7 things to know about international travel this summer

When it comes to international travel right now, the world isn’t exactly just anyone’s oyster, but it could be your shrimp cocktail. In other words, many countries are still closed to tourists, but many beautiful destinations are finally opening their doors.

Indeed, even the European Union recently decided to unlock the doors for many tourists, including vaccinated Americans. And, even better, many countries have waived (or will waive soon) these pesky quarantine requirements. This means that you no longer need to include an additional 10 days of travel without travel in your plans.

At the same time, things are not exactly the way they used to be. The post-COVID travel world has its fair share of complications, many of which will lead to additional planning and expense. Here are some things to know before you cash in your travel rewards this summer.

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1. You will probably need to get the vaccine

Of course, not all countries that allow American tourists will require you to be vaccinated, but most European countries certainly will. You will need to show your proof of vaccination before you are allowed to enter your destination. Your CDC card should be sufficient in most cases. Without it, you could be turned away before you even set foot on foreign soil.

Even if you’re heading to a country that doesn’t require travelers to be vaccinated, unvaccinated travelers will likely have to overcome many hurdles. Some countries will require unvaccinated travelers to be quarantined upon arrival (and, yes, you will pay for that yourself). At the very least, you will likely need to take multiple COVID-19 tests if you don’t have the proper vaccination documents.

2. Testing is common – and at your expense

Speaking of testing, be prepared to show a negative COVID-19 test result before you travel. In fact, many countries will require a negative test before you arrive, even if you are vaccinated. Most countries require that the test be taken no later than 72 hours before your arrival.

In some cases, you won’t just need to test before you arrive – you will also need to test after you’ve been there for a few days. Some places require a negative test two to three days after your arrival, and other countries may require a third test after five to ten days. And, just like quarantines, these tests are not paid for by the places you visit; the cost comes from your poached. So make sure your personal finance budget is prepared.

3. Country skipping may not be possible

If you are looking forward to a trip to multiple countries, you may need to think again. While some countries will be open to visitors regardless of where they have been, most countries will want to know where you have been in the past 10-14 days. And if they don’t like your answer, they might not let you in. This is especially true if you are spending time in a country with a high number of coronavirus cases. Be sure to check the entry / exit requirements for each country on your sightseeing list.

4. Masks are still mandatory in most countries

Although the United States has decided to throw the masks in the wind, most other countries are not so relaxed about letting your aerosols fly freely. Many countries still have sturdy mask mandates for public transport and in public buildings. And unlike the United States, many other countries will impose stiff fines if you are caught without a mask in public. So make sure you bring enough clean masks for your entire trip – just in case.

5. Be prepared for curfews, closures and capacity limits

A number of countries are still subject to various forms of foreclosure, even though they are open to tourists. In some places, this means strict curfews on travel after dark. It could also mean that some businesses are still closed, in whole or in part. For example, restaurants may be open for take out, but will not allow you to sit inside and eat.

Another thing to expect is capacity limits, especially at popular tourist stops. Plan to be flexible about where and when you can go to certain attractions.

6. Travel health insurance is compulsory in many countries.

It is always a good idea to purchase health insurance when traveling. You never know what might happen overseas, and most U.S. insurance policies won’t cover you outside the country. And, of course, that will double to travel amid a global pandemic that has already killed millions of people. But while you can risk it without insurance, your destination country may not. Some countries will require you to have proof of sufficient medical coverage to cover coronavirus care before you are allowed to enter the country.

7. You will need a negative test to go home.

While restrictions in the United States have all but evaporated in many areas, we are not that lax at the border. If you leave the country and travel abroad, you will need to present a negative COVID-19 test before you can return. The test result should not be older than 72 hours. Conveniently, multiple home COVID-19 tests are accepted, so consider packing a few before you go to make sure you have what you need to come back.

Plan, plan and plan – then plan even more

Traveling abroad is rarely easy, even in the absence of a global pandemic. But it’s much more complicated right now, even in countries with few restrictions. Make sure you plan your trip well, including researching all the destinations on your agenda. And don’t forget the local restrictions. It is good to familiarize yourself with the national rules, but local towns or villages may also have additional requirements that you should be aware of.

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Denied a personal loan? How To Improve Your Credit Score Now, Money News

Credit Bureau Singapore (CBS) and Moneylenders Credit Bureau (MLCB) collect and manage consumer credit data. They give every Singaporean consumer a credit score that indicates the likelihood of you going into default. Your credit score is important and will follow you throughout your life, playing a vital role in a lender’s decision to offer or sometimes deny you credit.

You can find your credit score for free by going to Credit Bureau Singapore and requesting a report on your credit history. The score will be between 1000 and 2000 and will be accompanied by a score (ie AA or HH). Those who fall below 1,723 are placed in the lowest category and are considered to have a bad credit score.

Credit score Risk level Probability of default
1911-2000 AA Min 0.00%, Max 0.27%
1844-1910 BB Min 0.27 percent, Max 0.67 percent
1825-1843 CC Min 0.67%, Max 0.88%
1813-1824 not a word Min 0.88 percent, Max 1.03 percent
1782-1812 EE Min 1.03 percent, Max 1.58 percent
1755-1781 FF Min 1.58 percent, Max 2.28 percent
1724-1754 GG Min 2.28 percent, Max 3.46 percent
1000-1723 HH Min 3.46 percent, Max 100.00 percent

If you have bad credit or are looking to improve your credit score for a future loan, here are five tips you need to know.

