Tamila McDonald, Author at The Free Financial Advisor

Here Are The Pros and Cons of Using Bestow

September 27, 2021 by Tamila McDonald Leave a Comment

When you’re looking for term life insurance, the number of options that are available is often overwhelming. However, if you’re looking for a company that doesn’t require medical exams and can provide you with fast coverage, Bestow might be your perfect match. If you are wondering whether Bestow is the best option for you, here’s what you need to know about the company, as well as a look at the pros and cons of using Bestow.

What Is Bestow?

Bestow is a term life insurance policy portal that uses a streamlined online application and algorithm-supported calculations to determine if a partner insurer can extend you coverage. It’s important to note that Bestow currently acts only as an agent or broker, so any coverage you get isn’t technically from Bestow. The company does have plans to become a fully licensed insurer, though it isn’t clear when that’ll occur.

At Bestow, speed and convenience are both priorities, something that may appeal to many prospective customers. However, as with all companies, there can be some drawbacks to going this route.

The Pros of Using Bestow

The main pros of using Bestow are speed and convenience. The application process only takes a few minutes and, since a medical exam is never a requirement, you can wrap everything up in no time. Plus, everything is online, so you can get it all done from the comfort of home.

Another benefit of Bestow is that your coverage – should you decide to purchase it – begins right away. There aren’t any waiting periods or setup delays, giving you immediate peace of mind.

Bestow doesn’t work on commission, so you don’t have to worry about being pressured into a plan that isn’t a good fit. Instead, you’ll get options that are selected for your situation, not the amount of money they generate for the company.

Finally, Bestow works with an A+ rated carrier. While there is a higher rating companies can get (A++), A+ is still incredibly reliable, which can make you feel more confident about moving forward with a longer policy if that’s what you’re after.

The Cons of Using Bestow

As with all term life insurance options, there are some drawbacks to using Bestow. One of the biggest is that coverage is only available up to $1.5 million. While that may sound like a lot, other places do offer policy options far above that mark.

Additionally, Bestow only supports term life insurance. If you’re looking for another kind of coverage, Bestow isn’t designed to meet your needs.

Even if you’re looking for term life, not everyone qualifies for coverage either. While there isn’t a medical exam, you do have to supply some details about your health history, and certain conditions make you ineligible for coverage.

Age restrictions do limit many people’s options, too. While the company does have term lengths as high as 30 years and can supply coverage to people up to 60 years old, that doesn’t mean everyone age 60 and younger has access to 30-year terms.

Instead, for a 30-year policy, you have to be a woman under the age of 41 or a man under the age of 40 and a non-tobacco user. For tobacco users, the age cutoffs are 31 and 30, respectively. The highest age for a 25-year policy is 45, and 20- and 15-year policies are cut off at 50 and 55, respectively. If you’re above the age of 55, a 10-year term is the most you can get.

When it comes to coverage amounts, Bestow isn’t necessarily the most expensive. However, there are more affordable options available.

Is Bestow the Right Option for You?

Generally speaking, Bestow could be a solid place for term life insurance for many people, particularly younger adults who aren’t tobacco users. However, anyone age 60 and under looking for coverage who doesn’t want a cumbersome application process or medical exams should keep Bestow in mind, too.

In the end, getting a quote from Bestow is completely free. As a result, you can find out what coverage options are available to you specifically, all without having to commit. Then, if there’s a plan that meets your needs, you can finalize the purchase, allowing you to have immediate coverage.

If you’re looking for term life insurance and you need it fast, Bestow could be your answer. You can find affordable plans with ease and get instant coverage upon approval, all from the comfort of your home. Head on over to the Bestow website to learn more today.

Can you think of any other pros and cons of Bestow that people should know about? Have you used Bestow and want to discuss your experience? Share your thoughts in the comments below.

Can You Tell ME the Best Way to Negotiate an ER Bill?

September 20, 2021 by Tamila McDonald Leave a Comment

An unexpected trip to the emergency room (ER) usually comes with a pretty high price tag. Whether you have medical insurance or not, the amount you owe could be significant, so much so that fitting it into your budget may be impractical, if not impossible. Luckily, you can negotiate your ER bill, creating an opportunity to reduce what you owe. Here’s a look at the best way to negotiate an ER bill.

Review the Bill for Accuracy

Before you do anything else, you need to take a moment and make sure your ER bill is accurate. Mistakes aren’t as uncommon as you’d think, and when they occur, you may be able to get them removed if you can show that they are incorrect.

If you’re ER bill only shows one total, request an itemized bill from the hospital. That way, you can review each individual charge to see if any might be mistakes. If your itemized list only featuring medical billing codes and not descriptions, there are numerous sites online that let you check them. However, you can also speak with the billing department and ask for the definitions.

If you do find errors, speak with the hospital billing department about the mistakes. Request that they remove or recode those line items and re-submit your bill to your insurance company. That way, you’ll be working with an accurate bill once your new one arrives.

