Why October’s the Best Time to Start Looking for Your First Home

Fall may be the best time to look for a house
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As the leaves start to fall and the air gets autumn-crisp, the housing market cools down. But if you’re ready to buy your first home, there may be no hotter time to start the search.

Trulia, an online real estate resource for homebuyers and renters, recently released a report concluding that October is the best month for starter-level home-hunting. The organization found that starter-home supply peaks in October and rises 7 percent in the fall months, compared with the spring. That results in home prices that are 4.8 percent and 3.1 percent lower

in the winter and spring, respectively, than in the summer, the busiest home-buying season.

The Trulia report aligns with an analysis released recently by ATTOM Data Solutions, a real estate database. ATTOM reported that home buyers get the best deals in February, when the median home price is 6.1 percent less than the rest of the year, on average. These findings were based on public home-selling data from 2000 to 2016.

Buying a home could be a long process. If you are going to seal the deal in February, you need to be making offers in December or January, which means you should start looking as early as October or November, said Daren Blomquist, ATTOM’s senior vice president.

How the fall housing market aids first-time buyers

The fall house-hunting guidance holds particularly true for first-time buyers, many of whom tend to be young professionals without children, experts say.

“They are not as tied to the school calendar,” said George Ratiu, managing director of quantitative and commercial research of the National Association of Realtors. Conventional wisdom says the fall season is the best time for first-time buyers to look for houses because home prices are likely to drop as more houses come on the market and families with children have either moved or stopped looking.

People searching for starter homes also enjoy more flexibility than existing homeowners looking to move.

“The catch-22 is that if it’s a good time to buy in the fall, it’s a bad time to sell,” Blomquist said. “So it’s kind of a wash for move-up buyers. Whereas first-time home buyers don’t have to worry about the selling of the equation.”

New buyers still face many obstacles

However, it can still be a challenging market for first-time home buyers, and it’s getting tougher, experts say.

Supply and demand

Nationally, housing supply has been shrinking over the past few years. It has tightened even more in 2017 than in previous years. Existing homes available for sale at the end of August fell 2.1 percent to 1.88 million and were down 6.5 percent from last August, according to the NAR.

It would take 4.2 months for the houses on the market to be sold at the current pace, down from 4.5 months a year ago. (Six months is considered a balanced buyer-seller market.)

But the demand for housing has been growing as a result of an improving economy and increasing job opportunities.

“Prices had nowhere to go but up,” Ratiu said. Homebuyers “have more money, but there are not enough homes on the market, and the price of homes has outpaced their income, which makes it hard for them buy.”

Nationally, the August median sales price of existing homes, which starter buyers tend to purchase, was $253,500, 5.6 higher percent than last August, according to the Realtors’ association. Meanwhile, wage growth remained fairly stagnant, at around 2.5 percent, the Bureau of Labor Statistics reported.

The NAR on Tuesday reported that Pending Home Sales, a future-looking indicator, fell 2.6 percent in August compared with last year — its lowest reading since January 2016.

“When I see pending sales declining, it’s likely sales for the next month will be down,” Ratiu said.

Ratiu said that much of the declining sales was the result of the housing shortage, which indicates that people looking to buy may not be able to find a house. But if they can buy, fall months are still a good time to snag a suitable home, Ritiu said, because the slow sales season gives starter home buyers that edge in a tough seller’s market.

“If first-time homebuyers are competing with buyers who have bigger down payments, which typically you would have with a move-up buyer, they are going to lose out more often than not in that situation,” Blomquist said. “So if they are willing to buy when other buyers are dormant or in hibernation, then they could get an edge and face less competition.”

Tougher lending standards

Tougher lending standards since the financial crisis have have hit hard among first-time buyers, who made up 31 percent of all homebuyers in August, the NAR reported. The median down payment percentage in the second quarter of 2017 rose to its highest in nearly three years, at 7.3 percent, up 1.4 percentage points from last year’s 5.9 percent, according to ATTOM.

This means if you buy a home for $200,000, you would have to put down $14,600 today versus last year’s $11,800.

To put that in perspective, at the peak of the last housing boom in 2006, before the financial crisis, the median down payment percentage for houses sold nationwide was 2.1 percent, Blomquist said.

There are good reasons why the down payment percentage rose, but it puts a huge financial burden on college graduates and young professionals coming into a pricey real estate market while carrying an average student loan debt of more than $35,000, experts say. (On that topic, here are some important things to know if you have student loan debt and are buying a house.)

Trulia reported that first-time homebuyers need to allocate nearly 40 percent of their monthly paycheck to buy a starter home, up from 31 percent in 2013.

Factors to consider when buying your first home

Seasonality is just a piece of the puzzle in homebuying — the biggest factor people should consider is affordability, Blomquist said.