1. Build a credit history and pay on time

Lenders will generally decline a credit card or loan application when there is little or no credit history. It is difficult to analyze a candidate when there is no background to examine. In contrast, a consumer with a long credit history is generally considered to be a more reliable borrower (in the absence of meaningful data on delinquency).

If you find yourself in this camp, the first thing to do is open a line of credit. There are many great credit card options available in Singapore to help you build your credit. You will quickly see your credit score improve when you use your credit card responsibly and pay your bills on time.

2. Avoid default at all costs and pay your debts on time

Delinquency data or late payment indicators in your credit history will penalize your score. That being said, defaulting on a loan can be one of the most damaging actions for your credit score. The impact of a single default on your credit score can make or break a lender’s decision to offer you a credit card, personal loan, or home loan. Not only that, you may be subject to higher interest rates on existing debt as well as any other fine print. So try to make payments on time.


If you are unable to pay off your debt, don’t ignore it. Enlist the help of a credit counselor to work with you to avoid making this serious mistake. You may be able to restructure your debt using a debt consolidation plan or a loan with balance transfer to avoid defaulting on a loan.

3. Try not to have too many or too few credit facilities open.

If you have little or no credit history, we suggest that you start applying for a credit card. However, try not to have too many credit facilities open at the same time. It is difficult to keep track of and manage many different credit cards in your wallet. So to avoid payment default and mismanagement of your payment deadlines, aim for 4 to 5 bank cards maximum. You should also consider closing unused credit cards, starting with the cards with the highest interest rates and annual fees.

4. Survey data

One way to penalize your credit score is to take out multiple loans over a short period of time. This behavior signals to lenders that you are in desperate need of credit and that you may be in a bad financial situation. Essentially, every time you apply for a new loan, a bank or financial institution requests a copy of your credit report. This creates a new investigation into your credit history. Having too many inquiries at once tells lenders that you are trying to get into debt fast. This behavior will lower your credit score and may even prevent you from being approved for a loan in the future. Instead, lay out your loan applications and wait a few months before applying for additional credit cards or loans.

5. Don’t use credit cards to the max

Your credit usage pattern is basically a ratio of your total amount due / total available credit on a recurring basis. Most credit cards have a credit limit, but that doesn’t mean you need to regularly maximize what you have. Avoid using more than 30% of your available limit to indicate a healthy credit usage pattern.

Conversely, if you regularly maximize your credit limit and use high credit usage, you will quickly see your credit score drop. Using credit plays a bigger role than you might have guessed when determining your credit score. If you end up with unfavorable usage patterns and your credit score suffers, adjusting your monthly spending habits can be a quick way to improve your credit score.

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3 money tips my young clients always hate to hear

  • I work with high income tech workers, and there are three financial tips they hate to hear.
  • I always recommend watching your spending. Earning more should mean saving more.
  • I recommend a simple investment strategy over a fad strategy, and get rich over time, not overnight.
  • Read more stories from Personal Finance Insider.

After spending over a decade working with retirees who have accumulated more money than they will ever need in their lifetime, I have moved on to working with young professionals. Helping clients navigate their path to financial independence when they are starting from scratch comes with challenges, but it’s hugely rewarding.

I often tell clients that one of my jobs is to defend their and me future. Part of that job is telling them things they might not want to hear. Hate them or love them, here are my top three tips that get the most perspective. If you are serious about a path to financial independence, keep them in mind!

1. Watch your spending

My clients are high income tech employees who receive generous cash bonuses and stock compensation in addition to their base salary. They are often the first person in their family to make that much money, so they have to use their income to build wealth.

One of the first exercises I do with clients is to review their cash flow. We analyze their spending in detail so they can see where their money is going. We also calculate the percentage of their income they are saving and determine how much they need to save to meet their financial goals. Yes, that part gets personal (and maybe uncomfortable). Although I get a lot of resistance with this exercise, I feel like it is the most important step in the financial planning process.

It is essential to find a balance between enjoying your life today and saving for your future. There is a direct correlation between how much of your income you save and how long you can retire. The most effective way to close this gap is to monitor your spending.

Watching your spending doesn’t mean giving up everything you love. Take the time to think about what’s really important to you and see if your spending matches your values. Pay off your debts to reduce your fixed expenses. Anticipate non-recurring events or unforeseen expenses so they don’t ruin your budget. Get used to living on your base salary and use bonuses or stock compensation to accelerate progress towards your long-term goals.

2. Get rich slowly

You may have heard the expression “building wealth is a marathon, not a sprint”. Contrary to popular belief, an overwhelming the majority of millionaires are self-taught. You don’t need multiple six-figure incomes to become a millionaire.

In the absence of inheritance or luck in the lottery, the key to successfully building wealth lies in one word: discipline. Even if you are lucky enough to receive a life-changing windfall, a lack of discipline will quickly lead you down the road to bankruptcy.

Financial discipline, like any other type of discipline, requires consistent habits and behaviors over time. It is essential to set goals and have a plan to achieve those goals. Prioritize yourself first and save at least 20% of your income. Start saving early to take advantage of compound interest. Think about the small changes you can make over time to bridge the gap between where you are now and where you want to be. Finally, understand that there are no quick fixes when it comes to investing.