Research Going Rates for Services

Another step you need to take before actively negotiating is to research the going rate for the same services at other hospitals. In some cases, you can secure a lower price by simply pointing out that other facilities charge less as long as you can prove that is the case.

Similarly, if you’re uninsured, researching the rates that insured patients are charged can work in your favor. It lets you determine the fair market price for the services you received and use those as a basis for a cost reduction request.

Gather Up Some Cash

Before you make the call to negotiate, determine how much you could afford to pay in cash right away. Many healthcare facilities offer cash discounts, especially if you can make a substantial lump sum payment right away.

Mainly, cash discounts are offered for two reasons. One, they allow hospitals to avoid credit card fees or similar expenses. Two, they eliminate a lot of administrative work, including issuing you additional bills, handling account maintenance, and following up on your debt.

See if you can gather most of what you owe in cash before the due date on your bill. That way, you have another point to pursue during the negotiation.

Start Asking About Financial Assistance

With all of the information you’ve gathered in hand, it’s time to contact the hospital and begin the negotiation process. Usually, once you have an accurate ER bill in hand, your first step isn’t to focus on the charges themselves when you call the billing department. Instead, you want to ask about financial assistance programs.

All nonprofit hospitals are required to have financial assistance programs for long-income patients. Additionally, the majority of for-profit hospitals have them as well.

Exactly what’s available may vary by state and facility. Additionally, whether or not you qualify may depend on several factors, including your income level, whether you have insurance or Medicare, and more. However, if you are eligible for assistance, your out-of-pocket obligation may shrink substantially, if not disappear entirely.

Continue with the Negotiation

If you don’t qualify for enough financial assistance to make your bill manageable, continue with the negotiation. Present what you know about fair market prices for the services you received as a starting point. See if they are willing to reduce any of the individual charges that aren’t in line with local norms.

If the first person you speak with isn’t able to do anything about pricing, ask to speak with a supervisor. You may have to move a few levels up to get to someone who has the ability to negotiate the costs, so keep asking for the person’s supervisor until you reach the right people.

After that, if you have enough cash to pay most – but not all – of the bill, as about cash discounts. Don’t lead off with how much money you have available. Instead, simply ask if they offer price reductions to people who can pay the majority of the bill in cash all at once.

If the cash discount they offer brings your bill down enough, you can simply arrange to pay it. If you are just barely short of the total price they present, ask if they would take the amount you have available instead. In some cases, if you’re close, they’ll accept. However, this isn’t guaranteed.

Request a Payment Plan

Many hospitals understand that ER bills are hard for patients to manage. As a result, most make payment plans available to patients. Not only are they a way to avoid medical collections while spreading out the repayment process, but they are also usually interest-free.

Speak with the billing department about payment plans and see what they can offer. If the payment size is manageable, you can simply agree to the terms and begin making payments.

However, if you’re experiencing a hardship that makes the payment they presented too difficult to shoulder, be honest about that. Let them know what you can reasonably afford and see if they are willing to accept that amount instead. If they agree, you can move forward with the arrangement.

Get Help from a Patient Advocate

If you’ve spoken with the billing department and still haven’t found a mutually acceptable solution, you may want to connect with a patient advocate. A patient advocate will help you navigate financial assistance programs and negotiate with the healthcare facility, increasing the odds that you can get the bill reduced to a manageable point.

As you look for a patient advocate to assist you, check the credentials of any contenders. Ideally, they need to be certified by a reputable organization, as well as have education or training that’s relevant to your situation. That way, you can rely on their expertise, as well as increase your odds of finding a solution.

Do you have any other tips that can help someone negotiate an ER bill? Share your thoughts in the comments below.

What Are The Major Downsides to Using a Roth IRA?

September 13, 2021 by Tamila McDonald Leave a Comment

When people look at opening an individual retirement account (IRA), it isn’t uncommon to see recommendations directing them toward the Roth version. While Roth IRAs certainly have plenty of benefits, that doesn’t mean they are the best fit for everyone. After all, they are not drawback-free. If you’re considering a Roth IRA, here’s what you need to know about the downsides of using one.

Low Contribution Limit

For 2021, the IRA contribution limit is $6,000, though individuals age 50 and over can add another $1,000 to that. While that can feel like a substantial sum, it may not be enough to fully fund a retirement, depending on when you began.

Instead, many people with Roth IRAs may also need to set money aside elsewhere. If they are employed, a 401(k) or similar option through an employer could be a smart choice, particularly if they are offering a match.

For anyone who doesn’t have access to an employer-sponsored account, there are other options available. Self-employed individuals may be eligible for a solo 401(k), giving them a solid alternative. Using a traditional brokerage account could also work, though it doesn’t have the tax benefits that you get with formal retirement savings.

Income Limits

Unlike a traditional IRA, your modified adjusted gross income (MAGI) has to fall within a certain limit to contribute to a Roth IRA. The limit that applies to a Roth IRA varies depending on the account holder’s tax filing status.