“You’ve got to look at your finances and determine if it’s a good financial decision for you to buy a home,” he said.

Also recommended: Weigh the pros and cons of buying versus renting, as it sometimes makes sense to rent, depending on your long-term plans. If you are looking to buy your first home in the coming months, you can check out this guide for first-time homebuyers to help you through the long and complicated process.

The post Why October’s the Best Time to Start Looking for Your First Home appeared first on MagnifyMoney.

No, Equifax Is Not Calling You. Watch Out for Scam Phone Calls After the Data Breach

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Less than a week after the Equifax data breach was made public, it seems scammers are already looking for opportunities to prey on concerned consumers.

The Federal Trade Commission posted a scam alert Thursday warning consumers to not give their personal information to anyone who calls and claims to be an Equifax representative. Over the summer, hackers breached the Atlanta-based credit bureau’s database and accessed the personal information of about 143 million consumers, including sensitive information like Social Security numbers.

But Equifax is not calling those affected by the breach, so if you get a phone call from someone saying they represent Equifax and want to verify your account information, the FTC advises you hang up. It’s ironic, in a way, to target victims by posing as a concerned Equifax representative. The company has been criticized widely for its sluggish response to the breach, which occurred sometime between mid-May and July but wasn’t discovered until July 29 and wasn’t announced until more than a month later.

In response to the security failure, the House Committee on Energy and Commerce has demanded Equifax answer several questions about the breach, including why the company put off announcing the breach for so long. Equifax has until Sept. 22 to respond to the committee’s questions, and the committee plans to hold hearings on the breach in September or October.

In a company statement, Equifax CEO Richard Smith said the breach was a “disappointing event.”

“Confronting cybersecurity risks is a daily fight,” he added. “While we’ve made significant investments in data security, we recognize we must do more. And we will.”

In the breach, people’s Social Security numbers, dates of birth, addresses, and other personally identifiable information (PII) were compromised, so it’s understandable you’d be worried and are looking for help.

Here’s what you can do to take control of protecting your identity.

Assume you’re affected

While you can go to Equifax’s website and go through a multistep process to see if your information has been compromised, you can also just assume someone has their hands on your personal information. (It’s also worth noting the Equifax site reportedly isn’t reliable for telling you if you’re affected, and many consumers have reported the site is slow to load or doesn’t load at all.) Even if you weren’t among the 143 million whose personal information was compromised in this breach (and the odds aren’t in your favor), chances are it has been or will be in a breach at a different company or organization. With that in mind, you’ll want to focus on how to detect signs of identity theft and how to respond to them.

Monitor your credit

Equifax responded to the breach by offering free credit and identity monitoring to everyone — not just those affected — for a year through TrustedID Premier. You must go to equifaxsecurity2017.com to enroll, which requires entering your last name and the last six digits of your Social Security number. You’ll then be given an enrollment date, which may be several days after you start the enrollment process, at which point you can return to the site to continue enrollment. You’ll need to set a reminder to continue the process, as Equifax won’t send you a notification when it’s time.

You have many other ways to find out if someone has misused your personal information. Several companies offer free credit scores — Credit Karma, Discover, Capital One, Mint, LendingTree (our parent company), etc. — either to everyone or to their customers. To help you choose, we put together this guide to getting your free credit score. Credit Karma also offers a free credit monitoring service, and Discover cardmembers can sign up for alerts when their Social Security numbers are detected on suspicious websites. You can also pay for credit monitoring services from a number of providers, including the three major credit bureaus Equifax, Experian and TransUnion, as well as credit scoring giant FICO.

Consider a credit freeze

You can also freeze your credit so no one, not even you, can apply for new credit using your information. If you do this, you have to initiate a freeze with each of three major credit bureaus, as well as “thaw” each report when you want to apply for a new credit account. Every time you freeze and thaw your credit you may be charged a fee, which varies by state. This only protects you from credit fraud and does not prevent things like taxpayer identity theft, criminal identity theft, medical identity theft, and insurance identity theft.

On Sept. 15, Equifax announced it is waiving the fee for removing and placing credit freezes on Equifax credit reports through Nov. 21, 2017. Anyone who paid for an Equifax freeze at or after 5 p.m. EDT on Sept. 7 will receive a refund, the company said.

Have a plan for responding to identity theft

One of the best ways you can prepare for identity theft is to detect it early. After that, you need to know how to resolve it. You can do this yourself by filing a police report, disputing fraudulent accounts on your credit reports, and making the phone calls necessary to correct any problems stemming from the fraud. Or you could pay someone to help you with this time-consuming task. Check with your employer to see if they offer identity theft insurance or identity theft resolution services as an employee benefit, and if not, consider paying for it.

