5 Financial Steps All Parents Should Take to Protect Their Family
Via: Guest blogger Sara BaileyAs a parent, the safety and security of your family is your No. 1 priority. However, creating a safe home and looking after your children isn’t enough. To truly protect your family, you need to think about financial security too. Here are five financial planning steps all parents should take:
No parent wants to think about passing away before their child grows up. But while it’s tough to think about, it’s important to plan for. If you don’t write a will and something happens, you’ll have no say over who raises your children or how your money is allocated. Even if you have few assets, it’s imperative to create a will that namesa guardianfor minor children.
Life insurance is another critical piece of worst-case-scenario planning. If you pass away without a life insurance policy, your family could struggle to afford a funeral and stay afloat financially. While this is especially true for wage-earning parents, the high cost of child care means life insurance is important forstay-at-home parents, too.
When shopping for life insurance, you’ll need to choose between term and whole life insurance. Term life insurance expires after a set number of years. It comes with low premiums that are suitable for parents who don’t have a lot to spend on life insurance. For those who want a life insurance policy that never expires and guarantees return on investment (as long as you pay the bill), whole life is a better choice.Learn moreabout the options at Nerdwallet.
We all want to be close to family as we age, but relying on adult children for care in old age isn’t the best choice. According to the Family Caregiver Alliance, family caregivers lose anestimated $300,000in wages. That’s enough to prevent adult children from saving for their own retirement and their children’s education.
Plan for long-term care now so you can afford professional caregiving when you’re older. Because Medicare generally doesn’t cover long-term care, you’ll need to increase your retirement savings, purchase long-term care insurance, or make another plan to finance long-term care. While it may seem early to be thinking about old age, making a long-term care planwhen you’re young gives investments time to grow and secures you lower premiums on long-term care insurance.
Not all financial planning involves looking decades into the future. An emergency fund is a key financial tool for dealing with unexpected andunavoidable billsthat can crop up any time, like hospital bills in a medical emergency. It’s not enough to have spare money in investments. As SmartAsset explains, an emergency fund should be held somewhere that’seasy to accessin a hurry, like a high-interest savings account or money market account.
If one parent were suddenly unable to work, would your family be able to stay afloat indefinitely? If the answer is no, you need disability insurance. Disability insurance pays a portion of your income (usuallyaround 50-60 percent) if you’re sick or injured and can no longer work.
Some workplaces offer disability insurance through their employee benefits package. Talk to your HR department to learn if there’s a disability plan you can opt into. Otherwise, you’ll need to purchase individual insurance. You may also choose to supplement an employer’s policy with additional insurance, such as if your employer only offersshort-termdisability insurance.
Keeping your family safe is about more than clicking in seatbelts and cleaning scraped knees. True family security involves asking the hard questions, like how you’ll pay the bills if you lose a job or your spouse passes away. By facing these tough questions head-on and taking financial steps to prepare, you can secure your family’s future no matter what happens.
Image via Unsplash
First Financial Planning Steps for New Parents
Making the jump into parenthood for the first time can be thrilling. However, in order to provide the best quality of life for your family, it is important to begin financial planning as early as possible. This will help ensure your family will remain stable over the years and have enough saved for both expected events, like college, and the unexpected. Here are some ways you can start financial planning for yourself as a new parent.
Determine Your Net Worth
You should begin by taking full account of your current status. In other words, you’ll need to calculate your net worth. Net worth is everything of value you own (your assets, which include everything from cars to instruments to land) minus your liabilities (any debts you might have). To stay organized when calculating your net worth, create two columns, one for your assets and liabilities.
In the assets column, start listing anything you own. Be sure to include less tangible assets, like savings, your current bank account balance, and stocks and bonds. While many assets have corresponding values, some, like property, are in more constant states of flux depending on the market, so you’ll also need to figure out the value of your home. The easiest way to estimate your home’s value is to locate a comparable house nearby. Use the internet, inquire with real estate agents, or search your neighborhood yourself to find houses of a similar size and age with similar amenities. Be sure to take location into account -- if your current house is in a good spot in a highly-lauded school district, try to find a property in that same district. You should also consider the time of year and the status of the market. Remember, the current estimated value of your house may not be what you paid originally. If possible, pick several comparable houses and average their sale prices to estimate the value of your own home. Add that value to your assets column and add the numbers together.