My high school orchestra teacher always said, “There is no shortcut to success. This phrase is true about many aspects of life, including your investments. A seemingly good investment decision in the short term will not make up for the lack of discipline in the long term, which brings me to my final tip.

3. Keep it simple

I have had countless clients asking me about out-of-the-box investing strategies in the hopes of generating quick and easy returns. Often, clients do not fully understand what they are getting into. They believe that these investment strategies will earn more than the stock market or compensate for the fact that they are not saving enough.

The idea that building or maintaining wealth requires investments in alternative or exotic investments is a myth. Ben Carlson, Warren Buffett and other investment experts compared the performance of simple or “lazy” wallets to some of the more complicated and expensive investment strategies and found that complex strategies have failed to beat low cost mutual funds or exchange traded funds over multiple time periods. A simple and diversified portfolio can be just as (if not more) effective in the long run when it comes to investing.

The keep-it-simple philosophy also applies to bank accounts, investment accounts and credit cards. I have worked with couples who have (and frequently use) dozens of bank accounts and credit cards. As the accounts pile up, it becomes more and more difficult to keep track of their spending and saving habits. It’s also easy to overdraft a checking account or forget about a credit card payment.

Some clients have investment accounts with more than one custodian. All of these accounts add unnecessary complexity to your life and make managing your finances even more difficult. While there is no one-size-fits-all solution for managing accounts, I recommend that you take a look at your accounts to see how you can consolidate and simplify your life. Also, think twice before opening a new account.

Initially, many of my clients don’t like to hear my top three tips. However, after following my advice and seeing the results over time, they become believers. The road to financial independence is not rocket science. Watching your spending, getting rich slowly, and keeping it simple can help you get there sooner than you think.

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Here’s why I canceled a credit card I really liked

I’ve had my share of credit cards over the years, and usually I try not to close an account unless there’s a really good reason for it. I know that having long-standing accounts can really improve my credit score, so generally that’s reason enough to keep a card, even though I rarely use it.

But years ago I ended up canceling a credit card I had made use quite frequently. Here’s why.

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The importance of good customer service

I’m the type of person who prides himself on being financially responsible. In fact, I never had a credit card balance in all the years that I held my cards. I have always been successful in charging expenses responsibly and paying my bills in full to avoid accruing interest charges.

I also have a strong history of being on time with my invoices. But a month, I encountered a catch.

Normally, I get an email notification from each of my credit cards letting me know when my bill is due. This, in turn, prompts me to log into my account and schedule each payment.

One month, I never received this email for the card in question. To this day, I don’t know why he never came. The credit card company insists it was sent, but it never reached my inbox (I even checked my spam folder, just in case).

Now you can probably see where it’s going. In the absence of this e-mail, I forgot to schedule my payment. So I got hit with late fees, and only once I got this notification and an overdue invoice did I realize what had happened.

At that time, I had been a cardholder for several years and had never been late on a payment. Well, that didn’t happen. The rep I spoke to insisted that I should have received this email and that she could not waive the late charge. I then asked to speak to his supervisor, who was also unhelpful.

Even though I had never been overdue and it was my first violation, and the account was not horribly past due (it was between 30 and 60 days), my credit card company did refused to budge. So from that point on, I refused to remain the card holder.

Lesson learned

Most of us don’t think of customer service when looking for new cards. Instead, we tend to focus on credit cards with the best cash back opportunities and the best rewards programs. But good customer service is also an important thing to look for.

The card I canceled after my frustrating customer service experience was a good card otherwise. I liked the rewards program and used the card regularly. But I wasn’t willing to stay on a card with a company that valued my business so little that they wouldn’t waive a single late fee. If you’ve had a bad experience with your credit card company’s customer service team, you may also want to consider closing your account. And that’s especially true if the cancellation won’t seriously damage your credit score and you can find a replacement credit card that offers great rewards.

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Cover letter for a mortgage: template and how to write one

Our goal is to give you the tools and the confidence you need to improve your finances. While we do receive compensation from our partner lenders, whom we will always identify, all opinions are ours. Credible Operations, Inc. NMLS # 1681276, is referred to herein as “Credible”.

After your mortgage application, the lender will assess your application and your financial documents to verify that you meet their loan approval requirements.

If the lender finds information that raises red flags, they may ask you for a letter of explanation to shed light on the issue – whether it’s an employment interruption, a derogatory note on your unusually large credit or deposit in your bank account. .

Here’s what you need to know about cover letters, including how to write one:

What is a letter of explanation for a mortgage loan?

A letter of explanation is your opportunity to explain inconsistencies in your mortgage loan application and all the aspects of your financial history that your lender needs to better understand before they can approve you for a loan.

After requesting a mortgage, your application goes through the subscription process. The underwriter examines your credit history, employment, tax returns, assets and debts in detail to ensure that the information is complete and accurate and that you have a low risk of default on the loan.

If anything arises that could disqualify your claim, the underwriter may request a letter of explanation to help better understand the specific details of the problem.

Advice: The subscriber will verify your credit scores, employment and other items shortly before finalizing the loan. Any changes since loan approval may require an explanation before the lender authorizes your loan to close. So it is best not to change your finances until you have completed the home buying process.

If you’re looking to buy a new home, Credible can help you compare prequalified rates from all of our partner lenders in just minutes. It’s simple and secure – and you don’t even have to leave our platform.

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Why you might need a letter of explanation

Just about any aspect of your loan application may require a letter of explanation, but most requests are for credit, employment, cash reserves, or fraud protection.