We’ve rounded up the best identity theft resolution services here.

More than anything, remain calm as you sort through the fallout of this breach. Focus on making a plan for protecting yourself from and responding to identity theft and making sure you only deal with trustworthy service providers.

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Higher Student Loan Rates Take Effect in July. Here’s What That Means for Borrowers

For the first time since 2014, the interest rates on federal student loans are going up.

For the first time since 2014, the interest rates on federal student loans are going up. Loans disbursed between July 1, 2017 and June 30, 2018 will carry the new rates, which are 0.69 percentage points higher than those of federal loans that have gone out since July 1, 2016. Here are the new rates:

  • Direct subsidized loans for undergraduate borrowers: 4.45%
  • Direct unsubsidized loans for undergraduate borrowers: 4.45%
  • Direct unsubsidized loans for graduate or professional student borrowers: 6%
  • Direct PLUS loans for graduate and professional student borrowers: 7%

Why Did the Interest Rates Change?

Legislation that went into effect in 2013 tied federal student loan interest rates to the 10-year Treasury note. Every year, the undergraduate loan rates are calculated by adding 2.05 percentage points to the high yield of the 10-year note at the last auction prior to June 1. Add 3.6 percentage points to the high yield to determine unsubsidized graduate loan rates, and for PLUS loans, add 4.6 percentage points.

How the Rate Change Affects You

If you’re getting a federal student loan in the next year, these are the rates you’ll pay for the life of the loan. Borrowers with existing federal student loans won’t experience a rate change, unless they have a variable interest rate, which is rare.

While the rates have gone up, they could be much worse: The 2013 legislation caps federal student loan interest rates at 8.25% for undergraduates, 9.5% for unsubsidized graduate loans and 10.5% for PLUS loans. Since the 2008 financial crisis, the benchmark rate has remained historically low, but if it rises, future student loan borrowers will pay. So if you’re going to college in the next few years, or will borrow on behalf of someone who is, keep tabs on the 10-year Treasury yield.

How to Change Your Student Loan Interest Rates

Whether you’re a new borrower or have been repaying student loans for a few years, you should know there are a few options for changing the interest rates on your student loans.

You could apply for a federal Direct consolidation loan, which combines multiple eligible loans into a single loan. The interest rate on that loan is the average weighted interest rate of the loans you consolidated, rounded up to the nearest 1/8th of 1%. Whether this strategy will save you money on interest depends on the balances and interest rates of the loans you’re consolidating.

Let’s say you have three loans with the following balances and interest rates: $3,500 at 4.66%, $6,500 at 4.29% and $7,500 at 3.76%. The weighted average interest rate of those loans is 4.14%. But if you switch the interest rates on the largest and smallest loan balances, the weighted average would be 4.36%. The math matters when considering consolidation.

You could also refinance your student loans at a lower rate with a private lender (there’s no federal refinancing option beyond consolidation), but you will lose many of the benefits federal student loans offer, like income-driven repayment plans and student loan forgiveness.

There’s also a simpler way to cut your student loan rates: Set up automatic payments. The savings may not be as significant as they can be with consolidation or refinancing, but most student loan servicers offer a rate discount to borrowers who enroll in auto-debit. If you’re looking for other ways to make your loan payments more affordable, here’s a list of your options.

It’s crucial you stay on top of your student loans, as missing payments can trash your credit and result in significant financial obstacles. You can see how your student loans and other accounts affect your credit by reviewing your free credit report summary on Credit.com.

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13 Confusing Student Loan Terms You Need to Know

It's important you understand your student loans, and that starts with learning the meaning of the terms you're likely to encounter in the student-loan worl

There’s no need to sugarcoat it: Student loans are complicated, and everyone from new borrowers to those who’ve been paying them for more than a decade find them confusing. As much as you might want to not think about them, it’s important you understand your student loans, and that starts with knowing the meaning of the terms you’re likely to encounter in the student-loan world. Here are 13 confusing loan terms you need to know.

1. Servicer

Your student loan servicer is the company to whom you send your student loan payments. It may or may not be the place you got your student loans in the first place, and your servicer could change as you repay your loans. Federal loan borrowers can find out their student loan servicer by logging into the National Student Loan Data System. If you have private student loans, your student loan servicer is the institution from which you borrowed the money.

2. Repayment Options

Federal student loan borrowers can pay back their student loans in several ways, and they can change their plan at any time for free (though it can take some time). The options include plans that allow you to lower your payments based on your income and plans that allow you to spread out your payments over a longer term. You can read more about your student loan repayment options here.

