Category: Financial Health

A home equity loan is a loan for a set amount of money. You get the loan by using equity, or value, in your home. Each month, you make payments on the loan to gradually pay it back.

There is some risk involved with home equity loans. If a person doesn’t make the payments, the lender can foreclose on their home. But they can be a good way to borrow extra money for home upgrades or other large expenses. Here’s what you need to know.

Choose a lender carefully

You can ask friends and family for recommendations. Then, look at what each one offers. Banks, credit unions and other lenders may all have different interest rates. They may also have different payment terms for the loan.

Ask questions

Your lender should explain the home equity loan to you. If you don’t understand something, ask. Make sure you know:

*  The interest rate of the loan

*  The monthly payment amount

*  Annual percentage rate (APR), which includes fees and other charges

*  Fees that may be charged for applying or closing on the loan

Get your credit score

When you apply for a loan, the lender will usually check your credit score. This is a number that tells the lender about your financial history. It includes things like how many accounts you have, late payment history and debt.

Your lender can tell you your credit score when they check it. You also have a right to see a free copy of your credit reports once each year. You can get your free report atannualcreditreport.com.

Shop around

You can talk with more than one lender before you choose one. If lenders know you are looking at other options, this can help you get the best deal.

Ask each lender for the lowest interest rates and fees. You can also ask them to beat the terms of another lender.

Read carefully

Before you sign, read the loan closing papers. They should match what you agreed to. Don’t sign if you’re not sure.

Source: Federal Trade Commission

It can feel like a dark cloud hanging overhead – the upcoming expense of your child’s college education. Whether your child is one month or 16 years old, it’s never too late to start putting some money away to invest in your child’s future.

529 college savings plans

A 529 allows you to save money to pay for your child’s college education tax-free. If the money is used on higher education, you won’t be taxed on the withdrawal either.

Usually, the money must be used on tuition, room, board, or certain supplies required for college enrollment, or you may have to pay a penalty and taxes.

Prepaid tuition plans

When you set up a prepaid tuition plan, you “lock in” today’s tuition prices. In general, these plans must be used on colleges within your state to get the lower tuition rate.

Savings accounts

You can set up a savings account in your child’s name that you manage. This is called a custodial account. When your child is old enough, he or she can access the funds.

IRA and Roth IRA accounts

IRAs, or individual retirement accounts, are investment accounts that let you save without getting taxes taken out. With a deductible IRA, you must claim your money that goes into the IRA as tax deductible. Then, taxes are incurred when you withdraw the savings later.

If you put money into a Roth IRA, your earnings are tax-free if you wait to withdraw them after five years – and if they’re used for college tuition.

Coverdell education savings accounts (ESA)

Coverdell ESAs are like an IRA for college. If the money is used for education, you won’t pay any taxes when you withdraw it.

Because each family’s budget and needs are different, there is no single solution that works for everyone. Carefully consider the pros and cons of each option before you move forward.

Before you begin saving for college….

If possible, talk with a financial advisor before you begin. Some plans, such as a deductible IRA, may depend upon your income and other factors. And, an expert in the field can help you choose the best option for your situation.

Ask questions. Be sure to ask the representative about:

*  Fees and commissions to pay

*  When and how taxes are incurred on the money you invest

*  Interest you may earn

*  Risk involved with investments

*  Whether you can use the money for other things (if your child doesn’t go to college or gets a full scholarship, for instance)

*  Whether the money must be used in-state

Don’t forget about federal loans, which are an option for many families – especially if college is right around the corner.

1.See.See what you agreed to. Look at all the paperwork for the loan documents. Check the annual percentage rate (APR), which is the cost of your loan interest measured by a yearly rate. Look at the finance charges, which includes the total amount of interest and certain fees you’ll pay.

2.Say no.Say no if you’re not comfortable. If you are unhappy with the loan conditions or the vehicle, don’t feel forced into it. You can always leave without finishing the deal if you change your mind. If you’re not sure, tell them you need more time to think about it. Dealers cannot force you to sign the loan.

3.Sign.Sign all the blanks. Before you drive away with your new vehicle, make sure both you and the dealer have signed everything in the loan papers. All blanks should be filled in. You should also get a copy of all the paperwork on the spot.

1.  Do protect your personal information all the time. Never share your birthday, social security number, credit card number or passwords with others. No one should call or email you asking for this information.

2.  Do stand your ground. Scammers may try to scare you by saying if you don’t give them money, you’ll be arrested or turned into the IRS. Don’t believe them. Police and government agencies don’t use phone calls to collect money.

3.  Don’t trust caller ID. Scammers can change the caller ID to look like an official business or even a government agency.

4.  Don’t pay someone with wire transfers or gift cards. Some scammers will tell you to wire them money or may ask you to send them gift cards. Don’t do it. A real organization would not ask you to send money this way.