Here are a few things that might prompt your lender to request a letter of explanation:

Derogatory items on your credit report

Previous credit issues may prompt you to ask for a letter of explanation because they suggest that you have been having difficulty managing your debt. These problems include:

  • Late payments
  • Collectibles
  • Landfills
  • Bankruptcy
  • A short sale or foreclosure

Excessive credit requests can also be a red flag if they cause the lender to suspect that you bought credit because you had trouble getting approved.

To find: Can You Buy a Home With Bad Credit?

Unusual or inconsistent work history

You will need at least two years of stable employment, either in the same position or field, to prove that your Income Is reliable. Some circumstances that make you appear riskier in the eyes of the lender include:

  • Job losses or periods of unemployment
  • Self-employment
  • Frequent job changes
  • A new job in a different field

Buy a home away from your workplace

If your new home is more than 80 kilometers or so from your workplace, your lender might suspect that you are buying a second home or investment property rather than a primary residence.

Lending standards are stricter for non-primary residences, and interest rates are generally higher.

Lack of rental history

Lenders like to see a history of on-time rent payments for at least the past 12 months for first-time buyers. This is because inexperienced tenants may not be ready to suddenly take on a mortgage payment.

Bank deposits, withdrawals or large transfers

Lenders like money in borrowers’ checking and savings accounts to be “seasoned and sourced,” which means that the money has been there long enough and its source is apparent enough to show that it has grown. is your money versus gift money or a loan that you will have to repay.

Conversely, large withdrawals can cause the lender to think that you are in a bind.

Inconsistency in mailing address

Address discrepancies on a loan file are considered “high-level red flags” for mortgage fraud, warns Fannie Mae.

The lender will need a letter of explanation if they find any inconsistencies in your identification documents, such as a different address listed on your credit report than on your bank statements and tax returns.

Learn more: Credit Monitoring: Why You Should Get A Credit Monitoring Service

How to write a letter of explanation

It’s best to keep your cover letter short and sweet. Include as much detail as needed, but only address the specific information requested by the lender. The idea is to make it easy for the subscriber to find the information they need.

Your cover letter should be pragmatic in tone and structure. Here are some of the things mortgage experts recommend that you include in the letter:

  • The date you write the letter
  • The name, mailing address and telephone number of the lender
  • Your full legal name and loan application number
  • Your explanation, with references to any supporting documents you include
  • Your postal address and telephone number

Once you’ve gathered your information and thoughts, here’s how.

1. Be honest about your financial situation

The lender already knows, or at least suspects, a problem with the request. Now is not the time to try to convince them otherwise or to find excuses for them. Politely state the problem as a question of fact, then continue with the explanation.

2. Be brief

The underwriter wants to see all the information they need to understand the problem, but that’s all they want to see. Keep your explanation brief, to the point, and to the point.

3. Provide evidence to support your explanation

If, for example, the lender thinks you will have an excessive commute from your new home, consider getting a letter from your boss or from the human resources department explaining the situation and attach it to your letter.

Likewise, if a prolonged illness has prevented you from working, enclose your unemployment benefit statements and / or medical bills with your letter.

4. Proofread your letter for errors

An error-free letter shows that you have taken the Underwriter’s request seriously. Also, be sure to maintain a professional tone throughout the letter.

Explanation letter template

The content of your letter will of course depend on your particular situation. You can use the following template letter and replace the details in brackets with your own information and explanations:

[XYZ Bank]
[123 Broadway]
[New York, NY 20021]
[RE: Jane Smith’s mortgage loan application #123456]

Dear loan specialist:

I am writing to you in response to the underwriter’s request for information regarding [my gap in employment] of [January 15, 2020 to June 15, 2020]. The reason for my absence from work was [the premature birth of my son on January 15, 2020].

In support of my explanation, I have attached the following documentation:

  1. [An insurance statement documenting that he was hospitalized from January 15, 2020 through April 1, 2020]
  2. [Certification of Health Care Provider for Family Member’s Serious Health Condition under the Family and Medical Leave Act form]
  3. [A letter from his pediatrician restricting him from attending daycare until June 15, 2020]

If you have any further questions, please do not hesitate to contact me.


[Jane Smith]
[123 State St.]
[New York, NY 20012]

What to do if your letter of explanation is rejected

In the event that the underwriter rejects your explanation, you have a few options. First, you can submit a new letter with more specific details. Include anything you might have forgotten the first time around and some additional documentation to support your explanation.

If that is not enough to qualify for the loan, you can start from scratch and try to get a mortgage with another lender, but you might encounter the same problem.

Your best bet might be to postpone your purchase while you improve your credit and / or solve the problems which precipitated the request for explanations. At the very least, the issues will be more distant in the past the next time you apply, so they might have less of an impact on the lender’s decision.

Compare several lenders

If your letter of explanation is rejected, you may want to try turning to another lender. Credible’s streamlined process can help. We make it easy to compare multiple mortgage lenders. In just a few minutes, you can view prequalified rates and generate a streamlined pre-approval letter, all without leaving our platform.

About the Author

Daria uhlig

Daria Uhlig is a Credible associate who covers mortgages and real estate. His work has been published in publications such as The Motley Fool, USA Today, MSN Money, CNBC, and Yahoo! Finance.

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Borrowers stranded awaiting the surrender of their public service loan

After a decade of careful monitoring of student loan payments, some borrowers about to cancel their loans have found themselves stuck in a cruel final phase: the waiting period.

