3 ways home warranty companies avoid paying up

Photo: ckelly

Are you thinking about purchasing a home warranty for yourself or offering one to buyers when you sell your house? You might be surprised by the number of components in your home that a warranty won't cover.

It’s important to carefully read the complete contract before spending your money to make sure you’re signing up for the coverage you expect, but I can give you a heads up about what to look for. To learn about the many ways in which home warranties can fall short, read my Interest.com article, 3 ways home warranty companies avoid paying up.

What To Do If Your Identity Is Stolen

Photo: Diego3336

If your identity is stolen, you may have trouble obtaining credit or getting a good interest rate. Creditors may pursue you for debts you haven't incurred. You may even encounter problems when applying for a job because of fraudulent, negative information that appears on a background check. For all of these reasons and more, if you become a victim of identity theft, you need to begin working to clear your name immediately. Read about the basic steps to take in my Financial Edge article for Investopedia, What to Do If Your Identity Is Stolen.

Who profits when you refinance?

Photo: sigsegv

If you refinance, you probably expect to save thousands of dollars over the life your home loan. You can achieve lower interest rates, lower monthly payments and possibly lower total borrowing costs.

But knowing how mortgage companies and loan officers make their money can help you make sure you don't get cheated.

Learn how lenders make their money in my Interest.com article, Who profits when you refinance?

When to avoid making a homeowners insurance claim

Photo: 111 Emergency

Homeowners insurance provides essential protection against expensive damage to your home, but that doesn't mean you should file a claim every time something goes wrong. In some cases, you might be better off if you handle the problem yourself.

Insurance companies have been accused of raising premiums, or even dropping policyholders, if they file too many claims or if they file the wrong kind of claim. Learn more in my Interest.com article, When to avoid making a homeowners insurance claim.

An Introduction To Complementary Currencies

Photo: imtfi

In communities around the world, people have come up with alternatives to the usual way of paying for goods and services. Instead of yen, pounds or dollars, they are using privately developed substitutes called complementary currencies.

A complementary currency is a medium of exchange that functions alongside a national currency to fulfill a need that the national currency seemingly does not. According to the International Journal of Community Currency Research, community and complementary currency systems have four main purposes:
  • To promote local economic development
  • To build social capital
  • To nurture more sustainable lifestyles
  • To meet needs that mainstream money does not

To learn more about complementary currencies and how they work, read my Investopedia article, An Introduction To Complementary Currencies.

Discover’s cash-advance option could replace your debit card

Photo: 401K

Discover credit card holders can get cash when they make a purchase at selected stores by taking advantage of the Discover Cash Over program. In contrast to regular, pricey cash advances, there are no fees associated with Cash Over transactions.
Learn how it works in my Interest.com article, Discover's cash-advance option could replace your debit card.

How HELOCs Can Hurt You

Photo: Brock Builders

You may have heard that a home equity line of credit (HELOC) is a convenient, flexible and low-cost way to borrow money for things like buying a car, paying for your kid to go to college, or undertaking a home remodeling project. 

All of these statements can be true if you manage your HELOC prudently. 

But if you don't, a HELOC can become very expensive and get you into financial trouble. Learn how in my Investopedia article, How HELOCs Can Hurt You.

5 Steps To Forming A Tax-Exempt Nonprofit Corporation

Photo: bsabarnowl

A 501(c)(3) nonprofit corporation is a type of charitable organization that the Internal Revenue Service recognizes as tax exempt. This type of corporation does not pay income tax on its earnings or on the donations it receives.

Also, any time a taxpayer makes a donation to a 501(c)(3) nonprofit, they can reduce their taxable income by the amount of their donation if they itemize their deductions on their federal income tax return. This incentive encourages private charity and makes it easier for nonprofits to raise money.

If you've ever wanted to raise money for a cause on your own terms, you might want to start a 501(c)(3). My Investopedia article, 5 Steps To Forming A Tax-Exempt Nonprofit Corporation, describes what you should consider before you decide to pursue your goals through this method and tells you how to get started if you decide to move forward.