How Knowing Your Net Worth Helps Financial Planning
In the liabilities column, list all of your current debts, including credit card debt, student and personal loans, mortgages, car payments, and so on. Add up the numbers to find your total amount of current liabilities. Finally, subtract your total liabilities from your total assets to find your current net worth. While this may seem like a simple exercise, knowing your net worth can help design your financial plan for the next several years.
If you are below or near a total of $0, you should immediately take steps to reduce your current expenditures and increase your assets, perhaps by adding a stream of income or investing in more valuable ventures. Knowing your net worth also helps you estimate how much ready money you’ll have at a particular time, which can be extremely useful should emergency strike.
First Steps Toward Financial Security
As a parent, you’ll have to plan for your child’s future as well as your own. Start by taking steps to reduce your liabilities and pay off any lingering debts. Now that you have your finances organized, you can create a weekly budget. Be sure to include the cost of meals, memberships, and incidentals, as well as entertainment, like trips to the museum with your child. Even changing your behavior slightly by eating out one day less each week can greatly affect your overall monthly assets.
A 2014 study found that the average cost of raising a child to age 18 is almost $250,000, so every little adjustment can help. Saving years before you need the extra money will help ease the burden. The same goes for college planning-- begin saving as soon as possible. Even if you can only afford a small amount each month, getting into the habit of setting a certain amount of money aside for a college fund will help you feel more at ease over the years.
Financial planning may seem like a difficult, complicated task. However, the key is to be organized. If you keep track of the flow of your money and take steps to spend less than you make, you will put your family in a good financial position for the future.
Photo Credit: Pexels.com Thewidow.netThis blog is written by Sara Bailey at her website www.thewidow.net who at 41 found herself a grieving single mom raising a son and daughter. Through her website she shares her experience and inspiration with others. Sublime Financial Guest BloggingIf you're an individual or company in our industry or related industries and would like to share important or timely information please feel free to contact us.
For any homeowner, foundation issues spell trouble. After all, the foundation is the base of the house. When it has a problem, the whole structure is affected. From roof problems to bowing walls, the problems from a bad foundation can be significant.
So, will a foundation problem hinder you from selling your house? Probably not. However, you may need to compromise on the price.
When prospective buyers hear of a foundation issue, either they will negotiate the price heavily on their favor or they will walk away. A home’s foundation, after all, is very important.
Jim from Granite Foundation Repair here in Dallas provided some insights on how to tell if your house has foundation issues and offered an advice on how to sell it.Signs Your House Has Foundation Issues
If you suspect you have a foundation problem, have your house inspected by a professional foundation repair expert immediately. Sometimes, the foundation issue may not be as serious as you initially thought.
Getting a professional assessment will help you decide whether it will be worth to fix it or sell it as it is. Here are signs that will tell you your house has foundation issues:
At first, the problem may not even be noticeable. But over time, you may notice that the gap continues to widen.
Slab foundations and pier and beam foundations are positioned differently, so they get impacted differently.
This is a common issue in slab and pier and beam foundations. Be sure to have your home professionally assessed, as high humidity levels may also cause this.
Foundation upheaval is caused by various factors. For example, excessive moisture or expansive clay soil.
Remember that all cracks are created equal. So, have them examined by a professional foundation repair expert. Options in Selling a Home with Foundation Problems
Once you’ve noticed that your house has a foundation problem, the next thing to do is understand the available options. These are: Option One: Try to sell the home with its foundation issues.
Consider this option if your house requires extensive repairs. Buyerslooking to provide value to an investment property often see this as a good opportunity. On the other hand, many buyers often think “money pit” whenever they hear the words “foundation repairs.”