Public service loan forgiveness borrowers report waiting up to six months for their forgiveness requests to be approved, often without explaining why. Although loan payments are suspended For pandemic relief, borrowers are still worried about whether their approval will be processed before payments resume in October. Plus, they face the stress of knowing that a change in their employment status could upset years of careful preparation.

Data released by the Education Department last week show a backlog of paperwork of around 147,000 forms – although the agency has not released a breakdown of the number of applications from borrowers who have made the required number of payments for discount against those still pending requests that submit annual updates. The Education Department did not respond to questions about the delay.

Public Service Loan Forgiveness, often referred to as PSLF, was created to provide loan relief to borrowers who spend at least a decade working in often low-paying government or nonprofit jobs. Borrowers must make 120 qualifying monthly payments before obtaining their canceled loans.

Amy Cocuzza hit the 120 mark in January, after years of carefully monitoring her progress. She thought hers was a straightforward case: She had worked as a lawyer for a federal agency for 10 years and had submitted annual employment certification forms in recent years that showed she had made the required number of payments.

So when she submitted her application, she had no reason to believe that it would be refused. But as the weeks turned into wordless months, his anxiety grew. She started checking her account five, six, and then seven times a day. There was, after all, a lot at stake. She had planned her entire career and financial life around that promise.

“He just disappears into the void,” she said. “There is no transparency. There is no communication. You hear nothing for months and months. And you start to think, ‘uh oh, did I miscalculate somehow?’ “

In the almost four years since the first borrowers became eligible for exemption through the PSLF, the program has gained a reputation for being a bureaucratic mess. Stories of service agents miscalculating payments or borrowers getting conflicting information about their employer’s eligibility for the program are common. Refusal rates remain high, so even those borrowers who claim to have tripled their eligibility cannot ignore lingering doubts that their loans will in fact not be canceled when they are in this final stage of waiting.

The delay can have a huge mental impact on individual borrowers who wait for months, says Seth Frotman, executive director of the Student Borrower Protection Center.

“It’s just another insult to borrowers in this system,” he says. His organization is particularly concerned if the government activates payments before the backlog of forms is processed.

In some cases, there is more to the line than just the discomfort of waiting. The program states that borrowers not only make 120 qualifying payments while working for an eligible employer, but that they are still working for an eligible employer at the time their loans are canceled.

This requirement added to the stress for Melissa Pennise of Rochester, NY as she waited. She asked for forgiveness in January. She works in public health at a nonprofit organization and, like most nonprofits, resources can change based on funding from year to year. What if his job had been cut when this year’s budget was established in April?

Fortunately, this did not happen. And she logged on last week to find her $ 104,000 balance canceled.

People who have worked for forgiveness for over a decade want to get on with their lives, she says. “But there’s nothing you can do until these loans run out. “

Over the past few years, FedLoan, the service agent hired by the government to manage the civil service loan forgiveness, has improved a lot in providing borrowers with up-to-date information on their progress towards loan forgiveness, said Pennise. But once she applied, it was much harder to get answers. (FedLoan referred questions about the pardon wait time to the federal student aid office at the Department of Education.)

Borrowers like Pennise have taken Reddit, Facebook and Twitter to share stories about what to expect in the absence of more official information.

It’s not just the people who are at the end of the road who face the delays. Borrowers who attempt to certify their employment or get an updated tally of the number of eligible payments they have made are report similar delays.

Arthur DeVore III submitted his documents to certify his employer in December. He’s still waiting. He also has private loans, so every month when he pays his private loans he calls to check the status of his PSLF employment certificate form. He works for the Equal Employment Practices Commission in New York City. This is a local government agency, so it should be a hard-hitting case.

“I’m frustrated because it shouldn’t take that long,” he says. “What kind of extreme verification process do you have that takes seven months?” “

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Under normal circumstances, according to Betsy Mayotte, founder of The Institute of Student Loan Advisors, which offers borrowers free advice on paying off student loans, under normal circumstances receiving a final loan forgiveness notice in the Part of the utility loan remission typically takes between 45 and 90 days. The timeline is definitely longer than that now, she says, likely due to the disruption caused by the pandemic.

She expects the timeline to shrink again over the next few months. And the government has created a new tool that should help speed up the job certification process if your employer is already in the system as one that has been approved for PSLF. Mayotte says that, for the record, borrowers who used the tool seem to report a much shorter deadline than people who submit their documents by hand.

A simple improvement, in the meantime, would be for borrowers to receive clearer information on the schedule when they request a rebate.

“Even if the schedule is not ideal, it at least sets expectations,” says Mayotte. Right now, instead, some borrowers are reporting that customer service reps say they aren’t allowed to give a timeline. So people repeatedly call for updates or submit multiple applications, which only further clutters the system, Mayotte says.

This corresponds to what Cocuzza went through. When she first applied and asked for a deadline, she remembers being told it could take two or three months. But on subsequent calls to FedLoan, she got inconsistent responses.

“I feel like you could probably call three times an afternoon and have three different stories about what’s going on with your application,” she says.

Despite these challenges, Cocuzza’s is a success. Last week, after 154 days, she logged on after lunch – her second check of the day – to find that her request had finally been processed. His loan balance fell from $ 227,609 to $ 0.

“When I realized the loans ran out, I just started sobbing.”