3. Forbearance

Forbearance is a temporary suspension or reduction of your student loan payments when you are unable to make payments as a result of financial problems, medical expenses, unemployment or “other reasons acceptable to your loan servicer,” according to the Education Department. Your loan will continue to accrue interest during this time and will be added to the principal balance when you exit forbearance. You must apply for forbearance. There are several circumstances under which your servicer is required to grant forbearance (mandatory forbearance), including a medical or dental internship or residency, National Guard duty and many others. You can only receive forbearance for 12 months at a time. If you have a private student loan, check with your lender to see if they offer forbearance.

4. Deferment

Deferment is a temporary suspension or reduction of your student loan payments during certain situations like unemployment, economic hardship, enrollment in school or active military duty, among others. You are not responsible for paying the interest that accrues on some student loans during deferment, but you are for most. You must request deferment, and you can stay in deferment as long as you meet the requirements. If you have a private student loan, check with your lender to see if they offer deferment.

5. Student Loan Forgiveness

There are several programs that allow you to get rid of some or all of your federal student loans, and you can read about them here. Keep in mind you may have to pay taxes on the forgiven balance, as the IRS may see it as income.

6. Delinquency

You are delinquent on a student loan when you haven’t made a payment on your student loans for 30 or more days since your last payment’s due date. Your student loan servicer will most likely report the late payment to the major credit reporting agencies, which will hurt your credit. (You can see how your student loans affect your credit standing by viewing your free credit report summary on Credit.com.) Delinquency also tends to come with late fees.

7. Auto Debit

Many student loan servicers call automatic payments “auto debit,” meaning your payment is automatically taken from your bank account on the due date every month. You can often get an interest rate reduction by enrolling in auto debit. It’s usually at least 0.25 percentage points.

8. Default

Default means you have not made student loan payments in a long time, and as a result, your entire student loan balance is now due. Your loan will have likely been sent to a debt collector at this point. For federal student loans, you enter default after you’ve failed to make a payment for more than 270 days. That time period is generally shorter for private student loans. You can learn more about the (very) negative consequences of student loan default here, as well as how to recover from it.

9. Refinancing

Refinancing your student loans means taking out a new loan to pay off your existing loans, ideally to make your loans more affordable. For example, you can take out a student loan that has a lower interest rate than the average interest rate of all your existing student loans, which can save you money over the life of the loan. Student loan refinancing requires taking out a private student loan, as the federal government offers no refinancing option. You could also refinance a student loan by paying it off with a home equity line of credit.

10. Consolidation

A federal consolidation loan combines all your eligible federal student loans into a single loan with one payment. The interest rate on that loan is the weighted average of all the included loans’ interest rates, rounded up to the nearest one-eighth of one percent.

11. Subsidized

With a subsidized loan, the government pays the interest on your student loan while you are in school or in deferment.

12. Unsubsidized

With an unsubsidized loan, you are responsible for all the interest that accrues on your loan during school, deferment and forbearance. If you do not pay the interest during that time, it is added to your principal loan balance.

13. Capitalized Interest

Any interest you accrue while not in repayment can be added to your principal balance, meaning you will pay interest on top of that interest. That’s capitalized interest.

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7 Money Tips Every College Graduate Needs

Yes, you need to find a job and a place to live, but don't let that throw a wrench in your budget.

While senior year of college is hectic, it’s crucial for new grads to stay on top of their finances. Sure, you need to find a job and a place to live, but you can’t wait until those things fall in line to start paying attention to your bills and your budget. Of course, that’s exactly what some people do, which can lead to debt, a lack of savings and credit problems.

To help you (or the new grad in your life) stay focused, we put together a list of money tips to keep in mind during the transition from college student to full-time adult. We asked Alex Sadler, managing editor of personal finance site Clark.com and the money-basics series “Common Cents,” to share her top tips for managing money after college.

1. Spend Less Than You Make

This one sounds obvious, but it’s easy to lose control when you have an apartment to furnish, want to live a vibrant social life or haven’t quite gotten the hang of grocery shopping. And to know whether or not you’re spending less than you make, you have to track your spending.

“It’s easier said than done, but it’s something you can live by for the rest of your life,” Sadler said. “If more is going out than coming in, find ways to pick up extra cash.”

Keep in mind a large component of spending less than you make is saving properly. Sadler suggested automating your savings by participating in an employer-sponsored retirement plan, especially if your employer offers a savings match. You may also be able to set up automatic transfers to a savings account, so you’re less able to money on things you don’t need.

2. Don’t Ignore Your Student Loans

A huge part of spending less than you make is knowing your exact expenses. If you’re like most college students, you have student loans to repay soon. Even if your first payment isn’t due for a few months, you need to know what you’re dealing with now.