Eat Healthy And Save Money

Photo: The Culinary Geek

Grocery prices rose 6.2% from October 2010 to October 2011, according to the USDA's Economic Research Service. The agency predicts a further 3 to 4% increase in grocery prices in 2012.

If you're having trouble sticking to your household grocery budget, don't stop buying more expensive healthy foods in favor of cheap junk foods. Instead, start looking for foods that are both nutritious and affordable.

Learn about some good options in my Financial Edge article for Investopedia, Eat Healthy and Save Money. Also read my previous article, Eating Healthy on a Budget.

How to ask for a credit card reconsideration

Photo: hyku

If you’ve ever applied for a credit card online, you’re familiar with the following process: fill out a form with your name, address, Social Security number and some information about your annual household income, monthly housing payment and sources of savings.

Click “submit,” and within 60 seconds your application is approved, denied or pending further review.

If your credit card application is denied, you don’t have to take no for an answer--at least not right away.

The company has to tell you why it denied your application.

If the reason is "too many requests for credit or opened accounts with us," consider this initial rejection a starting point for a possible negotiation.

Learn how to undertake such a negotiation in my Interest.com article, How to Ask for a Credit Card Reconsideration.

What to expect from a home inspection

Photo: Peg Syverson

Buyers want to make sure that a home they have under contract doesn’t contain major problems that they can’t afford to repair or don’t want to hassle with.

The person they rely on to go beyond the obvious and reveal the home’s true condition is a home inspector.

Home inspectors are specially trained to spot problems the average person is likely to miss. However, there are limitations on what inspectors can legally examine. To learn what these limitations are, read my Interest.com article, What to Expect from a Home Inspection.

How To Form A Homeowners' Association

Photo: cdsessums

Homeowner associations (HOAs) have become more and more prevalent. According to public policy professor Robert H. Nelson, condominiums, homeowners' associations and cooperatives "as recently as 1970 represented only about 1% of U.S. housing. By 2010, however, there were more than 300,000 community associations housing more than 60 million Americans, 20% of the U.S. population."

What does this mean for you? It means that if you're shopping for a home, you need to find out whether it's in an HOA. You need to understand what an HOA is and whether you can live with its rules.

HOAs manage issues that affect the entire community, such as safety and security, lack of property maintenance, local nuisances or the provision of services that aren't taken care of by the local government. HOAs also can be a source of major strife because of the power they wield over homeowners.

HOAs are generally formed by developers when a new community is constructed. As a condition of acquiring property in many communities, buyers must join the HOA. As a result, many people wind up joining HOAs without truly understanding what HOAs are or how they work, just because they fall in love with a particular home.

To learn about the intricacies of HOAs, read my new Investopedia article, How To Form A Homeowners' Association, about how HOAs are formed and run.

For even more information on homeowners' associations, check out 9 Things You Need To Know About Homeowners' Associations.

When your lender is required to cancel PMI

Photo: Tilemahos_E

Do you have private mortgage insurance? Did you know that your lender is required to automatically cancel it when you have paid your mortgage down to a certain point?

Under the Homeowners Protection Act, your lender must cancel your PMI when the loan-to-value ratio on your mortgage reaches 78%.

Find out how to make sure your PMI gets canceled as soon as you're eligible in my Interest.com article, 
When your lender is required to cancel PMI.

Rethink Your Credit Cards

Photo: billaday

Now is an ideal time to take stock of your existing credit cards. What interest rates are you paying? What rewards are you earning? What changes can you make now to start off 2012 with the best cards in your wallet? Find out in my Financial Edge article for Investopedia, Rethink Your Credit Cards For Holiday Spending. Even though the holidays are over, the tips in this article still apply.

In mortgage hunt, talking to the right people matters

A bad experience with applying for a mortgage might have you thinking that you can’t qualify for a home loan when you really can.