The contribution limit also has three phrases. If a person’s MAGI falls below a certain point, they can contribute the full amount allowable during the tax year.

MAGIs that sit above that initial cutoff but below a second one will see their maximum allowable contribution lower. If a person’s MAGI crosses an upper threshold, they are not allowed to contribute to a Roth IRA.

Here is an overview of the income phase-out ranges based on tax filing status:

Tax Filing Status	MAGI	Contribution Limit
Single / Head of Household	Under $125,000	Up to Annual Maximum
	$125,000 to $139,999	Phasing Out
	$140,000+	Ineligible
Married Filing Jointly	Under $198,000	Up to Annual Maximum
	$198,000 to $207,999	Phasing Out
	$208,000+	Ineligible
Married Filing Separately	Under $10,000	Phasing Out
	$10,000+	Ineligible

For individuals with pre-existing Roth IRAs who become ineligible to contribute in a subsequent year, they don’t lose access to that retirement account. Instead, they simply can’t add contributions while their income exceeds the limits. If their income declines in a subsequent year, they can begin contributing once again.

It’s also important to note that MAGI limits don’t apply if you’re rolling a traditional IRA into a Roth. However, you do have to follow all of the rollover rules, some of which are relatively complex.

Additionally, it’s crucial to understand that the limits are subject to change each year. Annually, the IRS reviews both the income and contribution limits to determine if adjustments are necessary. Often, when those occur, the numbers shift upward, not down. However, the changes do tend to be pretty small in the grand scheme of things.

Set Up Falls on You

With employer-sponsored retirement accounts, contributing is fairly simple. Your employer has made most of the difficult choices, takes care of your enrollment, and even makes sure that contributions come right out of your paycheck.

Unlike an employer-sponsored retirement account, you have to set up your own Roth IRA. Along with choosing the bank or broker that will hold your account, you’ll need to determine when you’ll contribute. The money won’t come straight out of your paycheck. Instead, you’ll have to schedule transfers to fund the Roth IRA.

In many cases, even a Roth IRA is reasonably automated once you get it set up. However, the initial legwork can be time-consuming, particularly if you have to spend a lot of time exploring banks and brokers to find the right option.

No Upfront Tax Deduction

When a Roth IRA, you contribute after-tax dollars. That means you don’t receive a tax deduction for setting money aside for retirement during the tax year the contributions are made. Instead, you can take distributions once you reach retirement age tax-free.

Essentially, it’s the opposite arrangement you find in a traditional IRA. With traditional IRAs, there is an upfront tax deduction. However, distributions are taxed.

Technically, not everyone views the Roth IRA as a drawback. However, it doesn’t mean that you have to spend more of your money on taxes now. As a result, you may have less in your budget to spend or save, which could be troublesome for some people.

Additionally, depending on your financial situation, getting the tax break later instead of upfront may not yield the biggest benefit. If your income is higher during your earning years than it will be during retirement, you could end up spending more in taxes over the course of your life by using a Roth IRA.

The Five-Year Rule

When you hit the minimum age for withdrawals with most retirement accounts, you don’t have to worry about any penalties. However, Roth IRAs are subject to the five-year rule. That means if your first contribution to your Roth IRA wasn’t at least five years ago when you being making retirement withdrawals at age 59 ½ or older, earnings you receive as distributions could be subject to taxes.

For many people who begin contributing to a Roth IRA well before retirement age, this isn’t usually an issue. However, if you didn’t open a Roth IRA until after you were 54 ½ years old or older, you’ll have to wait past age 59 ½ to make tax-free earnings withdrawals.

Whether that is a problem depends on your financial situation. Some people work beyond age 59 ½ or have other sources of funds, so they don’t necessarily need the Roth IRA income right away. As a result, waiting until they can make tax-free withdrawals isn’t automatically an issue. Instead, it just requires awareness and planning.

For others, the delay could be more problematic. As a result, anyone who is considering opening a new IRA later in life should determine if the five-year rule applies to them. If so, they should make sure that the impact isn’t an issue and, if it could be, potentially explore other retirement account options.

Can you think of any other downsides of using a Roth IRA? Do you think the benefits outweigh the drawbacks? Share your thoughts in the comments below.

Here’s Some Investment Advice After an Inheritance

September 6, 2021 by Tamila McDonald Leave a Comment

Getting an inheritance is often bitter-sweet. While the money may be an opportunity, it is attached to losing someone who may have been important to you. As a result, it can be hard to think clearly about how to handle the windfall, potentially setting you up for some poor decisions. However, by using the right approach, you can make smart choices. Here’s some investment advice after an inheritance.

Take a Breath

First and foremost, don’t make any financial moves if you are still grieving. Emotionally difficult events often cloud a person’s judgment. If you are still struggling with significant feelings of sadness, anger, confusion, or frustration, you may make a choice that you wouldn’t usually. At times, that may be a decision you would later regret.