Even when a buyer is willing to fix the issue, financing the repairs may become a problem. Many lenders shy away from houses that need structural repairs. Traditional lenders like HUD and VA only finance homes that are structurally sound.
Suppose you find a buyer that agrees to this condition then the rate of interest is likely to be way high. As such, understand that many buyers may have a hard time qualifying to buy it if you decide to sell the home as it is. Option Two: Fix the issues and then sell the home.
Get a professional assessment as soon as you notice your home has a foundation issue. Ideally, you want a report from a structural engineer. This should cost you anywhere between $400 and $900 depending on where you live.
For issues that don’t require extensive repairs, expect to pay anything between $4,000 and $12,000. However, if the foundation problems require extensive repairs, then the costs of between $20,000 and $40,000 are pretty common.
Selling a house that has foundation issues isn’t easy. Prospective buyers are scared of such homes and banks are less likely to authorize loans.
Difficult as it may seem though, it doesn’t mean it’s impossible. You only need to understand the options before you once a professional foundation repair assessment is done.
Sublime Financial here in Dallas, Texas specializes in finding the best rates for home loans across Texas. We have also been advising our clients that mortgage rates will rise.
Mortgage News Daily reports they have. Let’s share some information they are reporting.
In total, rates are up a better part of a half a point since December 2017. The current trend continues to offer false hope with potential ceilings that are quickly broken. Rates have then had a challenging time getting back below those levels. This is classic behavior for these sorts of big, serious market movements and part of the reason we've continued to advocate a defensive stance despite periodic victories. Such victories are bound to occur in any interest rate environment. We need to see bigger victories and more of them if it's going to make any sort of sense to be anything other than defensive when approaching the current interest rate landscape. Lock early and plan on rates moving higher until we see a broad shift in momentum.
Let Sublime Financial get your home loan locked in now. From cash-out refis, new home purchases or getting a lower rate, we can still get you a good rate before it continues to rise. Contact us now.
Per The Mortgage Reports; It's a new year, but a similar story from years past is on repeat. Mortgage rates are low, but not for long.
Just about every analyst out there is calling for higher rates in the new year. The economy is breaking records, and a freshly minted tax code could induce economic expansion, but also inflation.
All these factors are bad for mortgage rates.
The good news, though, is that rates are surprisingly steady in the face of overarching changes like the new tax law. A golden opportunity still exists for those who are looking to buy or refinance a home in 2018.
The general consensus among mortgage rate forecasters, not surprisingly, is that mortgage rates will go up in 2018.
Following is a short list of predictions for 30-year fixed rates, according to the nation's top authorities.
Compared to today's rates below 4%, all of these are unwelcome but realistic predictions.
The question astute mortgage shoppers might ask is, why does everyone keep predicting higher mortgage rates? Basically, it's because mortgage rates are currently "too low."
Put another way, mortgage rates should be higher than they are. The economy has made a near-full recovery since almost a decade ago, when the housing downturn took its toll.
Unemployment topped out at 10% during the Great Recession and now sits in the low 4s. The stock market is booming, and housing prices are rising, too.
Mortgage rates are currently "too low."
Interest rates usually rise when the economy is doing this well. In the summer of 2007, in the midst of the last boom, 30-year rates neared 6.75% according to Freddie Mac. The boom prior to that — in 1999 — offered rates above 8%.
So why are rates still half that?
That's a good question, and one that many analysts have tried to answer. Many cite low inflation as discussed below. Others say wages for the average worker aren't rising enough to spur stronger spending, and therefore a true recovery.
And there could be something to that. If you don't own a house, you don't own stocks, and you haven't gotten a real raise in years, do you really feel better off than you did a few years ago? Probably not.
While one could speculate forever on why mortgage rates are still low, the fact that they are should spur refinancing homeowners and prospective buyers. By all accounts, there's a closing window on low rates.
The invisible ceiling will likely break apart in 2018.
On December 22, President Trump signed into law "the biggest [tax] cuts ever in the history of this country."
The new code brings a number of changes, some of which directly affect homeowners and home buyers.