Part of the problem might be that you're not talking with the right people.

Todd Huettner, president of mortgage brokerage Huettner Capital in Denver, says that "when you call a help desk or a call center for any lender, you wind up talking to people who are essentially customer support or telemarketers. They do not have underwriting experience and cannot answer specific questions about your unique situation."

Learn who you should be talking to and why in my Interest.com article, In mortgage hunt, talking to the right people matters.

Photo: grendelkhan 

Citi Extra Cash offers some deals, some duds

Photo: Wonderdawg777

If you’re a Citibank credit card holder, you might have received a promotional mailing recently announcing that you have been awarded $100 in Citi Extra Cash.

Your first thought might have been, "Great! An extra $100 in cash back and I didn’t even have to do anything to earn it! What a nice surprise!"

Not exactly.

Citi Extra Cash is different from other credit card cash-back rewards. You can’t exchange your rewards for a check, a statement credit or a gift card.

To learn the basics of how the program works, read my Interest.com article, Citi Extra Cash offers some deals, some duds.

Here are some additional details about the program:

You earn 10% in Extra Cash on purchases made with your eligible Citi card, and it can take up to 6-8 weeks for this Extra Cash to appear in your account. It’s unclear what is considered an eligible card, even after reading the terms and conditions. It appears that you may need an invitation or special marketing message from Citi to participate.

You can also put Citi Extra Cash toward the purchase of merchandise. It’s harder to tell if you’re getting a good deal here since different stores often sell the same items at different prices. It’s also difficult to assess the quality of an unbranded item online. The items that are name brands don’t have model numbers, so you can’t search the internet for product ratings.

If you make a purchase you later regret using Citi Extra Cash, you can cancel it the same day with a phone call, or return it within 30 days of the redemption date by first calling a phone number to get a return authorization number. There is a 15% restocking fee for unwanted items. Bedding, pet items, food and partially used gift cards are not returnable. 

The program has a low-price guarantee, but there are a lot of restrictions, such as this one: “Price Guarantee applies only to a price published on a US based website within 24 hours of purchase and does not apply to the net cost of a purchase when a coupon, promo code or rebate is applied in the shopping cart or after the purchase.”

You can also use Extra Cash for travel. I did a test for a 1-week car rental at Chicago Midway, Avis and Budget were the only options. I chose Avis for an economy car over the Christmas holiday. Citi Extra Cash said I could get the car for $352.99, minus $75.62 in extra cash, for a pre-tax total of $277.37 and an after-tax total of $377.59, payable at pickup. The Avis website gave me a grand total of $468.34 for the same car, so the Extra Cash appears to pay off. However, Priceline tells me I could get an economy car for as little as $253, so maybe it’s not such a deal after all unless you’re loyal to a particular rental company.

3 Easy Ways To Improve Your Credit Score

Photo: 401K

If you're strapped for cash and having trouble making ends meet, improving your credit score may be the last thing on your mind. However, it's a worthy goal because it can help you get lower interest rates and improve your financial situation down the road. Even if your current financial picture isn't exactly rosy, you can still make significant strides forward with these easy ways to improve your credit rating. Learn how in my Financial Edge article for Investopedia, 3 Easy Ways To Improve Your Credit Score.

Tax quirk could make your home more attractive to buyers

Photo: roarofthefour

If you're selling a home, here's how to make it more attractive to potential buyers: Throw in some cash and an income tax deduction.

The Internal Revenue Service allows the seller to pay points -- that's a fee some homeowners pay to lower their mortgage rates -- on the buyer’s behalf. Then the buyer gets to deduct the points as mortgage interest.

Learn more about how this process works in my Interest.com article, Tax quirk could make your home more attractive to buyers.