If you don’t feel emotionally calm enough to make big financial decisions, wait. Give yourself a chance to breathe and recover. That way, when you do make investment choices, you can be more confident about them.

Define Your Goals

Another step that you need to take before you choose any investments is to define your financial goals. Not only do you need to figure out your general plans for the money, but you also need to determine a timeline for its potential use.

Some types of investments are better for short-term objectives, while others are more suited for long-term ones. For example, while purchasing stocks, ETFs, index funds, or similar investments through a brokerage may work for goals positioned a few years out, while retirement account investments don’t usually align with short-term objectives.

If you want to save for a child’s college, a 529 plan provides you with benefits you won’t get elsewhere. If your goal is to set the money aside for retirement, then putting the money in an IRA, 401(k), or similar account could be your best choice.

By understanding your goals, you can choose investment vehicles that align with the objective and timeframe involved. That way, you get the best approach for your situation.

Understand Your Risk Tolerance

All investments include some level of risk. You are never guaranteed to receive a particular return. In fact, you may not just miss out on gains; you can also experience losses.

The amount of risk varies between investment options, at times dramatically. When risk levels are higher, the potential for significant growth and losses are both elevated. With lower amounts of risk, growth and loss rates are usually both reduced.

Not everyone has the same perspective when it comes to the amount of risk they find acceptable. Some investors are bolder; they are willing to tolerate a substantial amount of risk in exchange for the possibility of significant gains. While they understand that hefty losses are also possible, they feel the risk is worthwhile.

Others aren’t comfortable with high amounts of risk, accepting lower growth potential in exchange for a sense of increased financial safety. They would instead prefer that their investments feel reliable above all else, even if that means achieving less when it comes to gains.

Before you invest, you need to estimate your risk tolerance. That way, you can choose a strategy that meets your needs.

Diversify Your Portfolio

Regardless of your goal, you want to diversify your investment portfolio. With diversification, you reduce overall risk by having a variety of stocks, ETFs, index funds, bonds, or other assets in your portfolio.

That way, if one asset experiences a problem, you aren’t guaranteed to see losses across the board. Instead, the other investments may remain stable or could potentially rise, offsetting the decrease associated with the one asset or, at least, preventing widespread losses.

Get Help from a Professional

While some investing strategies are relatively straightforward, not all types are easy to navigate, especially for beginners. If you are new to investing, working with a financial adviser or similar professional can be a smart move. Sign-up to The Motley Fool for good advice.

When you work with an adviser, they can discuss your goals with you to understand what you want to achieve. Then, they can provide recommendations or outline all of your options, answering questions about the pros and cons of investing using each of those approaches.

As you start to research financial advisers, make sure to vet them carefully. Review their credentials. See if they are commission or fee-only. Read reviews from past clients. Request recommendations from trusted family members, friends, or colleagues.

Choosing the right financial adviser is essential. That way, you can get sound guidance that you can trust, ensuring you’re able to start your investment journey with greater ease.

Do you have any investment advice for after an inheritance? Did you receive an inheritance and think people could benefit from your experience? Share your thoughts in the comments below.

Should You Stay Married Until You’re Out of Debt?

August 30, 2021 by Tamila McDonald Leave a Comment

Money is often a point of contention in marriages. So much so that it’s often cited as a leading cause of divorce. However, many spouses wonder if getting a divorce while in debt is a smart move. They think maybe it’s better to wait until the debts are repaid before severing the relationship. If you’re trying to figure out if you should stay married until the broader debt situation is solved. Here’s what you need to know.

How Debt Is Handled During a Divorce

Before you decide whether you should stay married while debt is in the equation. It’s important to understand how those obligations are handled during a divorce. Usually, any debt in both spouses’ names is considered a joint obligation. Regardless of who spent the money.

However, if you live in a community property state. Even debt not in your name could fall on your shoulders. If the debt was incurred during the marriage, particularly if the resulting spending benefited both parties, both spouses can be deemed responsible.

If you live in a common-law state instead. The situation above doesn’t usually apply. The main exceptions tend to be if you cosigned on a debt. Even if it wasn’t ultimately jointly owned. In those cases, debts in your spouse’s name can also be viewed as yours.

In the end, the situation can be surprisingly complex. It ends up even more complicated if you and your spouse aren’t in agreement about debt responsibility. Should that occur, a judge may make the final determinations about where debts go, and that may not come out in your favor.

Dealing with Debt Before a Divorce

In many cases, the only way to avoid a court potentially deciding who is responsible for various debts is to pay them off. By eliminating the obligations. They are no longer part of the equation.

If both spouses agree about the goal of paying off debt and are willing to work together for mutual benefit, this could be plausible. For this to work, transparency needs to be a priority. By being open and honest with each other about the financial situation, it’s easier to move forward toward the shared goal without any unnecessary hardship.