“Most college graduates don’t know how much they owe until their first bill comes in the mail,” Sadler said. And because of accrued interest, you may owe more than you recall borrowing. “Figure out exactly how much you owe and what your options are: Do you qualify for loan forgiveness? Income-based repayment?” Your student loan repayment options vary depending on the kind of loans you have. Get a handle on them now, so you don’t miss a payment and damage your credit. Here’s a helpful guide to understanding student loan repayment.

3. Know You’re on Your Own

Being responsible with money doesn’t mean you can’t have any fun, but it is on you to understand how to balance your needs and wants.

“Nobody wants to say, ‘I’m on a budget, I can’t go out,’ or ‘I can’t do that, I’m on a budget,’ when you’re 22 and you’re super excited about being in the real world,” Sadler said. At the same time, you have to own your decisions. “At some point, there won’t be anyone there to help you. Once you figure that out, it gives you a sense of motivation to really have control of your money, and it motivates you to understand the fact that money is what gives you freedom in life.”

4. Pay Attention Now — Or Regret It Later

“How you handle your money in your early 20s is so much more important than you realize at the time,” Sadler said. “Those choices will impact your finances for the next 10 to 15 years.”

Sadler speaks from experience. In her early 20s, Sadler had a couple hundred dollars on a store credit card that she ignored. She let the late payments stack up, which is one of the worst things you can do to your credit. “When I realized it at like 26 or 27, I paid it off in full, but there’s nothing you can do about those late payments,” she said. “I’ve fixed it, but it took a lot.”

A lot of young people adopt the mindset that they’ll pay off debt or save more later when they have more money. “But later never comes,” Sadler said.

5. Plan for Everything

You’ll never have more time in front of you than now, so start planning. Incorporate long-term goals like buying a house or saving for retirement into your regular budget, as well as short-term goals like vacation or large purchases. Planning ahead is the only way you can make those goals happen.

“I was knocked upside the head in my 20s when I asked my dad for $1,000 to go to a bachelorette party in Mexico,” said Sadler. “He looked at me and said, ‘Have you lost your mind?’ And I said, ‘I can’t pay for it.’ And he said, ‘Then you can’t go.’ ”

Doing the things you want to do requires discipline and may involve more planning than you realize. “It’s not never going out or eating ramen noodles, but it’s paying attention,” Sadler said.

6. Manage Your Basic Expenses

Maybe you feel like there’s hardly any money left over for fun things after you’ve budgeted for bills and loan payments. Remember, you’re not necessarily stuck with those fixed expenses. Sadler recommended re-evaluating your cellphone plan, shopping around for competitive insurance rates and finding cheaper entertainment options, whether that means cutting a subscription or switching service providers. The research is worth the time if the savings can give you more flexibility.

7. Get a Credit Card & Use It Responsibly

Your credit standing plays more of a role in your day-to-day life than you may realize. It factors into your insurance premiums in most states, affects your ability to get an apartment and can even come into play when you’re getting a new job. If you haven’t started building credit, now’s the time to start. You can see where your credit stands and track your progress toward a better credit score with a free credit report snapshot from Credit.com

Sadler emphasized the importance of using a credit card wisely and cautiously: “You need to pay the balance in full every month to avoid interest, so just use it to charge things you know you can pay off,” she said. “Understand the implications of using a credit card irresponsibly — one missed payment can seriously damage your credit.”

Want more guidance on how to be financially responsible after college? Here are 50 smart money moves to make before (or right after) you graduate.

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9 Questions to Ask About Student Loans Before You Graduate

Graduation's around the corner, so don't put off asking the hard questions about how to handle your student loan debt.

It may not be your first priority, but preparing to repay your student loans should be on your pre-graduation to-do list. How you manage your student loan payments will shape your finances for decades to come, so know what you’re dealing with before you get swept up in the day-to-day demands of post-graduate life.

Before you leave school, also make sure you know the answers to the following questions. Good news: We’re giving you them (or at least telling how to find them on your own).

1. What Kind of Loans Do I Have?

You either have private student loans or federal loans. You can look up your federal loans using the National Student Loan Data System (NLDS). You should have the paperwork from your lender or student loan servicer (private and federal) from when you took out the loan. Private loans generally come from traditional banking institutions, while federal loans are issued by the government. Common federal loans include Direct subsidized loans, Direct unsubsidized loans and Perkins loans.

2. Whom Do I Owe?

You can find this information in the resources referenced above. Your financial aid office should have information on file as well, since they receive the money. If you haven’t gone through student loan exit counseling at school, you need to before you graduate. They’ll explain whom to pay, and it’s the perfect time to ask any questions. Once you know who’s managing your loans, set up an online account to access all your information.