USDA offers no-down-payment loans in rural areas

Photo: cwwycoff1

Low-income homeowners who think they're stuck renting might be able to achieve home ownership through the U.S. Department of Agriculture's Rural Housing Direct Loan program. This 100% financing program is federally funded, and loan proceeds can be used for the following:

* Purchase a new home.
* Purchase an existing home that is move-in ready.
* Purchase an existing home and repair or renovate it.
* Purchase a manufactured home.
* Prepare an undeveloped site and build a home on it.

Learn more about this program in my Interest.com article, USDA offers no-down-payment loans in rural areas.

CreditKarma.com Now Offers Consumers Free Credit Monitoring

Photo: epSos.de

I received an interesting email yesterday about a new credit monitoring product. The reason the email interested me is because unlike the expensive credit monitoring products offered by the credit bureaus and other financial institutions, this product is free.

I've written about The Pros and Cons of Credit Monitoring Services for Investopedia's Financial Edge. I found that most credit monitoring services cost $10 to $15 a month.Over the course of a year, that's $120 to $180.

CreditKarma.com is now the first company to offer free credit monitoring to all U.S. consumers. This product monitors a consumer’s credit file on a daily basis and alerts him or her when a significant change occurs.

“Consumers can stay on top of their credit and protect themselves from identity theft and credit reporting errors without being charged a monthly fee,” said Ken Lin, CEO of CreditKarma.com. “Our goal at CreditKarma.com is to provide easy access to a person’s own credit information and empower them with the timeliest information on their financial health.”

Here’s how it works:
1.A consumer enrolls at CreditKarma.com. Registration is free and takes less than two minutes.
2.CreditKarma.com monitors the consumer’s credit report for free on a daily basis.
3.A significant change occurs in their credit file, such as a new credit inquiry, a delinquent payment or improved payment history.
4.CreditKarma.com notes the new activity and emails the user a credit alert, letting them know about the important change.

CreditKarma.com already provides more than 4 million consumers with free credit scores and access to free credit monitoring to help them realize the everyday cost savings of having good credit by offering personalized savings recommendations for credit cards, student, auto, mortgage and home equity loans. It also provides financial education and access to free tools that empower consumers to take charge of their financial health including the Credit Report Card, Credit Score Simulator and Credit Card Statistics. To learn more, visit www.creditkarma.com.

Keep in mind that any credit monitoring service, whether paid or free, will have shortcomings. Such a service can't prevent identity theft from happening to you, for example; it can only notify you that it's already occurred. Even then, credit monitoring is likely to miss some forms of identity theft, such as the following:
  • someone using your information to apply for a job 
  • someone using your information to get a cell phone
  • someone using your Social Security number, but not your name, to open new accounts
That being said, the sooner you catch an identity theft problem, the better. Also, if you're planning to apply for a loan such as a mortgage or auto loan, it's not a bad idea to stay on top of your credit reports to make sure there are no negative items that will bring you a higher interest rate than you can afford or that will prevent you from qualifying at all.
Learn more about CreditKarma's free credit monitoring at CreditKarma.com and learn more about credit monitoring in my article, The Pros and Cons of Credit Monitoring Services.

How Much Do You Need To Spend To Earn Credit Card Points?

Photo: lisamurray

To get the best benefits from credit card reward programs, you have to understand how they work. Read about three popular credit cards, how their reward programs work and how much you have to spend on each card to cash in on a reward in my Financial Edge article for Investopedia, How Much Do You Need To Spend To Earn Credit Card Points?

Store Credit Cards: Do The Incentives Pay Off?

Photo: JacobEnos

Have you ever wondered whether you should have said "yes" when the cashier asked you if you wanted to open a store credit card account and save 10% off your purchase?

While store credit cards fundamentally work just like regular credit cards, they have unique advantages and disadvantages.

In my Financial Edge article for Investopedia, Store Credit Cards: Do The Incentives Pay Off?, I examine the incentives stores offer with their credit cards, what pitfalls you might encounter if you sign up and whether the payoff could be worth opening an account.