Government Shutdown Brings Mortgage Obstacles

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The Shutdown’s Housing Market Woes

It’s a great time to buy a home, and you’re ready. You’ve saved up a suitable down payment, found a home, and settled on a lender. As an added bonus, interest rates are at their lowest point in the last nine months – despite the Federal Reserve’s interest rate hikes.

There’s only one problem. The government shutdown has created obstacles to your mortgage – maybe in ways you hadn’t considered.

Loan Roadblocks

The shutdown effect is obvious if you’re a government worker suddenly trying to buy a home with IOU’s – but, otherwise, why would your mortgage application be affected? It may depend on the type of loan you’re seeking.

USDA loans, popular in rural areas, are backed by the U.S. Department of Agriculture. With the USDA shut down (at least as of this writing), no new applications are being accepted and scheduled loan closings have been put on hold. Homebuyers caught in the middle are be…

2 Out Of 5 Balance Transfer Cardholders Don’t Pay Off Their Balance In Time

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A balance transfer card with a 0% introductory interest rate can be an excellent way to consolidate high-interest debt and efficiently pay it down. It can also be a way to avoid reality and rack up even greater interest payments in the end.

A new study by CompareCards.com finds that too many Americans are taking the latter path. The CompareCards 2018 Balance Transfer Credit Card Report shows that 2 in 5 Americans that have had a balance transfer card failed to pay off the full transferred balance before the introductory period expired.

“That was disappointing to learn,” said Matt Schulz, Chief Industry Analyst with CompareCards.com. “That means that lots of people aren’t getting as much savings from balance transfer cards as they could, and that’s a shame.”

Balance transfer cards carry a high annual percentage rate (APR) after the 0% period. Any remaining balance from the tran…

To Stop Paying Interest Charges, Overpay Your Credit Card Bill

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Can you pay off your credit card bill in full and still be charged interest? Yes – depending on the timing of your payment.

As National Financial Educators Founder and Chief Education Officer Adam Carroll points out, “One of the greatest expenses we have in our life is the interest expense on debt.” Interest charges accrue according to the terms and conditions legalese of your particular credit card, which people rarely read until it’s too late. Generally, when the billing cycle ends, you will have a grace period to pay off that balance in full and avoid interest charges.

Your credit card statement will show the statement closing date, the amount due at that time, and the payment due date on that amount. Assuming your card has a

Tax Identity Theft Lower But Still A Problem

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Identity thieves have many ways to steal your money – including fraudulent tax returns. They file a return in your name as early as possible to beat your legitimate return, with fake financial data designed to claim a large refund. You won’t realize this until your tax return is denied because there’s already been a return filed with your Social Security number. As Bankrate.com Chief Financial Analyst Greg McBride points out, “Tax ID fraud is one of those things where somebody can have your Social Security number and they could have been sitting on it for a while, and you would have no idea until they go and file a bogus tax return under your Social Security number. You only find out at the point where your legitimate return gets rejected.”

It’s a lucrative but simple scheme – and, with more stolen identities available via large data breaches over the past few years, tax identity theft attempts have…

Consumers $1 Trillion More In Debt In Just 5 Years

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How would you handle $4 trillion of debt? Hopefully, you’ll never have to answer that question – but America’s total outstanding non-mortgage consumer debt is nearing the $4 trillion mark. (Add mortgage debt, and our total consumer debt tops $13.5 trillion.)

According to Federal Reserve data as of October 2018, non-mortgage consumer debt was just over $3.96 trillion and is on pace to break the $4 trillion mark before year’s end. This debt includes revolving debt like credit cards ($1.037 trillion) and non-revolving debt including auto loans, student loans, and personal loans ($2.926 trillion).

LendingTree highlights the rise in consumer debt in their November 2018 debt report. Using Federal Reserve data, the report finds that our consumer debt has quadrupled over the last 24 years.

We passed the $3-trillion mark in 2013, and we’ve added $1 trillion to that in the subsequent five years. In contrast, it took us ten years to go from $2 trillion to $3 trill…

10 Tips For Dealing With Holiday Debt, Part 2

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Holiday Debt On the Increase

Are your credit cards still smoking from holiday overuse? Based on a recent MagnifyMoney survey, it wouldn’t be surprising.

Consumers who financed their holiday spending averaged $1,230 in holiday spending debt – a sharp increase from 2017’s $1,054 average and 2016’s $1,003 average. Increases in wages and consumer confidence are at least partly to blame. Did a personal increase in wages and confidence lead you into a mountain of holiday debt?

We’ve given previous tips on dealing with excessive holiday debt. You’ve got more debt – so we’ve got five more tips, for a total of 10.

6. Slice Your Budget Further

To pay off holiday debt, you can’t settle for paying o…

10 Tips For Dealing With Holiday Debt, Part 1

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Santa was not so kind to your friends and relatives this year, so you felt the need to fill the gap. You overspent on holiday gifts, and now you are stuck with a significant amount of holiday debt. Gratitude from gift recipients is a great feeling, but gratitude is not going to pay off your MasterCard bill. If it’s any comfort, you’re not alone; according to one report, Americans racked up an average of $1,230 in debt last holiday season.

What do you do? Start with the classic bit of advice – “if you are in a hole, stop digging.” Recognize that you overspent, and freeze your spending until you can take the following steps.

How to Reduce Holiday Debt

  1. Assess the Situation and Rebalance the Budget – Face up to your debt and total up the damage. Rebalance your budget to account for this new debt, and look for any budgeted spending that you can temporarily drop. You will need to eat out less often and delay other discretionary spendi…

2 Out Of 3 Loans Used for Credit Cards and Loan Consolidation

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What do you do with debts that have unfavorable interest rates or difficult payment terms? If you can, consolidate them into one debt stream with more favorable terms. Balance transfer credit cards exist for this purpose, but personal loans may be an even better alternative.

November 2018 data from LendingTree shows that over two-thirds of all personal loan inquiries are for debt consolidation (37%) or credit card refinancing (31%). Personal loans generally offer lower interest rates for equivalent credit profiles, and consumers are taking advantage of the difference.

The lowest average annual percentage rate (APR) for all credit cards is 17.15% according to CreditCards.com, and balance transfer cards aren’t much better at a 16.33% average lowest APR offer. According to LendingTree, borrowers with excellent credit averaged 9.62% APR on pers…

Forced Credit Account Closures Rising While More Applications Denied

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According to Federal Reserve data, serious credit card delinquencies rose sharply in late 2016 and continued to grow through 2018, nearing 5% of cardholders. Similarly, involuntary account closures rose from 4.2% in 2016 to 7.2% in 2018 – but why?

If the economy is doing so well, why are people having trouble paying credit card bills and having accounts closed? Credit scores provide a clue.

A low credit score is a solid indicator of risk for credit card companies. Involuntary account closures are approaching 20% for consumers with credit scores below 680, while transitions into serious delinquency are approaching 25% for those with scores below 620.

In addition, overall revolving debt (mostly credit card debt) has grown from $969 million in 2016 to $1.037 trillion as of the third quarter of 2018.

Given increases in debt and delinquency, card issuers believe they were too free with post-recession credit – and they are reacting accordingly. In t…