3. What Are My Repayment Options?

This depends on the type of loans you have. Private student loan repayment tends to follow a typical installment loan repayment structure, in which you make monthly payments for a fixed loan term. Federal student loans offer more options. The default play is called standard repayment: fixed monthly payments for 10 years. If you want a lower monthly payment when you start out, you can change your repayment plan at any time for free, though the change may not take effect immediately. If you want to enroll in an income-driven repayment plan, graduated repayment or extended repayment, be sure to request a new plan through your student loan servicer as soon as you can. You can learn more about student loan repayment options here.

4. How Much Are My Monthly Payments?

For loans with a set repayment term, the payment will be the same every month if you have a fixed-interest rate (as all federal loans do), or your monthly payment amount will change if you have a variable-interest rate (as some private loans do). Monthly payments through income-driven plans will depend on how much money you make. You should be able to get this information from your lender or servicer.

5. When’s My First Payment Due?

Federal student loans generally have a grace period of six months, meaning your first payment comes due six months after you graduate, leave school or drop below half-time enrollment. Some grace periods are nine months. If you have a private lender, you may not have a grace period — find out as soon as possible.

6. How Do I Pay?

You’ll start hearing from your lender or servicer soon if you haven’t already. Like most bills, you can go the old-school route of sending a check, or you can pay online. Keep in mind you don’t have to wait till your grace period ends to make a payment, and you can also enroll in automatic payments to make sure you don’t miss any. On that note: You don’t want to miss any student loan payments, because it will damage your credit, and your credit score plays a role in how much you pay for other credit products, as well as renting a home or buying a cellphone. You can keep tabs on how your student loans are affecting your credit by getting two free credit scores every month on Credit.com. If you’re thinking about getting a credit card after college, here are a few good options for new grads.

7. What’s My Interest Rate?

This should be in your loan paperwork and in your online account. Make sure you know if it’s a fixed- or variable-interest rate.

8. How Can I Make Repaying My Loans Easier?

If you have multiple federal student loans, which most borrowers do, you can consider consolidating them. With a federal Direct consolidation loan, you can qualify for certain loan forgiveness and loan repayment options (though you may not have to consolidate to qualify), and you’ll only have to make one monthly payment, rather than several to multiple servicers.

You could also consider refinancing multiple loans with a private lender, but know that you’ll be giving up many of the benefits that come with federal loans if you do this. There is no federal refinancing option. You can also enroll in automatic payments to make your life a little easier — just be sure to check that it goes through every month and that your bank account has enough money to cover the bill.

9. How Can I Make My Loans More Affordable?

Among the benefits previously noted, enrolling in automatic payments usually gets you a 0.25% discount on your interest rate. Private loan refinancing could also help you save money if you have good credit and can qualify for a lower interest rate. Additionally, changing your repayment plan to a longer term or an income-driven plan can lower your monthly payments.

There’s another way to look at loan affordability: long-term savings. For example, all the interest your loan accrued while you were in school will be added to the principal once your grace period expires, meaning you’ll have to pay interest on interest. You can avoid this by paying off the interest before your first loan payment comes due. You can also pay more than your minimum payment each month, which can help you pay off your loans early.

Student loans can be complicated, so reach out to your student loan servicer if you have questions. Conversely, if you’re having issues with your student loan servicer, you can file a complaint with the Consumer Financial Protection Bureau.

Credit.com can offer help with your student loans, too. If you have questions about them or other money stuff, leave your questions in the comments. 

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The Average Student Loan Debt in Every State

Borrowers in the class of 2015 had an average of $30,100 in student loan debt. We break down the average debt in each state.

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Here’s How Many People Actually Have the Worst Credit Score

It is possible to have a rock-bottom credit score. Find out exactly how many U.S. residents meet this dubious threshold.

As confusing as credit scores can be, most people get the basic concept: You want a high score, not a low one. What qualifies as a good credit score depends on the scoring model you’re talking about (and there are dozens of them), but a common range is 300 to 850. The higher your score, the better. You don’t have to aim for an 850 to get the best terms on a loan or qualify for top-tier credit cards, but anywhere in the high 700s is a good place to be.

Ideally, you’re not anywhere near the bottom of the range, but it is possible to have a 300 credit score on a 300 to 850 scale. The good news: A very small portion of the population has such a score. The bad news: Some people do.

How Many People Have the Worst Credit Score?

There are 294 million “scoreable” consumers, and only 0.01% of them had a 300 credit score, according to data credit bureau TransUnion pulled for Credit.com in March 2017. (A scoreable consumer is someone with enough information in their credit files to generate a VantageScore 3.0. TransUnion said 4.28% of the population is not scoreable.) While 0.01% is a really small portion of consumers, it still means 29,400 people have the worst credit score (on the VantageScore 3.0 scale). In other words: It’s totally possible for your credit to hit rock-bottom. (You can see where you stand by getting two of your credit scores for free on Credit.com.)