More money :

Technicality delays forgiveness of student loans to more than 67,000 borrowers

Millennials don’t have kids because it’s too expensive

Should Biden cancel student debt? The loan forgiveness debate, explained

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Fintech loans are on the rise, but default rates are not that pretty

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Imagine a subprime consumer who wants to pay his credit card bills because his interest rates hover between 15% and 21%. They want to take out a personal loan with better repayment plans to pay off their existing debt.

Are people more likely to go to a bank or credit union when researching their options, or will they be more intrigued by fintech offering loans entirely online?

The latter seems to be a nicer option. And that’s what happened. Fintechs have wrested market share left and right from traditional banks and credit unions. FinTech claimed 49.4% of the unsecured personal loan market in March 2019, up from 22.4% four years earlier, according to Experian.

The level of delinquencies, however, is much higher on these non-traditional loans, with fintechs reporting a delinquency rate of 3.53% 15 months after the loans were granted, nearly double the provider rate. traditional 1.77%, according to a recent study of two companies. school teachers.

( Dig deeper: Fintech lenders will come back in force as the economy reopens )

The study – “Fintech borrowers: lax filtering or skimming– led by Marco Di Maggio of Harvard Business School and Vincent Yao of Georgia State University, was first published in 2018 and updated in late 2020. What they found is not a pretty sight. for fintech lenders.

On the one hand, the co-authors found that borrowers with high interest rates on their fintech loans are almost 40% more likely to be in delinquency, and their credit scores decline more than a bank loan. or credit union – an average decrease of 12 points instead of 0.9 points. – and their total debt increases by more than $ 8,000 after just one year.

According to Di Maggio and Yao, fintechs could target target audiences with risky credit scores and poor credit histories, as they recognize that these consumers cannot get comparable loans from a traditional banking provider. However, there is not yet enough data to support the theory that these non-bank lenders are actively marketing to at-risk consumers.

It is not exclusively an American problem. Major fintechs in India reported doubling delinquency rate between August 2019 and 2020, according to a report from TransUnion CIBIL.

“The delinquency picture is complicated and will take time to emerge due to the lagged effect of financial conditions, aid programs supported by lenders and changes in payment priorities” of Indian consumers, the report adds. of TransUnion.

Di Maggio and Yao got their data from a credit bureau that provided them with information on unsecured personal loans – a fintech favorite. The two examined a sample of over 200 million consumer credit records and rated borrowers by gender, age, marital status, and college degree, in addition to whether consumers were borrowing from a traditional provider or from a bank. a fintech.

Di Maggio says he cannot disclose which credit bureau he worked with to extract data on fintech default rates. The data – provided to Di Maggio as anonymous consumers – allowed the authors to match people with different types of loans and determine which loans came from which type of lender.

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Data that made waves

To dig deeper into the paper, The financial brand spoke to Di Maggio who said he decided to pursue the topic when he realized a profound lack of information on fintech default rates.

“I researched academic literature, looked at it [and found] it was sort of a difficult question to deal with, ”he explains, adding that it is not common or easy to find the data to back up what he and his coauthor have speculated. It’s still a fairly new conversation and the data isn’t plentiful yet, even though fintech lending is taking up space in the lending market exponentially.

Di Maggio mainly focuses on personal fintech loans, which are mainly used for the consolidation of existing debts. He sees it as the “riskiest segment” because, although borrowers may use part of personal loans to pay their unpaid bills, not all funds always go towards the intended purpose.

The vicious circle :

People only use part of the debt consolidation loan they have taken out to pay off their debts. Instead, they use a large portion of the loan to make new purchases.

And the problem has grown dramatically, he says, because people with card debt often keep the cards after paying them off and then increase the balance again.

“The worst outcome happens because if $ 40,000 wasn’t viable before, you now end up six months later with $ 80,000,” said Di Maggio. “In addition, borrowers’ results worsen in the months following the origination of the fintech loan compared to similar people borrowing from non-fintech lenders.” This is a classic weak point of debt consolidation loans. FinTechs have just made the process a lot easier.

Di Maggio’s discoveries are still making waves in the financial sector. When he first presented his research at a conference with a fintech audience, people were angry.

“We’ve had people from LendingClub, people from TransUnion that are very upset,” he says, joking that he challenged them to find data to prove he was wrong. Two years later, he says they have yet to provide him with alternative data.

It’s not all sun and roses

Fintech loans of course have their advantages, which could explain why so many consumers are moving away from conventional providers. People can get loans more easily if they have subprime credit scores, and fintech lenders will look at other forms of personal data to meet creditworthiness requirements.

( Read more: Banks play with dumping credit scores in lending decisions )

There is also much less oversight. While banking regulators threaten to incriminate banks and credit unions for breaches of compliance, fintechs have no federal oversight, although the Consumer Financial Protection Bureau does oversee some practices.

“Some observers argue that fintech lenders might be able to operate where banks don’t find it profitable,” Di Maggio and his co-author wrote in the paper, noting that fintech lenders also have lower fixed costs. to those of traditional lenders, as non-bank institutions do not have branches.

And these advantages are not lost on the attention of traditional banking providers. Banks and credit unions, while unwilling to admit it publicly, are increasingly concerned about the growing swarm of competitors.

They could win on you:

Nearly nine in ten financial institutions are also concerned that fintech loans will exceed their own loans, according to PWC.

