Category Archives: Personal Finance

Being Smart With Your Money as a College Graduate: 10 Tips

Being Smart With Your Money as a College Graduate: 10 Tips

college graduate

It’s the time of year where many people will graduating college and going into the “real” world. The party is winding down and reality will be setting in. College is not the easiest place to learn about finances. You’re taking on debt while not bringing in much, if any, income; all with the hope of a return in the future. I wanted to outline 10 tips for new college graduate stepping out on their own.

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The Waiting Period After Foreclosure, Bankruptcy, or Short Sale

waiting period chartIf you have lost your home through a foreclosure, short sale or bankruptcy and want to get another mortgage loan, you may be wondering how long you’ll have to wait. Your credit will take a hit after all of these situations, although possibly not as much as you think or for as long as you may think. Nevertheless, it will likely prevent you from getting another mortgage right away. The amount of time you must wait before applying for a new mortgage loan depends on the type of lender and your financial circumstances.

2017 FHA GUIDELINES

  • Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
  • Foreclosure – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
  • Short Sale / Deed in Lieu – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.
  • Credit must be re-established no late payments in past 12-24 months, depending on hardship

Application Date must be after the above waiting period to be eligible for FHA financing after hardship.

2017 VA GUIDELINES

  • Bankruptcy Ch 7 – You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
  • Bankruptcy Ch 13 – If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
    • If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
  • Foreclosure – You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
  • Short Sale / Deed in Lieu – You may apply for a VA guaranteed loan TWO (2) years after a short sale, unless it was a VA loan then restrictions apply
  • Credit must be re-established with a minimum 620 credit score

Application Date must be after the above waiting period to be eligible for VA financing after hardship.

2017 USDA GUIDELINES

  • Bankruptcy – You may apply for a USDA rural loan THREE (3) years after the discharge of a Chapter 7 or 13 Bankruptcy –
  • Foreclosure – You may apply for a USDA rural loan THREE (3) years after a Foreclosure –
  • Short Sale / Deed in Lieu of Foreclosure – If you had big issues the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640.  Over 640 your UW will make the call but typically not less than one year.
  • UPDATED 12/2014 – Mortgage debt included in Bankruptcy will go by BK discharge date, and subsequent foreclosure, short sale, or deed in lieu of foreclosure will not count as an additional waiting period, as long as you are off title for any defaulted mortgages.
  • Link to 12/1/2014 USDA Guideline – HB-1-3555  Attachment 10-B  See Page 4 of 6

Date of Credit Approval must be after the above waiting period to be eligible for USDA financing after hardship.

2017 CONVENTIONAL (FANNIE MAE) GUIDELINES

  • Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of a Chapter 13
  • Foreclosure – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure –
    • UPDATED – Effective 7/29/2014:  Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date.
    • UPDATED – Effective 8/16/2014:  Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from date your name is removed from title.  This replaces the ability to buy in 24 months with 20% down payment and minimum 680 credit score.
    • SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

Credit must be re-established with a minimum 620 credit score.

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Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.

Date of Credit Report must be after the above waiting period to be eligible for Conventional financing after hardship.

2017 JUMBO MORTGAGE GUIDELINES

  • Bankruptcy – You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for FOUR (4) years, FIVE (5) years if multiple bankruptcy occurs on credit profile.
  • Foreclosure – You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure – You may apply for a Jumbo mortgage loan:
    • SEVEN (7) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
    • NOTE: There are investors out there that will allow you to buy again in FOUR (4) years after a short sale, but expect higher rates, higher fees, and possibly larger down payment requirement.  Jumbo lenders have not yet loosened up the qualifying guidelines for buying after a hardship.
    • It may make financial sense to consider a portfolio Jumbo lender that offer high rates, so that you can take advantage of today’s market.  Once your short sale is seasoned, refinance into a more favorable, longer term loan.

NOTE:  If hardship is the result of an extenuating circumstance, waiting periods may be reduced.  Contact lender for details.

PREPARING TO BUY AGAIN

You should begin looking at your credit at least six (6) months before you are ready to buy again.

Quite often there are things left over on your credit report that can delay your ability to qualify.

With a little head start and good advice, you can get your credit in line, qualify for financing and buy again in the lowest priced real estate market that California has seen in years and years!