However, it’s important to understand that paying down the debt first can be complicated depending on the state of the relationship and where you live. As mentioned above, in a community property state, debts incurred during the marriage are viewed as joint even if both parties don’t have their names on the account. That could allow a disgruntled spouse to open new credit accounts without the other’s knowledge and saddle them with a financial burden without their knowledge or permission.

Similarly, on joint revolving credit accounts in any state, either spouse could continue to spend that money. Since both names are on the card, they are each potentially legally responsible.

Making the Choice

If your relationship isn’t currently amicable, then you need to consider what could occur and plan accordingly. In common law states, you may want to start removing each other’s names from various debts (and bank accounts), creating a degree of separation. That may allow you to focus on paying down debt before moving forward with a divorce.

If your relationship is hostile and you’re in one of the community property states, waiting to get divorced may not be the best choice. While the division of debt during the proceedings may not go the way you’d like, officially separating it could be the safer road.

However, if you and your spouse agree on debt and the risk of nefarious action is low, paying it off is a smarter move. It lets you both move out of the relationship with fewer monetary obligations, potentially easing the transition and increasing your odds of financial success down the line.

Ultimately, only you can decide what’s right. Reflect on the state of the relationship, consider how debt can be divided in your state, and head in the direction that’s the best fit for your situation.

Do you think people should stay married until both parties are out of debt? Why or why not? Share your thoughts in the comments below.

What Out Of Network Medical Services Mean to Your Financial Health

August 23, 2021 by Tamila McDonald Leave a Comment

Healthcare costs can add up quickly. However, if you’re using out-of-network medical services. The damage to your financial health could be significant. If you are wondering what kind of impacts out-of-network providers can have on your budget. Here’s what you need to know.

What Is an Out-of-Network Medical Provider?

An out-of-network provider is a healthcare facility or medical professional that isn’t affiliated with your health insurance coverage. They aren’t part of your insurer’s medical care network.

Medical networks are groups of doctors, hospitals, and facilities that have a contract with your insurance provider. That contract outlines various details about care. Particularly when it comes to the rates they can charge insured patients.

It’s important to note that out-of-network medical professionals can work for in-network facilities. When that happens, any facility-related charges are bound by the contract. However, services provided by the medical professional are not.

How Using Out-of-Network Medical Providers Costs You Money

When patients use out-of-network medical providers. They end up paying different rates for services than if they used an in-network provider. The out-of-network provider isn’t bound by a contract with your insurer. Thus, allowing them to set their own prices for services.

Insurers may also set separate coverage rates for using in-network and out-of-network doctors. For example, the percentage of the charge that the insurer will cover, copay amounts, and other details may be different. The rates are less favorable if you use out-of-network providers.

In some cases, insurers may not cover any of the costs associated with out-of-network care. When this happens, the patient is responsible for the full bill regardless of whether the insurer handles some of the expense if an in-network provider was used.

Cumulatively, this means that out-of-network medical services cost patients more money. Providers may charge higher prices, and the insurer may cover less of the cost. Anything not handled by your insurance company is your financial responsibility, so you’ll end up with a higher bill by not staying in-network.

How Out-of-Network Medical Services Harm Your Financial Health

Often, healthcare insurance and medical bills are quite costly, even when you use in-network providers. However, if you go out of network, the out-of-pocket costs are even higher. That can put a significant strain on your budget, making it hard to cover your living expenses while you repay the debt.

In the worst-case scenario, the higher costs might actually be unaffordable. If that happens, you may fall behind in repaying your medical bills, causing the account to go into delinquency or leading the provider to send the account to collections. At times, it may become so burdensome that bankruptcy seems like the best option, a choice that can have long-lasting effects on your credit report and score.

Can you think of other ways that out-of-network medical services impact your financial health? Share your thoughts in the comments below.

This Is NOT The Time to Purchase a New Home

August 16, 2021 by Tamila McDonald Leave a Comment

When mortgage interest rates are low, many people assume that makes it a great time to buy a new house. While lower interest rates are certainly a positive, other factors lean in the other direction, often outweighing any benefit a person may get from snagging a favorable interest rate. If you are wondering why now is not the time to purchase a house, here’s what you need to know.

Skyrocketing Home Prices

One of the most significant factors regarding why now isn’t a great time to buy a house involves home prices. The average home value in the United States is $298,933 (as of August 2021), representing a year-over-year increase of 16.7 percent. Plus, the prices in some cities rose much faster, and many are continuing their skyward trajectory.

While the rising prices may make it seem like buying sooner rather than later is a wise way to stay as far ahead of the curve as possible, that may not be true. It isn’t clear whether these growth rates will continue. Ultimately, there is a chance that once the current buying spree calms, the market will correct, bring home prices back down a bit.

Low Inventory Numbers

In many parts of the country, the inventory of homes is near record lows. Partially, this is because of the wide-scale buying activity spurred by the pandemic and reduced interest rates. However, some of it is also related to the time of year. Often, summer is a major buying season, putting additional stress on an already tight market.

