All Posts By

Tarra Jackson

Sep 18
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FHA New Rules May Make Getting A Mortgage More Difficult for People with Student Loans

By Debt Management, Money Management, Real Estate, Student Loans No Comments

Most people that know me know that I love movies! I especially love the romantic comedy, “While You Were Sleeping.”  However, there was nothing romantic or funny about the Federal Housing Administration (FHA) new rules that may make it more difficult for first-time and repeat home buyers to qualify for a mortgage.

Student-Loan-Debt-Collectors-student-loan-lawyerWhile you were sleeping …

On September 15, FHA’s new rule became effective to include deferred student loans in the debt to income (DTI) ratio that lenders use to determine whether a borrower can repay a mortgage.

Prior to September 15, 2015, FHA allowed loan officers to exclude student loans in deferment for at least 12 months from the total debt when calculating the debt-to-income (DTI) ratio.

Wait! … What?

Yup! That’s right! Under the new FHA rule, loan officers are now required to use 2 percent of the outstanding deferred student loan balance in calculating the monthly DTI. For example, if you have a deferred student debt balance of $20,000, FHA will now include a 2 percent ($400 a month) repayment obligation when calculating your DTI.

Why … Why … WHY?!?

Research by the Federal Reserve Bank of New York revealed that at the end of 2014, 43 million people, most of them younger than 40, had an estimated $1.2 trillion in outstanding student-loan debt, with an average balance close to $27,000.  Alarmingly, 17 percent of borrowers are delinquent or in default, and although 20 percent are current on payments, they have experienced delinquencies in the past.

Brian Sullivan, an FHA spokesman, told Ken Harney of the Washington Post, “Deferred student debt is debt all the same and really must be counted when determining a borrower’s ability to sustain both student debt payments and a mortgage over the long haul.” He added that the agency’s primary goal is to put first-time home buyers “on a path of sustainable homeownership rather than being placed into a financial situation they can no longer afford once their student debt deferment expires.”

What this means to you …

This rule change may “make FHA loans, which traditionally have been the go-to financing source for young, first-time and moderate-income purchasers, less attractive” say mortgage lenders and analyst.

The 2 percent calculation is more than the amount that Fannie Mae and Freddie Mac use, which is 1 percent. If your student loan is not deferred, the actual monthly payment is included with your total debt. This may affect the amount of mortgage you qualify for or whether or not you qualify for a mortgage at all.

And … There’s more!

There are also new rules regarding down payment gifts that could complicate things for you as well… (Continue reading “New rules make it tougher for people with college loans to buy houses” by Ken Harney, WashingtonPost.com)

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Sep 13
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8 Ways to Start Your Business With Little to No Capital

By Business, Money Management No Comments

Do you want to start a business, but don’t think you have enough capital to get your start-up started? Jonathan Long, contributor for Enterprise.com, shares 8 tips to start your business with little to no capital.

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Syndicated

Entrepreneurs will often have amazing business ideas, but they put them on hold due to a lack of capital. They assume that their idea will never get far off the ground unless they have major funding behind them.

It seems that every day there is a new startup receiving millions of dollars from venture capital firms, but what you don’t hear about is the several startup failures that burn through millions of dollars only to fizzle out and shut their doors forever.

If your idea and plan of execution aren’t well thought out from the beginning, no amount of money can turn it into a winner. Have a great idea but very little money? Don’t let that stop you! Yes, there will be ridiculously long days with little to no sleep. Yes, you are going to be stressed. But those that want it bad enough will make it.

Here are eight tips that can help you get your idea off the ground with limited funds.

1. Build your business around what you know.

Instead of venturing off into uncharted territory, make sure that you build your business around your skills and knowledge. The less you have to rely on outside sources the better. When your business is built around your own personal expertise you can eliminate consultants and outside assistance.

Also, having that knowledge is sometimes all that is needed to successfully take the plunge into entrepreneurship.

2. Tell everyone you know what you are doing.

Inform your family, friends, business contacts and past colleagues about your new business. Call, send emails and make your new venture known on your social-media profiles. Your friends and family members can help you spread the word, and past business contacts can introduce your brand to their professional contacts as well. This type of grassroots marketing can help introduce your company to a much larger audience.

3. Avoid unnecessary expenses.

You are going to have plenty of expenses, and there are some that just can’t be avoided. What you can avoid though is overspending. Take something as simple as business cards. You could drop $1,000 on 500 metal business cards that give off the “cool” factor, or you could spend $10 on 500 traditional business cards. Being frugal in the beginning can be the difference between success and a failed business.

4. Don’t get buried in credit card debt.

There is a smart way and a suicidal way to use credit when starting a business. New computers, office furniture, phones and supplies can all quickly add up. Instead of purchasing everything at once and throwing it all on a credit card, use your company’s revenue to finance your expenses. Eliminating the stress and burden of debt will greatly increase the chances of creating a successful business.

