving cash in lieu of fractional shares.

Stock Split

A stock split occurs when a company’s board of directors determines that their company’s strongly performing stock price may be too high for new investors. To make the stock price look more attractive to more investors and gain more liquidity and marketability, a stock split is executed to artificially lower the stock’s price by issuing more shares at a fixed ratio while maintaining the company’s unchanged value.

Depending on the predetermined ratio, a stock split could cause fractional shares to be generated. For example, a three-for-two stock split of a stock worth $111 would create three shares for every two shares each investor holds. Thus, a stock split would cause any investor with an odd number of shares to receive a fractional share.

However, if the company’s board isn’t keen to hold or deal with fractional shares, they will distribute investors’ whole shares and liquidate the uneven remainders, thus paying investors cash in lieu of fractional shares. The ratio or cash rate as set by the company performing the stock split can be located on the company’s corresponding SEC 8-K document.

reverse stock split because a stock’s prices are too low and they want to artificially raise them. If stock prices get too low, investors may become fearful to buy and the stock risks being delisted from exchanges.

When a stock undergoes a reverse stock split, each share is converted into a fraction of a share but higher-priced shares are issued to investors according to the reverse split ratio . For example, a stock valued at $3.50 may undergo a reverse one-for-10 stock split. Every 10 shares is converted into one new share valued at $35.00. Investors who own 33 shares or any number indivisible by 10 would receive fractional shares unless the company decides to issue cash in lieu of fractional shares.

Companies may notify their shareholders of an impending reverse stock split on Forms 8-K, 10-Q, or 10-K as well as any settlement details if necessary.

Merger or Acquisition

Company mergers and acquisitions (M&As) can also create fractional shares. When companies combine or are absorbed, they combine new common stock using a predetermined ratio, which often results in fractional shares for investors in all involved companies.

In these cases, it’s rare for the ratio of new shares received to be a whole number. Companies may opt to return whole shares to investors, sell fractional shares, and disburse cash in lieu to investors.

Spinoff

If an investor owns shares of a company that spins off part of the business as a new entity with a separately-traded stock, shareholders of the original company may receive a fixed amount of shares of the new company for every share of the existing company held.

How Is Cash in Lieu of Fractional Shares Taxed?

Just like many other forms of investment profits, cash in lieu of fractional shares is taxable , even though it was acquired without the investor’s endorsement or action. The stock’s company may send investors a check followed by an IRS Form 1099-B at year-end with a “cash in lieu” or “CIL” notation.

Some investors may simply report the payment on the IRS Form 1040’s Schedule D as sales proceeds with zero cost and pay capital gains tax on the entire cash settlement. However, the more accurate and tax-advantageous method would apply the adjusted cost basis to the fractional shares and pay capital gains tax only on the net gain.

Looking to Trade Fractional Shares?
SoFi Invest Can Help with That.

How to Report Cash in Lieu of Fractional Shares

Calculating the cost basis for cash in lieu of fractional shares is a little tricky due to the change of share price and quantity. The new stock issued is not taxable nor does the cost basis change, but the per-share basis does.
Consider the following example:

•  An investor owns 15 shares of Company X worth $10.00 per share ($150 value).
•  Investor’s 15 shares have a $7.00 per share cost basis ($105 total cost basis).
•  Company X declares a 1.5 stock split.

The investor is entitled to 22.5 shares valued at $6.67 each but the company states they will only issue whole shares. Therefore, the investor receives 22 shares plus a $2.73 cash in lieu payment for the half share.

The investor’s total cost basis remains the same, less the cash in lieu of the fractional shares. However, the adjusted cost basis now factors in 22 shares instead of 15, equaling a $4.66 per share cost basis and a $2.33 fractional share cost basis. Finally, the taxable “net gain” for the cash payment received in lieu of fractional shares equates to $2.725 – $2.33 = $0.39.

The Takeaway

It’s not always possible to anticipate a company being restructured and how it will affect shareholders’ stock. In the event the company doesn’t wish to deal with fractional shares, it’s important for shareholders to understand the alternatives such as cash in lieu of fractional shares, and how it affects them. While cash in lieu can be burdensome, investors can be made whole and can then proceed on their own accord.

There are many reasons investors consider fractional shares worth buying to add to their investment portfolio. For individuals looking to invest in fractional shares with the help of a simple account setup and no fees, SoFi Invest® can help.

Find out how SoFi Invest can help you reach your financial goals.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Stock Bits
Stock Bits is a brand name of the fractional trading program offered by SoFi Securities LLC. When making a fractional trade, you are granting SoFi Securities discretion to determine the time and price of the trade. Fractional trades will be executed in our next trading window, which may be several hours or days after placing an order. The execution price may be higher or lower than it was at the time the order was placed.

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