We specialize in these situations so feel free to drop me an email, call or leave a question below.

The Waiting Period Chart

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Be On A Budget And Still Go Out With Your Friends

20sYou and your friends may have shared a similar economic situation when you were kids or while you were in college, but now that you are adults, your incomes might diverge widely.  Differences in spending habits can destroy a friendship when they result in wildly different lifestyles or feelings of resentment, but if you approach the money situation with care and you have good friends, you can avoid blowing your paychecks on fancy dinners out or expensive clothes.

  1. Don’t Assume You Can Afford It Too

Just because all your friends recently purchased new luxury cars doesn’t mean you should follow suit. If you’ve always been on similar spending levels in the past, your inclination might be to think that nothing has changed. However, your friend might be earning a bigger paycheck, or be willing to make sacrifices in areas that you aren’t, like living in an inexpensive apartment or giving up vacations, in order to afford his or her new wheels. Of course, for all you know, your friend can’t afford it, either. Most people don’t volunteer information about how much they make. Stick to purchasing decisions you know you can comfortably afford, regardless of what the other people in your life are doing.

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Cashing Your 401k Early: What You Need to Know

Cashing Out Your 401k

If you’ve ever thought about cashing out your 401k, whether it is for down payment on a house or some other expense, there are a few things to consider. When it comes to your 401(k), different rules apply at different ages. Here’s an overview of what you can do at 55, 59 1/2, and 70 1/2.

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14 Step Plan to Transform Your Finances

managingmoney

I deal with people and finances on a daily basis. One of the things I have noticed is that very few people are taught how to manage their money. Frequently people admit to being so lost they don’t even know where to begin when it comes to money. I wanted to share a 14 step plan to help you transform your finances and better manage your money. Continue reading 14 Step Plan to Transform Your Finances

Are You Cheating Financially On Your Partner?

cheating-financiallyA record number of Americans are cheating on their partner or spouse, not with someone else, but with money.

From secret credit card purchases to hidden bank accounts, a January 2014 online survey by the National Endowment for Financial Education (NEFE) found that financial infidelity is on the rise. In fact, 35 percent of adults with combined finances admit to having hidden a purchase, bank account, statement, bill, or cash from their significant other, up from 31 percent in 2011. Thirteen percent of respondents said they’ve committed more severe deceptions, like lying about the amount of debt that they owe or even the amount of income they earn. Continue reading Are You Cheating Financially On Your Partner?

Accumulate Wealth and Be Comfortable

Accumulate Wealth and Be Comfortable

 

Whether your goal is to become a millionaire or to just be financially secure, we’ve got a few practices to help you accumulate wealth and become comfortable.

These tips come straight from David Bach, self-made millionaire and best-selling author. Bach outlines a one-step plan to get rich by making it automatic in his book “The Automatic Millionaire”.

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Stealth Savings: Little Moves that Equal Big Money

Stealth Savings: Little Moves that Equal Big Money

So, you’ve banned takeout, swapped all venti fat-free lattes for the trusty Mr. Coffee at home, staged the yard sale, cut the cable, dropped the landline, raised your insurance deductibles, brown bagged every single lunch for months, and plan to limit the A/C all sweatin’-summer long.

But you still need to build your emergency fund. What can you do?

Make little changes for maximum impact.

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Having the “Money Talk” with Your Parents

Having the “Money Talk” with your Parents

 

Having the “Money Talk” with your parents can be very uncomfortable. However, it is necessary to have now, before it becomes a problem in the future. People tend to not like talking about money or death, so when you combine the two it can cause some discomfort. Another reason for avoiding the conversation is that maybe your parents could be embarrassed because they didn’t handle their money well. Also, as the child you don’t want to come off as greedy or nosy.

Whatever the reason, we’re going to outline some steps you can take now to avoid some serious problems down the road.

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Closing the Gap Between your Financial Reality and Goals

Closing the Gap Between your Financial Reality and Goals

 

Most of us are failing miserably with our finances. Personal savings rates are at an all time low, retirements savings are non-existent, and overall net worth is diminishing.

Nobody wants to be terrible with their finances, so why are we failing? We’ll take a look at some of the reasons and some small steps you can take to get back in financial shape. It’s never too late to be Smart With Your Money.

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