 

Though it’s uncommon to have the worst credit score, having bad credit isn’t. More than a quarter (27.66%) of consumers have a credit score between 300 and 600, which is considered bad credit or subprime credit. Conversely, 20% have a super prime credit score (781 to 850). The average credit score was 645 when TransUnion pulled the data.

How to Deal With Terrible Credit

TransUnion didn’t identify common factors among consumers with a 300 credit score, but they pointed out some characteristics of subprime credit files: “Generally speaking people with poor credit (300-600 score) usually make late payments, only contribute the minimum amount, carry high percentage balances on multiple cards and apply for multiple lines of credit within a short period of time,” said Sarah Kossek, a spokeswoman for TransUnion, noting that the factors vary by individual.

So if you want to avoid joining the population of people with bad credit (or you want to get out of the club), it’s smart to make credit card and loan payments on time, pay down your debts, use a very small portion of your credit card limits and apply for credit sparingly. It’s also a good idea to regularly review your credit reports for accuracy, as errors may be hurting your credit. You can pull your credit reports for free each year at AnnualCreditReport.com.

If your credit is the worst, figuratively or literally, well, you can find a full explainer on how to fix it right here.

Image: mikkelwilliam

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This Man’s 2-Mile Ambulance Ride Cost $2,700. Is That Normal?

Ever wonder why ambulance rides are so expensive? This man's frustrating story will enlighten you.

Ideally, you’ll never need to ride in the back of an ambulance. But if it happens, here’s what you should know: Ambulance services are extremely expensive.

Rick Santoro learned that the hard way.

After receiving a two-mile transport in February, Santoro experienced sticker shock: His ride added up to $2,691.50. Though insurance covered most of it, Santoro had to pay $770.30 out of pocket, and he wondered if that was right. The bulk of the bill resulted from the fact he hadn’t yet hit his annual deductible, but it still seemed pricey, he said, given the brief care he received.

“I just want an answer,” Santoro said. “If I gotta pay the 700 bucks, I gotta pay … It will be a lesson learned for me.”

‘I Didn’t Feel Well’

In early February, Santoro, 60, was at an orthopedist’s office for a small procedure, an injection in his knee. Afterward, he passed out, but once he regained consciousness, he continued to feel ill.

His doctor suggested he go to the emergency room, and Santoro, uncertain why he was having issues, agreed. An ambulance took him two miles to the nearest hospital, and a few weeks later, the bill arrived. The short ride cost more than the subsequent emergency room visit, which he estimates lasted about two and a half hours. That bill was $200.

Why Are Ambulance Services So Expensive?

Santoro’s inquiry isn’t the first Credit.com has received about a pricey ambulance ride. As we’ve previously reported, there are many reasons medical transport services cost hundreds or thousands of dollars. It’s difficult to pin down an average amount for an ambulance bill, because costs vary so widely by location, services and contracts between providers and insurers. But the core expenses generally result from the same things.

“Labor, training, readiness, equipment — all these things factor into the equation,” said Alan Schwalberg, vice president of emergency medical services at Northwell Health Center in Syosset, New York, which provided the ambulance that transported Santoro. (Schwalberg said he couldn’t comment on a specific patient’s case but could speak generally about the cost of ambulance services at Northwell.)

“[Patients] can’t fathom how it’s so expensive,” he said. “They compare it to Uber, but it’s not Uber.”

People who receive ambulance transportation pay not only for the services they receive but also for what it costs for ambulances to be readily available in the service area, in addition to the cost of training people who provide medical services in the vehicle.

“There’s two people for every one patient, minimum,” which is a different standard of healthcare than you’d find in an emergency room, Schwalberg said. “It’s labor intensive.”

Equipment and staff must also meet local and state regulatory requirements, and the cost of such maintenance adds up. All that factors into the base charge, or what Schwalberg referred to as “loaded miles.”

On top of that, there’s a mileage charge, but that generally makes up a much smaller portion of the final bill. In Santoro’s case, the base charge was $2,480 and the mileage was $84. (The remaining $127.50 was a surcharge imposed by New York state.)

Part of what shocked Santoro is the fact that he received what he considered very little care: An EMT took his vitals and gave him oxygen, he said. But Schwalberg said Northwell doesn’t itemize medications and other care a patient may receive in an ambulance. Patients are charged for one of two types of care: basic life support or advanced life support.

Why Ambulance Costs Vary

While Schwalberg’s explanation gives insight into the high costs of ambulance transport, it’s really only applicable to Northwell Health Center on Long Island. As with many aspects of health care costs, base charges vary by provider, insurance coverage and location.

In Northwell’s case, ambulance rates were set after working with an outside consulting firm a few years ago, Schwalberg said. They compared prices throughout the region, determined the final rates, and then negotiated with insurance carriers what they would pay. They determined a patient’s final responsibility would rely not only on the type of insurance coverage they have but also on the terms their insurance carrier set with the provider.