When all of those factors come together, buyers simply don’t have as many options available. As a result, you may feel like you have little choice but to settle for a property that doesn’t meet all of your needs because that’s what is on the market.

With a purchase as significant as a home, settling isn’t necessarily smart. You may discover quickly that what the home lacks is actually problematic, leaving you dissatisfied with the house.

No Leverage to Purchase a New Home

When inventory is low, and prices are moving up, buyers lose a lot of leverage. Sellers don’t necessarily need to negotiate, as they know that they have a good chance of finding a different buyer who is willing to pay more or ask them for less.

For example, even if a home inspection reveals an issue, getting the seller to reduce their price or pay for the repair may be challenging. If the seller believes another buyer would go forward with the purchase at their preferred price anyway, they might refuse, leaving you in a tough position.

Today, it’s far more common for a home purchase to go through with a price above the initial asking. Additionally, fewer contingencies is a tactic some buyers use to make them more attractive to sellers. If you’re looking to purchase a home in a “hot” area, you need to decide if you’re willing to go to similar lengths. If not, waiting may be your best bet.

Rushing the Decision

Rising home prices and low inventories mean buyers have to act quickly. Otherwise, another prospective buyer might snatch up the property before you have a chance to make an offer. This creates a sense of urgency, one that may cloud a buyer’s judgment.

The issue with this scenario is that rushing could lead to poor decisions. You may extend an offer because you’re afraid you’ll miss out on a house, not because you feel strongly about having it.

Plus, the current state of the market adds an extra level of pressure to the situation. Often, buying a home is stressful when conditions favor buyers, let alone when it’s a seller’s market. The additional pressure could also lead to rushed decisions, increasing the odds you’ll overlook a problem or make another kind of misstep.

Are There Any Reasons to Purchase a Home Now?

A home purchase is a big decision, one that’s highly personal. For some people, buying now is going to be a necessity. If that’s the case, then make sure you understand the local market and what it means to go forward with a purchase in the current climate.

However, if you have the ability to wait, doing so could be smart. Market conditions are favoring sellers now, but that may not be the case long-term. You want to make sure that you factor that into your decision-making process. That way, you can make the choice that’s best for you.

Are there any other reasons that lead you to believe that now is not the time to purchase a house? Do you disagree with the points above and think that buying now is a good idea? Share your thoughts in the comments below.

Hurricane Season-Here’s What Your Insurance Won’t Cover for Hurricanes

August 2, 2021 by Tamila McDonald Leave a Comment

Hurricane season is currently well underway. While most people don’t want to think about a hurricane hitting their home. If you live in certain areas of the country, the possibility certainly exists. That’s why having the right kind of insurance coverage is so critical. Without it, you may not have the proper level of protection if your house ends up in the path of a hurricane. If you are wondering what your homeowners insurance won’t cover for hurricanes. Here’s a breakdown based on insurance type.

What Typical Homeowners Insurance Won’t Cover For Hurricanes

While homeowners insurance can be fairly comprehensive, it does have limits. Certain types of damage are often excluded if you have a traditional homeowners insurance policy.

In many cases, hurricanes aren’t explicitly listed as non-covered events. However, the kinds of damage hurricanes often cause normally are listed as excluded.

For example, water damage caused by storm surges and floods isn’t covered by the vast majority of traditional policies. If you live in a hurricane-prone area, some forms of wind damage might also be excluded. In both of those cases, you may need supplemental policies for flood and wind damage to secure the proper coverage.

Additionally, sewer backups related to a hurricane aren’t usually covered events. In fact, you may have to have both flood insurance and sewer backup coverage to ensure you have all of the protection you need.

Finally, if you incur expenses during an evacuation, such as costs associated with temporary lodging, that isn’t covered by most traditional homeowners insurance policies. However, if you come back to find that your house is now unlivable. You may have some coverage that can offset any temporary housing costs.

Dealing with Hurricane Deductibles

It’s important to note that if you do have a policy that covers hurricane-related damage. You may be subject to a hurricane deductible. A hurricane deductible is similar to a typical one. Since it outlines the amount you are responsible for paying to address the resulting damage.

However, hurricane deductibles are higher than your typical deductible. Additionally, they only apply under specific circumstances. Usually, a triggering event has to occur. For example, if a hurricane warning is issued by the National Weather Service, that may enable insurers to require hurricane deductibles.

Whether you may be subject to a hurricane deductible depends on where you live. They are only a factor if you reside in one of the areas that allow them. Currently, those locations include:

Alabama
Connecticut
Delaware
Florida
Georgia
Hawaii
Louisiana
Maine
Maryland
Massachusetts
Mississippi
New Jersey
New York
North Carolina
Pennsylvania
Rhode Island
South Carolina
Texas
Virginia
Washington, DC

Additionally, the amount of a hurricane deductible can vary. Typically, it’s based both on state law and the value of your covered property. It could be as little as 1 percent of your home’s value. On the other hand, it could be as high as 10 percent. This depends on applicable laws and what’s in your policy.