For instance, you will no longer be able to write off unlimited property taxes (or state and local sales tax). Those items are now capped at $10,000. Likewise, the mortgage interest deduction — one of homeowners' most beloved deductions — is now applicable to the first $750,000 in mortgages, down from $1 million.
But those changes won't necessarily affect mortgage rates themselves. What could affect them are the economic changes that come with the tax cuts.
First, the new tax code cuts the corporate tax from 35% to 21%. If all goes as the administration plans, that cut could spark economic development. Corporations could focus on expansion and hiring with the newfound funds.
More workers getting paid more could lead to higher mortgage rates via increasing inflation.
The average person could get a tax break as well, adding to economic growth.
For instance, a person in the 25% tax bracket will see their tax reduced to 22%. Likewise the 15% tax bracket is now 12%.
In real dollars, a married couple making $100,000 per year will see 3% more of their income, or $3,000, in 2018.
Multiply that by the millions of couples in that tax bracket, and it could add to economic expansion. That is, if those families decide to spend the money.
But more money flowing throughout the economy is not the only way mortgage rates could rise.
By some estimates, the tax plan will add hundreds of billions to $2 trillion to the federal deficit according to Investopedia. That debt would be financed by selling more Treasury bonds.
A bigger supply of bonds would dampen investor demand. So rates would need to rise to keep investors buying.
Treasury bond rates don't guide mortgage rates, but another type of bond does: mortgage-backed securities.
A bigger supply of bonds would dampen demand. So rates would need to rise to keep investors buying. Higher rates on mortgage-backed securities mean higher rates for consumer mortgages.
So, should you take a "wait and see" attitude toward mortgage rates in 2018? Probably not.
You can't talk about mortgage rates without also mentioning inflation.
Low inflation is perhaps the best explanation for today's "too low" mortgage rates.
Inflation has been surprisingly low. The five years preceding October 2017 saw a rate of "core" inflation (excluding food and energy) of 1.58% per year, falling short of the Fed's goal of 2%.
Low inflation in times of recession are expected. But why hasn't inflation budged during solid "rebound" years?
For comparison, prices during the five years preceding October 2008 saw a robust 2.19% average increase per year.
Not even the Fed fully knows why inflation hasn't picked up to those levels. To date, it has explained it away as "transitory." Meaning, whatever is causing ultra-stable prices will soon go away.
We won't try to answer the question here, but consumers should note is that interest rates are on borrowed time.
Will mortgage rates rise sharply in January as inflation picks up? Not likely. However, a gradual increase is expected as 2018 progresses.
Reverse mortgages in Texas are about to change. This change will go into effect across the entire country. Sublime Financial handles many reverse mortgages in Dallas and all over the state. We are now trying to inform clients who have been thinking about getting a reverse mortgage to act now.
The Department of Housing and Urban Development Tuesday announced it will increase premiums and tighten lending limits on reverse mortgages. This is because they have concerns about the actual strength of the program and some taxpayer losses.Mortgage Premiums In Texas
Anyone in Dallas or Texas looking for a Home Equity Conversion Mortgage (HECM) otherwise known as a reverse mortgage, will see insurance premiums rise from 0.5% to 2.0% of the maximum claim amount at the time of the origination.Reverse Mortgage Limits In Texas
According to the Wall Street Journal, the average amount of cash seniors can access will decline from about 64% of the home’s value to 58% based on the current rates. This goes into effect on loans October 2, 2017.
According to Ben Carson, the losses they have been seeing in the program, have spurred the need to make the changes to balance the mission of the program along with the responsibility to protect taxpayers. They do not want future reverse mortgages to adversely impact the overall health of the FHA’s insurance fund, which supports the financing needs of the younger, first-time homeowners with traditional FHA mortgages. Without this change the Federal Housing Administration would need an appropriation from Congress in the upcoming years to keep reverse mortgages going.
Reverse Mortgage Customers In Texas
What does this mean for our clients here in Texas who are looking at reverse mortgages? Do it now in September 2017 in order to get more value for your home and to avoid the higher insurance premiums.