For these reasons, it can be really difficult to know how much a health care service will end up costing you, unless you price it out with the provider and your insurer in advance. That’s something medical billing experts like Adria Goldman Gross recommend, but obviously that’s not an option in an emergency situation. In that case, Gross said you should be prepared to negotiate. (You can read more about how to avoid a high medical bill here.)

How to Handle a Massive Medical Bill

Gross said the first thing to do when you get a bill is check the medical billing codes to see if they match the services you received. (She recommends doing this with any bill, no matter the size, because errors are common.) If it’s wrong, that’s the first thing to challenge with the health care provider, but if it’s right, the next thing to do is research costs for similar procedures in your area. She said she uses the Medicare fee schedule as a benchmark.

Fair warning: While the fee schedule is publicly available, it’s not the easiest thing to read. If, based on those figures or other research, you feel like you’ve been overcharged, you can try to negotiate a lower bill. Again, this is easier said than done.

“Sometimes it could be one phone call, other times it could be 15 phone calls or it could be 20 phone calls, it depends,” Gross said. You’re in for a lot of work, she added, but if you really believe you’re being overcharged, it can be worth the fight.

Gross suggested arranging a monthly payment plan so your bill won’t be sent to collections while you pursue negotiations. (A collection account can seriously hurt your credit standing, though some newer credit scoring models won’t ding you for medical-bill collections. You can keep tabs on such things by getting your free credit report summary right here on Credit.com.)

“Say, ‘Look, I really feel that you’ve been paid the reasonable amount, and I really only owe you this much for the allowed amounts for your location,'” she said. Gross suggested working your way up the ladder and even calling the CEO of the hospital or an equivalent authority figure to make your case. If you truly can’t afford your bills, ask about repayment assistance. Schwalberg said Northwell offers such a program.

Having made several phone calls to the hospital to verify his bill, Santoro said he is on track to pay the full $770.30 in small monthly installments. He said he wishes he hadn’t taken the ambulance or at least knew how expensive it was going to be. Reflecting on the situation, he said he should have waited to see if he felt better or taken a car service instead of an ambulance, then acknowledged he isn’t sure how knowing the cost would have affected his decision at the time.

“Why can’t the guy that picks you up say to you, ‘This is going to be an expensive ride?'” Santoro said, seeming to replay the episode in his head. He added: “I don’t know what I would say. I just wanted to feel better.”

Image: FangXiaNuo

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Friendly Reminder: A Tax Extension Doesn’t Give You More Time to Pay

Haven't filed your taxes yet? Good news: You can get a six-month extension to do them.

Haven’t filed your taxes yet? Good news: You can get a six-month extension to do them. Bad news: You still need to pay your taxes by April 18 (this year’s deadline), or you’ll owe interest and fees for making a late payment. You have to do your best to estimate what you owe and make or postmark the payment by April 18.

How to Get an Extension to File Your Taxes

You can request an extension from the Internal Revenue Service by either submitting an electronic payment of your estimated tax due, filing an electronic Form 4868 or filing a paper Form 4868. Each option automatically gives you a six-month extension for filing your tax return, meaning you have until Oct. 18 to send in your paperwork.

To make an electronic payment to the IRS, you can make an online direct payment from your bank account, use the Electronic Federal Tax Payment System (requires enrollment) or use a credit or debit card. Making an electronic payment means you do not have to file a Form 4868, as the payment triggers an automatic six-month extension. If you file a paper Form 4868, you should include your payment.

What to Do If You Owe But Don’t Have the Money

People often want an extension from the IRS because they don’t have enough money to pay their tax bill. But that’s not how it works.

If you don’t have the cash to pay your taxes, you can make a partial payment, though the unpaid balance will be subject to interest and a late-payment penalty (generally one-half of 1% of the unpaid tax each month the balance goes unpaid, up to 25%). You could also pay your taxes with a credit card, though there’s a processing fee to do so, plus the interest you’d owe your credit card company. You can learn more about paying your taxes with a credit card here. While the IRS offers installment plans, you must file your tax return to apply for one.

Not only can paying your taxes late get expensive due to interest and fees, it could potentially damage your credit: The IRS could place a lien against your property for unpaid tax debt, which will show up on your credit report as a derogatory item. That can drive up the costs of other things in your life, like loan rates and insurance premiums. (You can see what’s affecting your credit by getting a free credit report summary every 14 days on Credit.com.)

Whether you decide to get an extension or file your tax return under deadline pressure, do your best to not rush through your work, because mistakes can cost you, too. Check out this list of 50 things to know if you haven’t filed your taxes yet.

Image: Tempura 

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