Addressing Supplemental Coverage

As mentioned above, certain kinds of hurricane-related damage aren’t usually covered by basic homeowners insurance policies. However, if you have the right supplemental policies or riders. You may have all of the coverage you need.

If you want reasonably comprehensive coverage for all kinds of damage a hurricane can cause. You may need the following extra policies:

Flood Insurance
Wind Insurance
Sewer Backup Insurance

Typically, by adding those three kinds of coverage, you can address most hurricane-related damage. However, as with all insurance policies. You’ll need to review the details to confirm what is and isn’t covered. Even those policies or riders can have exclusions. So you want to read through the policy carefully to make sure you have everything you need.

What Typical Renters Insurance Doesn’t Cover

Renters have a different kind of insurance coverage than homeowners. With a renters insurance policy, there’s never any coverage for the building’s physical structure. That’s because the renter doesn’t own the building.

However, like homeowners insurance policies, renters insurance coverage does have limitations. In most cases, damage caused by floods created by hurricanes isn’t a part of a typical renters insurance policy. Instead, the renter would need a separate flood insurance policy or a rider that addresses that type of water-related damage.

If you have a basic renters policy. Adding flood insurance or an appropriate rider may be enough. However, you’ll want to review the policy details to confirm.

Additionally, it’s important to note that renters aren’t typically subject to hurricane deductibles. As a result, if you owe a deductible. It’s typically the standard one in the policy.

What Vehicle Insurance Doesn’t Cover

Both homeowners and renters insurance policies don’t extend coverage to your vehicle. Regardless of whether the damage is related to a hurricane. As a result, you need a separate auto policy.

Unlike homeowners and renters insurance, comprehensive vehicle policies do provide hurricane-related coverage. With comprehensive coverage, damage that isn’t related to a collision is covered. Which includes damage caused by severe weather.

However, if you only have liability coverage on your vehicle. Damage related to a hurricane isn’t a part of it. In that case, you would have to handle any related expenses yourself.

Can you think of anything your homeowners insurance won’t cover for hurricanes? Share your thoughts in the comments below.

What Does it Mean to Recast Your Mortgage?

July 26, 2021 by Tamila McDonald Leave a Comment

When homeowners are looking for ways to reduce their monthly mortgage payments, most focus on refinancing. However, there is an alternative that can yield similar results without many of the hassles: mortgage recasting. When you recast your mortgage, you can secure a lower monthly payment, as well as save on interest and avoid fees associated with refinancing. If you’re wondering if mortgage recasting is right for you, here’s what you need to know.

What Is Mortgage Recasting?

Mortgage recasting is a process where the borrower pays a large lump sum to their mortgage lender, dramatically reducing the principal. In exchange for the substantial payment, the lender then reamortizes the loan based on the new, lower balance, creating a reduced monthly payment.

When you recast your mortgage, no other details of the loan change. You maintain the same interest rate, and the term length stays intact. Only the principal balance and monthly payments change.

Why Would You Recast Your Mortgage Instead of Refinancing?

Borrowers can potentially experience a few benefits if they opt to recast their mortgage instead of refinancing. First, it gives you the ability to keep your interest rate.

When you recast your mortgage, the interest rate is unchanged. With a refinance, the rate is based on your current credit score and market conditions. If you wouldn’t qualify for a rate lower than what you have on your loan now, then recasting lets you keep your existing rate.

Second, a mortgage recast doesn’t require a credit check. You’re staying with the original lender and maintaining the same general loan terms, so checking your credit isn’t necessary. If you refinance, a credit check is required, even if you use the lender that has your current mortgage.

Third, the cost of a mortgage recast is usually far lower. While you may see a small fee for the recast – usually in the $250 to $500 range – it’s far below what you’ll pay to close on your refinance loan. On average, the closing costs associated with a refinance are near $5,000, and that may not be the only fee you encounter.

Which Mortgage Loans Are Eligible for Recasting?

Only certain kinds of mortgages are eligible for recasting. First, you need to have a loan with a lender that has a reamortization program. Not all lenders do, so it isn’t an option available to everyone.

Second, you need the right mortgage type. Often, you’ll need a conventional loan to qualify. If you have an FHA, VA, or USDA loan, the lender may not have the ability to complete a recast.

Finally, your loan has to be in good standing. Typically, a lender won’t reamortize a mortgage if you’re behind on payments. Additionally, it may not be an option if your loan is currently in forbearance.

How to Recast Your Mortgage

If you want to recast your mortgage, you’ll need to complete several steps. Here is an overview of the typical process.

Contact Your Lender

Before you do anything else, contact your lender to ask about their mortgage recast process and requirements. Every loan provider may have different qualifications – such as a minimum lump sum payment – as well as unique steps you’ll need to take.