Sublime Financial handles home loan needs in Dallas and all of Texas. Please contact us immediately so that we can help you beat this deadline.
Are you moving to Texas from another state? Perhaps you’ve decided (finally), to stop renting and buy a home in Dallas, Houston or Austin. We’re helping clients from out of state and locals here in Dallas get a home loan, which gets them in the home of their dreams. If you are one of these home buyers you have no doubt discovered how tight the Texas housing market is and how challenging it can be to find a home.
Dallas, Houston and Austin Housing Market
According to an article this week in the Dallas Morning News, a Trulia analysis of building permits shows 1 out of every 10 new homes in the United States are being built in Dallas, Houston and Austin. Those Texas cities are on pace to build about 130,000 new homes in 2017. More than 10 percent of all new construction expected in the country for 2017. Here in Dallas alone, 50,000 new homes are expected to be built.
Buying a Home in Dallas and Other Texas Cities
There are a few factors to consider if you’re looking to buy a home here in Dallas or anywhere else in Texas. The first thing to take into consideration is the fast rate people from all over the country are moving here. We don’t know a single realtor who isn’t having to put higher bids on a house for their clients in order to get it.
The second factor is the shortage of housing in these markets even with new construction. Nationwide, homes listed for sale in any given month has been shrinking since mid 2015 according to Redfin.
Mortgages For Dallas Homebuyers
Sublime Financial can help you buy a home in Dallas or anywhere else in Texas. We do this by getting you either pre-qualified or pre-approved.
Getting pre-qualified is the first step in any home buying situation, which isn’t an all cash deal. It’s generally fairly simple. Homebuyers supply us with their overall financial picture including debt, income and assets. This gives us and the buyer an idea of how much home they can afford.
For the competitive market here in Texas we recommend our clients go a step further and get pre-approved at the start of their home search. Getting pre-approved means the buyer fills out the application with all the information to find out a more precise range of house they can afford. We then give the home buyer a conditional letter, which they can show the realtor. Sellers and realtors take note of potential buyers who have taken this extra step closer to obtaining the official mortgage. Often, getting pre-qualified can help our buyer move faster or get their offer accepted easier.
The Dallas and North Texas housing market is on fire. This isn’t news to anyone who is trying to buy a home. With people constantly moving to Texas in record numbers the availability of homes has declined while prices have increased.
Home Equity In Dallas and Texas
With housing costs increased across Dallas and the surrounding areas, homeowners who have owned their home for a few years find themselves in a unique positon with equity in their homes. There are several reasons Sublime Financial is working with homeowners across Texas to refinance their current mortgages. Using the equity is one of the big reasons. Many homeowners are using the equity in their homes to do a cash-out refi. This money might be used for home improvements or to pay off other debt.
Secure A Lower Interest Rate In Dallas
One of the top reasons our customers are refinancing is to get a lower interest rate. Many homeowners have an older mortgage, which may have a higher interest rate. By letting Sublime Financial find a new and lower rate we are able to save our customers money every month!
Refinancing A Shorter Term Helps Build Equity
By refinancing your home in the Dallas market, Sublime Financial also helps you build more equity in your house even faster. For example, if you currently have a 30-year fixed rate and refinance to a 20-year fixed rate at a lower percentage, you’ll be able to save on interest paid and shorten the amount of time it takes to gain more equity.
Switch Mortgages Types in Dallas
Some homeowners in Dallas may have an ARM and want to take advantage of the current low rate we have. By switching from an ARM, which can rise, to a fixed-rate mortgage, we can lock in these low rates now and you won’t have to worry about rate increases.
Modular Homes In East Texas
Last, but certainly not least, we have discovered that many people in the East Texas area with modular homes are sitting with very high loans right now. Many are paying over 6% and don’t realize that modular homes can now also be refinanced for a lower rate. These situations depend on a few things, but are certainly worth exploring to save a customer money.
Sublime Financial is helping our customers each week from Dallas to Tyler, Texas refinance their homes for many reasons and save them money. All our consultations are free. Please reach out to us now so we can help you as well.
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