It can then be a relief for existing providers to know that they may not have to worry as much as they think. According to Di Maggio and Yao, fintech loans may not be all they claim to be and traditional banking providers still have an edge over challengers. They have a better track record of attracting consumers who can repay their debt. And regulations once supposed to hamper traditional banking providers may be what saves them.

“I think digital lending and banking are less of a threat than, say, what’s happening to the payment system,” maintains Di Maggio, citing Stripe and a similar digital payment specialist, which he says pose a risk. significantly higher for banks than LendingClub.

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Advantages and disadvantages of prepaying your mortgage

No one likes to be in debt, and for most homeowners, their mortgage is the biggest debt burden they will ever have. While this can be an important psychological step in paying off your mortgage, it might not be the best financial decision in the long run, especially if you are doing it instead of paying off low balance, higher interest debt. Michael Roberts, William H. Lawrence professor of finance at the Wharton School of Business at the University of Pennsylvania, explained why spending that money on other goals might be a better strategy. Our conversation has been edited for length and clarity.

Should people pay off their mortgages sooner if they can? Why or why not?

Much depends on how your mortgage and other expenses fit into the larger context of your budget and it depends on your risk tolerance and the level of risk you are willing to accept. Beyond that, there are a number of pros and cons associated with prepaying a mortgage.

It is becoming a lot less clear, especially in the very low interest rate environment we find ourselves in. Consider the pros and cons.

On the benefit side, you are going to pay future interest charges, you are going to reduce future monthly expenses. You will also increase your debt capacity in the future which is fancy language as you will be able to borrow more easily in the future as you will not carry as much weight on you. If you are in the PMI (private mortgage insurance) camp, you will get rid of it sooner. It alleviates psychological loads, because some people are stressed.

But there are a host of downsides that people don’t think about. If you prepay your mortgage, you are not economy This money. Depending on how much you will earn on your savings, you could lose a lot of money. For the past 14 years it was obvious to me not to pay off my mortgage, because I made more investing in the stock market than paying off my 4.5% mortgage, but this is the best choice, because I got lucky that the market is doing well.

The good thing is that, unlike a house, savings are liquid. If I need money, I can sell stocks, liquidate an ETF, whatever it is. Absent from selling a house, I’m gonna have to take one Home equity line of credit or a reverse mortgage or a second mortgage. The monthly payments actually impose a certain discipline on some people.

If you have other higher interest rate debt, prepaying a mortgage loan makes absolutely no sense because you have to get rid of that higher interest rate debt first. If all of your equity is tied up in your home, there is less diversification there.

What are the advantages of keeping your mortgage for the entire term?

To expand on some of the things we’ve covered, packing all of your money in your house can be really problematic when you need it. The illiquidity of your real estate assets tends not to be appreciated. Depending on your tax status, you also benefit from an interest shield. By paying off your mortgage faster, you lose this deduction.

Keep in mind that the average return on the stock market was 11%, mortgage rates have been below for 30 years, it seems obvious: if I only invest money in the stock market for 20 or 30 years, I will have a lot more money than if I had paid off my mortgage earlier. This is not the way to think. That’s more, how much can I lose if I don’t pay off my mortgage sooner? If things don’t go well, you’ll lose money on prepaying your mortgage.

You have to have that best outside investment. Yes, you are taking some risk by not paying off the mortgage and investing in something that is not a guaranteed risk-free rate of return. The question is: what risk? From what I’ve reviewed, this is a low risk for people who have extra cash they don’t need to take care of food, utilities, and other essentials. .

Why do people pay off their mortgages sooner and what are some other strategies to achieve these goals?

Much of the rationale for prepaying the mortgage itself is, the cost of the mortgage is higher than the return on any risk-free investment. Yields on AAA-rated treasury bills or municipal bonds are all well below 3, 4, or 5 percent. The other reason, I believe, is psychological: to avoid having to make this important monthly payment. I use my grandmother as an example. My grandmother grew up during the Great Depression and made it a rule never to go into debt. This decision was very heartwarming, psychological and financial, but I also think that this decision limits your financial potential.

This is where people’s tolerance for risk comes in. The most obvious thing is to say that you are just saving money and your savings increase. If you want to invest in something risky like the stock market, they can grow, but they can also contract. Over sufficiently long horizons, the probability of these contractions decreases, it is a fact, but the size of these contractions increases.

I own and these are issues that I am struggling with. What allayed my worries was that I touched wood, I enough savings to take care of a few months of my mortgage and any other expenses that may arise. At the end of the day, it’s: do you want the money in the house or the savings account? That’s it. I live in the suburbs of Philadelphia. This ain’t San Francisco, Palo Alto, LA, where my house appreciates by 8% each year. Do I want all my wealth and savings to be tied up where they are growing at a low rate and it’s really illiquid? Compared to a savings account where I can withdraw it at any time and practically at no cost. I took the risk with these riskier investments it’s a good bet.

Nothing else?

It is certainly a unique period in the mortgage market. I bought a house in 2004 and my mortgage broker, who was a good friend, told me at the time that it was the best time to buy because mortgage rates can’t go below 5% .

It’s very easy to get lost in all the pros and cons and arguments, but at the end of the day it’s just where do you want your money: in the house or in a savings account, and which one pays the most. ?