5. Make sure your receivables policy won’t sink you.

If your business is a retail operation then this isn’t going to apply, but if you are providing services such as consulting or products to retailers you need to make sure that your payment policy is well thought out. Can you remain above water with net-15 or net-30 terms? Don’t base your receivables on what you think your customers will want. Base them on what is going to make your business operate successfully.

6. Build up sweat equity.

When I first started my business I worked around the clock, handling every aspect of the business as well as the marketing and growth. All of the hard work and long days that you put in isn’t for nothing. You are building a brand and your hard work is essentially increasing the value of … (continue reading 8 Musts to Start Your Business With Little or No Money via Enterprise.com)

Sep 13
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5 Car Buying Tips for Women

By Credit, Loans, Money Management, Shopping 3 Comments




Are you, or someone you know, in the market to buy a new car? The Fall Season is the best time to shop for a car because the New Year models come in, and dealers give great deals for older models to make room. Buying a new car can be exciting. However, the car buying process can also be intimidating and stressful for some women. If you are in the market for a new car now or in the near future, here are some Car Buying Tips to help save money and minimize stress when shopping for your next car.

car buying tipsKNOW YOUR BUDGET

The first and most important tip is to know “How much you can afford!” Do NOT let a car dealer’s finance department or bank tell you how much you can afford. Both essentially want to ensure that you borrow as much as possible so they can make more money off of you. The more they can make you believe that you can afford, the more the car dealership will make on the car and the more loan interest income the bank will earn on your loan.

GET PRE-QUALIFIED

The best way to avoid unpleasant surprises; like, not qualifying for the amount wanted, needing a cosigner or getting a ridiculously high interest rate, is to get Pre-Qualified or Pre-Approved for an auto loan. Go to your bank or credit union to apply for an auto loan. Tell them the payment amount you can afford to pay so they can determine the total loan amount based on the interest rate and term you qualify for based on your credit. Remember, the Higher your Credit Score, the Lower your interest rate, which may increase your qualified loan amount. Adversely, the Lower your Credit Score, the Higher your interest rate may be, which may reduce the qualified loan amount and require a down payment.

RESEARCH BEFORE YOU CAR SHOP

Now it’s time to have some fun going online to search for a vehicle in your price range. Dealers with No Haggle Deals are good because they, usually, sell their vehicles below NADAguides or Kelly Blue Book (KBB) value. Next go to NADAguides or KBB website to find out and print the Trade In and Retail Values to take when you go shopping.





TAKE A MAN WITH YOU

Some people may disagree, however,  when in doubt … take a man with you to the dealership. Take your husband, a boyfriend, father, brother, uncle, male coworker or that dude from down the street. Even if he knows nothing about cars or negotiating, take a man with you when you go car shopping. If the sales person begins speaking directly to the man, play along and coach your escort in what to say or not say. You are in control of the transaction; he is just a figurehead. Although not at all dealerships … unfortunately, women are sometimes taken advantage of during the car sales process.

NEGOTIATE BEFORE THE TEST DRIVE

Sometimes we lose our mind after we get intoxicated by that “New Car” smell during the test drive. My advice is to negotiate before you test drive to have a clear mind during the negotiation process. Here are a few things to do when you get to the car dealer:

  • Tell the sales person that you are doing a cash purchase. (Because you have already been pre-approved!)
  • Do NOT give your personal information or allow them to run your credit. (Again, you are already pre-approved.)
  • Tell the sales person what type of car and the price you want.
  • Ask if the car has any rebates or if the dealership has any incentives.
  • Ask to see the buyers order with options to see the breakdown of all expenses and fees to help you with negotiating.

Use your NADA or KBB value to negotiate the price as close to the Trade-In value as possible. Negotiating the price as close to the Trade-In value will give you equity in your car, as well as help you when you decide to trade in the car later.

Even if you are not able to get your dream car now, by getting a reasonably priced vehicle within your budget, you will help save money and get that dream car in your near future. Happy Shopping!

Sep 08
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Infographic: The Real Cost of College

By College, Money Management, Saving No Comments

So, where does a student’s money go over four-years in college?

After four years of all-night study sessions with friends, countless early morning classes, and semester after semester spent learning — with a dash of blowing off steam here and there — what does that piece of paper (degree) actually cost?

In honor of National College Saves Month in September, below is a cool infographic by AffordableSchools.net about the real cost of college and where the money goes.

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The Tried and True Expenses: Tuition and Loans

The bulk of student expenses come from school tuition — and heavy student loans for students that aren’t eligible for scholarships, grants, or other financial assistance.

  • $23,410: The average cost of in-state tuition for a public university in 2015.
  • $46,272: The average cost of in-state tuition for a private learning institution in 2015.
  • $35,000: The average amount of loan debt a 2015 graduate will have to face in the coming years.