By speaking with your lender first, you can ensure you can qualify for the reamortization. Plus, you’ll be able to get information about the process, including any required forms, how to make a principal payment, processing times, fees, and similar details.

Send the Lump Sum Payment

Once you have spoken with your lender, you can arrange to send the lump sum to pay down the principal. Often, it takes a couple of business days to process, so keep an eye on your balance to see when it posts.

Move Forward with the Recast

After making the principal-reducing payment, you’ll need to finalize the recast. In some cases, this means contacting your lender again to request the reamortization of the loan. You may also need to handle the fee for the service at this time.

However, even your lender initiated the review based on your previous discussion, it’s still wise to reach out again. That way, you can confirm everything is moving forward.

Continue with Your Old Monthly Payment

Recasting your mortgage doesn’t happen instantaneously. Instead, it isn’t uncommon for it to take 45 to 60 days before a new payment is assigned. Until that time, continue with your old monthly payment. That way, your loan remains in good standing.

Review Your New Monthly Payment

After the processing time passes, you should see a new monthly payment on your mortgage. Make sure to review the amount. That way, you can update your budget accordingly.

Alternatives to Sending a Lump Sum Payment

While sending a lump sum principal payment is often the fastest way to qualify for a mortgage recast, it isn’t always your only option. Some lenders will allow you to reamortize if you send enough principal-reducing extra payments over time.

For example, if your assigned monthly payment is $1,500, but you’ve been sending $1,750 instead, that extra $250 is a principal-reducing payment. Similarly, if you use biweekly payments, you technically make 13 payments per year instead of 12. As a result, if your monthly payment was $1,500, you’d make $1,500 in principal-reducing extra payments each year.

Many people send their tax refunds, work bonuses, or similar lump sums to their mortgage as extra principal-reducing payments. If you fall in that group, those funds also count.

Essentially, any money you send to your mortgage specifically to reduce the principal can help you qualify for a recast. Once you’ve sent in enough – based on your lender’s requirements – the lender may be willing to reamortize without an additional lump sum principal-reducing payment.

This approach can be ideal for anyone who wants the option to recast but doesn’t have access to a large lump sum today. However, it does mean staying with your current monthly payment until you’ve reached a point of qualifying, so it won’t help if you need to reduce your monthly payment quickly.

Have you recast your mortgage? Do you think it was the right decision? Share your thoughts in the comments below.

Is It a Good Idea to Be a Salaried Employee?

July 19, 2021 by Tamila McDonald Leave a Comment

When it comes to compensation at your job, there are usually two possible options. You are either hourly or salaried. In many cases, the company dictates which applies to your position. Meaning, you don’t necessarily get to pick what you receive for a specific role. However, by knowing the differences, benefits, and drawbacks, you can figure out if one approach meets your needs better than another. Then, you can use that during a job search. Thus, focusing on positions that provide what you’re after. If you’re wondering whether it is a good idea to be a salaried employee, here’s what you need to know.

Salaried vs. Hourly: What’s the Difference?

The main difference between salaried and hourly jobs is how you’re paid. In a salaried position, you’re paid a set amount each pay period, such as every week, two weeks, or month. The number of hours you actually work doesn’t necessarily factor into the equation, barring certain exceptions.

For example, you may be required to work a certain minimum number of hours each workday or workweek if you want to keep your pay for that period at its usual level. Otherwise, you might have to use paid leave if you’re going to be absent or fall below the requirement.

With hourly work, you’re paid based on the exact number of hours you work. Your pay rate is listed as “per hour,” so the number of hours you work impacts your paycheck each pay period. You may be given a schedule in advance, but your job may not be dependent on working a minimum number of hours on a weekly or per-pay-period basis.

The Benefits of Being a Salaried Employee

As a salaried employee, you get a level of financial security. You know how much you’re earning, and the amount tends to be reasonably consistent.

Additionally, salaried employees usually receive additional benefits, like medical and retirement. Paid leave is more common here as well.

Finally, salaried positions tend to be more career-oriented. You might have more chances to learn, grow, and develop, which could make it easier to advance into higher-paying roles.

The Drawbacks of Being a Salaried Employee

The biggest downside is that salaried employees aren’t always eligible for overtime. If you work more than 40 hours per week, you don’t get additional money in your check.

Additionally, since there isn’t overtime pay, there can be additional pressure to work long hours to accomplish certain objectives. While this isn’t always the case, when it happens, it can make the environment more stressful.

Is It a Good Idea to Be a Salaried Employee?

Whether becoming a salaried employee is a good idea for you depends on your needs and preferences. If you’d rather have a set paycheck, access to benefits, and more opportunities for growth, that may make not earning overtime worthwhile.

However, if you’d rather be compensated for every hour you work or experience less pressure to stay at your job beyond your scheduled time, salaried jobs might not be a great fit. Hourly might give you the flexibility you’re after, allowing you to clock out at the end of the day with less stress.

Do you think it’s a good idea to be a salaried employee? Why or why not? Share your thoughts in the comments below.