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I used my ‘FU money’ to quit my 6 figure job when I was not happy

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  • I was bad with money, but the FIRE movement helped me focus more on saving.
  • When I had a new boss who didn’t value me, I quit my job even though I was earning six figures.
  • Thanks to FIRE, I have enough “FU money” to last two years while continuing my freelance work.
  • Compare the rates and offers of savings accounts in your area »

In the fall of 2015, I pulled my credit report and I looked at my total debt: $ 30,000. At the time, I was living in New York City and thoughtlessly spending money under the misconception that I would face my debt at some point in the future when I made more. Then I discovered the FIRE movement (financial independence / early retirement), and it completely changed my life.

I reoriented myself to the value of saving and investing rather than spending, which got me out of that $ 30,000 in debt in 11 months. From there I started saving 60% of my income and over the next five years I was able to fund a two month trip to hike the Camino de Santiago (a 500 mile hike through the Spain), buy a house on my own, and finance my own business (the Economical Conference).

I settled into a plan to achieve financial independence at age 40, and everything was going really well. Until it doesn’t.

I decided to quit my 6-figure job

A huge asset that I had on my path to financial independence was my relationship with my employer. I saw my income more than double in nine years, got two months’ leave to go to Spain, and was allowed to work remotely before it was the norm. As for the full-time job, I felt like I hit the jackpot because I didn’t feel the kind of restriction in my time and energy that causes many people to pursue FIRE and quit. their jobs.

However, that all changed about a year ago when I got a new boss. The corporate culture and the work dynamics changed and it became very clear that I was no longer valued. The party was over for me, so I quit.

If I were only focused on achieve financial independence as quickly as possible, I would probably have kept my head down and tolerated this new environment in return for the six-figure salary that would have enabled me to achieve financial independence in the next six years. I hear this theme a lot in the FIRE movement. It goes something like this: “I hate my job, but I’m only X years old from FI so I’m going to put up with it for now.”

Instead, I decided to adopt a concept that I call “fi-lexibility”.

This concept is about recognizing that the pursuit of financial independence is more than the achievement of financial independence. While achieving financial independence is about opening up the possibility of early retirement, “fi-lexibility” is about seeing the options you have now, as you are on your way to even more options.

I have enough to work for myself

I looked at my finances and decided that even though I was not financially independent, I still had enough money to quit my job:

  1. I’ve had “FU Silver“(Or” Peace Out Money “, for the more polite of us). It’s like an emergency steroid fund: Two years of liquid, easily accessible living expenses.
  2. I was “FI coast“, which meant that I had enough money in my retirement vehicles to achieve what I would need for a traditional retirement without any additional contribution. This calculator helped me confirm my Coast FI status.
  3. My restless side as a host of the Optimal Finance Daily Podcast covered a third of my monthly expenses, which would help me stretch my “FU money” even further.

My current finances still require me to work for a living, but I no longer need to tolerate a less than optimal work environment. So for next year I am trying freelance work. Maybe I’ll find a way to cover my expenses independently on my time. Maybe I won’t and I’ll use up my savings a bit before I throw in the towel and look for another full-time job. Whatever the outcome, I have the financial bandwidth to try.

During my journey to financial independence, I came across a surprising irony: Perhaps the best part of pursuing FIRE isn’t achieving it. The ability to seize the opportunities that present themselves on the path to financial independence is where the real magic lies.

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How to qualify for a mortgage as a retiree

Many people aim to pay off their mortgage when they retire. Others sell their homes on retirement and rent instead.

But what if you’re the opposite and decide to buy a new home or switch from renting to owning after your shift is over? You may be wondering how you will qualify with a mortgage lender in the absence of a job. But in fact, getting a mortgage as a retiree isn’t all that different getting one while you’re working. Here’s how to get a home loan during retirement.

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1. Have a healthy source of income

While some retirees choose to work part time, many do not work at all. So how do you show proof of income if you are not actually working? You’ll just need to show a lender that you have money coming in every month, even if it doesn’t come in the form of a typical paycheck.

Seniors are generally entitled to Social Security benefits. In addition, you can have:

  • A pension that pays you regularly
  • Investment income from a brokerage account
  • A retirement plan, such as an IRA, from which you can make regular withdrawals

All of this counts as income for mortgage approval purposes because it shows that you are able to pay off a loan.

2. Have great credit

Having a strong credit score is essential to getting approved for a mortgage, regardless of your age. The minimum credit score for a conventional mortgage is 620, but it’s best to aim higher. In fact, if you want to get the best mortgage rates available, you should aim for a score in the mid-700s or higher.

If your credit score might need a boost, the best thing you can do is pay all of your bills on time and also pay off some existing credit card debt. Plus, using the three major credit bureaus to check your credit report for errors – and correct those that are unfavorable to you – could help your score go up.

For more information, see our guide on how to create credit quickly.

3. Keep your debt to a minimum

Another factor that mortgage lenders look at when assessing loan applicants is their debt-to-income ratio. It is a measure of your outstanding debt compared to your income. It is important to keep this ratio low, because the more it increases, the more risky you become. And if you already have a lot of debt, your lender may be concerned that you might not be able to keep up with your mortgage payments on top of your existing loans. You can lower your debt ratio by paying off your existing debts or increasing your income. This may mean having to take a part-time job, even if you are doing it temporarily.

You might think that qualifying for a mortgage is more difficult as a retiree, but it won’t necessarily be the case. Just do your best to have some type of income stream, increase your credit score as much as possible, and reduce your debt load so that a lender is more likely to give you a home loan.

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