Graduate students tend to have higher loan debt than their undergraduate counterparts, with 65 percent of 2012 graduates racking up$50,000 in student loans.

  • 59 percent of students end up not finishing their undergraduate degree, and may have up to $10,000 in debt that they are struggling–or don’t want to–pay back.

Hitting the Books

Once students have set their schedule for the semester, it’s time to purchase the required course materials.

  • One course worth of books = hundreds of dollars. Students spent an average of $313 per course on books, according to The National Association of College Stores.
  • The College Board found students paid anywhere from $1,146 to $1,244 for books in the 2014-2015 school year.
  • The cost of books continues to rise. One study found the price of books jumped 82 percent in the last 10 years alone.
  • Where to buy? Approximately 66 percent of students still buy their textbooks and college materials from their local college bookstore.
  • Other students value short term leases on learning. According to a Student Watch survey, 40 percent of college students preferred torent their textbooks rather than purchase them outright.

Plugging In

With more classes than ever going mobile, many students may prefer a tablet or laptop to keep up with class notes, research and term papers. In 2013, technology purchases for educational purposes reached $13 billion.

  • 81 percent: The average amount of students who prefer to study digitally. This marks a 40 percent increase from 2013.
  • Of 1,700 students surveyed, 77 percent indicated they felt they scored higher by using a tablet or laptop than simple class notes. Approximately 48 percent said that digital-based studying actually saved them time in the long run.

Food and Drink, A la Carte

Everyone needs to eat–and college students are typically strapped for cash. That doesn’t mean they don’t dole out cash for not-so-smart eats.

  • The price of pizza stacks up. The average college student could spend $2,000 on pizza over the course of four years, according to Mark Kantrowitz at FinAid.org.
  • Oodles of noodles: still a student staple. At 13 cents a package, ramen noodles remain a favorite for many students–it’s Japanese nickname gakusei ryori translates to “student food.”
  • Party on…to an empty wallet? Over a four-year time period, the average college student could spent $500 a year on alcoholic beverages.
  • The freshman five. Freshman typically drink five alcoholic beverages per week–which could negatively affect their academic performance.

Getting Around

Having a place to crash and a way to get around town is essential for every student.

  • $9,804: average cost of room and board at public university
  • $11,188: average cost of room and board at private university

The College Board estimates that college students spent between $2,609 and $3,242 during the 2014-2015 school year on transportation, among other personal expenses, including clothing or entertainment.

Test Time

Prepping for graduate school may begin before many college students even cross the stage to collect their undergraduate degree. Graduate level tests such as the GRE and GMAT take precious hours of study–and extra money–to ace.

  • GRE: $195
  • GMAT: $250
  • LSAT: $175
  • MCAT: $300

Other fees may also apply, including paying the testing site, or having to reschedule. Both the GRE and GMAT charge $50 to reschedule a test date.

Share your comments below.

Sep 04
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Celebrate National College Savings Month

By College, Money Management, Saving No Comments

It’s no coincidence that September is National College Savings Month. Each year a child moves to a new grade reminds us that college will be here before we know it.

Have you started to save for college yet? It’s not too early — or too late — to begin. According to How America Saves for College 2015 by Sallie Mae® and Ipsos, parents saved an average of $10,040 last year — and those who planned saved 46% more for college than non-planners. If you’re wondering how to start, try following the Sallie Mae® 1-2-3 Approach to Saving for College:

  1. Open a savings account. Set up and designate a savings account as your college fund. Deposit gifts from friends and family, and sign up for free services that let you earn cash back to save for college.
  2. Make regular contributions. Set a goal and create a routine of adding money. Even a little bit adds up over time, and automatic deposits make saving easy.
  3. Explore tax-advantaged options. Put your money to work using dedicated college savings programs like Coverdell Education Savings Accounts, prepaid state college savings plans, and 529 college savings plans.

Use Sallie Mae’s College Planning CalculatorSM to help you determine your savings goal. This free tool will take you step-by-step through building a customized plan to save and pay for college.

Celebrate National College Savings Month by starting or adding to a college savings fund for your student. For more free tools and tips on saving and planning for college, go to SallieMae.com/CollegeSavingsMonth.

Encouraging Responsible Borrowing

Sallie Mae has helped more than 30 million Americans pay for college since 1972. We encourage students and families to supplement their savings by exploring grants, scholarships, federal and state student loans, and to consider the anticipated monthly payments on their total student loan debt and their expected future earnings before considering a private education loan.

Before investing in any 529 plan, please consider whether your or the designated beneficiary’s home state offers its taxpayers benefits that are only available through that state’s 529 plan.

© 2015 Sallie Mae Bank. All rights reserved. Sallie Mae, the College Planning Calculator, and the Sallie Mae logo are service marks or registered service marks of Sallie Mae Bank or its subsidiaries. SLM Corporation and its subsidiaries, including Sallie Mae Bank, are not sponsored by or agencies of the United States of America.