What is the one financial advise nobody follows?

Never buy a new car.

The 2 most expensive things you are likely to buy is a house and a car.

You will probably buy a few houses in your life, but they will tend to go up in value, and since they go up in value you will make money with them. Woo Hoo!

You will likely have many cars in your life, and you will lose every penny you ever spend on a car. If you buy a car for $30,000 you will sell it in 5 years for $12,000. You just lost $18,000.

You will repeat this a lot in your lifetime and you will lose every time you buy a car. The best thing to do is spend as little as you possibly can on a car!

The other side to this is the car loan, many car loans have very long terms these days, sure the rates can be low but if you are broke you will likely pay 12+% on any car loan that you get. So not only are you going to lose money on the car you are paying the bank for the privilege of losing money.

The best thing to do is to buy a car with cash, or make sure you can pay it off very quickly. Keep that car and just repair it.

Most people like to use lots of excuses:

• The paint is bad
• It will need a new timing chain soon
• It needs a lot of work
• I deserve a new car
• I want something safe
• We need more room
• I can’t go on a long trip with this car.

Sure there are times when you may need to change cars, new child, starting a business or whatever. But you can keep repairing cars for a long time.

Don’t let a repair of $3,000 “make” you spend $20,000! Because guess what! By the time that new car needs the same repair the old car will need the same repair! So you are only delaying repairs, constantly.

If you do need to buy a car, it’s best to buy 3–5 year old car with cash, as few times as you can. If you were really smart, you would invest $400 a month, the same as that car payment would have cost you.

By:  Randy Pratt - Real-Crypto Investing Educator / Quora (March 29, 2022)

Mortgage Do's and Dont's

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Through the VA home loan program, millions of veterans and service members have become homeowners. VA loans are favored for the following reasons: lower mortgage rates, no PMI required, no down payment necessary, and, to an extent, no minimum credit score requirements.

While the Department of Veteran Affairs does not set a minimum credit score, lenders will have their minimum standard. Read on to understand what this means and how flexible credit score requirements with a VA loan works. 

Credit Score Requirements

With VA loans, buyers can expect more flexibility and lenient credit guidelines. 

Whatever type of loan you are applying for, you need to meet the lender's minimum requirement to secure home financing. Credit scores show a buyer's creditworthiness or how likely a borrower can repay a loan. And as with other types of loans, lenders will offer the best rates to applicants with higher credit scores. 

So while the VA doesn't require a specific credit score, the lender --who actually funds the loan --will still have a standard they want their borrowers to meet.

It's worth mentioning that a government-back VA loan comes with much security for the lender, which is why their requirements are considerably laxer. This is notable because low credit scores are a frequent reason for getting turned down when applying for a loan.

So although the VA doesn't enforce a minimum credit score, a minimum score between 580 to 660 is a guideline most often seen with VA loan approval. 

No PMI

PMI is insurance that protects lenders if a borrower defaults on a loan. 

Most mortgages have a private mortgage insurance requirement if you put down less than 20%. PMI can be a burden considering that the cost comes to 0.15% to 2% of the loan amount. Not paying PMI is an advantage that VA loan applicants enjoy even when putting down less than 20%!

No Down Payment

Buyers can spend years saving for a down payment. But with a VA loan, a home can be financed with no down payment. Conversely, FHA loans have 3.5% minimum down payment requirements, while most conventional loans require 3-5% down. This cost savings is a significant benefit for the military borrower!

Lower Loan Rates

VA loan programs have the lowest average fixed rates in the market, with interest rates averaging 0.5 to 1% lower than conventional interest rates.

VA LOAN ELIGIBILITY REQUIREMENTS

VA loans were designed to help veterans buy their first properties at affordable prices. Here are the main requirements for a VA loan:

• The home must be your primary residence. No investment or rental properties are allowed.
• You must meet all underwriting requirements, especially those for credit and income.
• You must have a Certificate of Eligibility which proves that you qualify based on the service member's duty status and service history. Alternatively, one can be the surviving spouse of a service member that meets those requirements.

VA INCOME REQUIREMENTS

The VA encourages underwriters to follow their income guidelines to determine if a borrower has a stable income and can make payments without any problems.

The guidelines suggest that a borrower's DTI ratio should not be higher than 41%. If the borrower has a higher DTI ratio, other credit factors may be used to determine final approval.

You'll be glad to know that plenty of VA lenders will accept multiple forms of income, including disability pay, basic allowance for housing, retirement income, hazard pay, overseas pay, imminent danger pay, and clothing allowances.

There are other nuances to getting approved for a VA loan beyond a minimum credit score. But there's no need to feel overwhelmed. Our team is well-versed in the intricacies of government-backed loans. Using our experience and digital speed, we'll guide you through the process quickly and effortlessly. Get started today using our secure online application. 

Did you know that owning property has tax incentives as a "mortgage interest deduction?" This article will outline what a mortgage interest deduction is, its limits, and how to include this deduction in your taxes. 

What counts as a "Mortgage Interest Deduction"?

The mortgage interest deduction is a portion of your itemized tax deductions --the section that reduces the amount you may owe to Uncle Sam. 

Including a "mortgage interest deduction" subtracts the interest paid on loans you used to purchase, build, or renovate a property. You can use this deduction every year you do your taxes, and this perk applies to the mortgage interest paid for primary and secondary homes. 

Be aware, however, that the deduction does not include payments made to homeowners or private mortgage insurance (PMI). But several other property-owning expenses are tax-deductible, such as your:

• Title insurance
• Down payments or deposits
• Extra payments made to the principal
• Interest accrued on a reverse mortgage.

This list isn't definitive and should not be mistaken as professional tax advice. However, it's an excellent point to mention to your tax preparer or for you to investigate further as you do your taxes. 

Limits To Mortgage Interest Deduction 

Tax laws change frequently. The most recent adjustment was made with the Tax Cuts and Jobs Act, decreasing the limit. This policy states that single or married individuals that file jointly can deduct a max of $750,000 in interest. 

However, married couples who file separately have a limit of $375,000 each. Note that there are some exceptions that you can explore with your tax professional. Here are some of those exceptions:

• Home Acquisition Debt: This applies to purchase loans taken out between October 13, 1987 - December 16, 2017. In this instance, one can deduct up to $500,000 if married and file separately, adding up to a $1 million limit in total.
• Grandfathered Debt: Mortgages acquired before October 13, 1987, can deduct all interest without limit. 
• Home Equity Debt: Second mortgages acquired between October 13, 1987 - December 16, 2017, for reasons other than building or renovating can deduct up to $100,000 in interest--or $50,000 if married and filing separately.

Prepaid interest points can also be deducted, but it works differently as the amount you can deduct will gradually decrease. So the amount you deduct the year you purchased the points will be less in subsequent years. 

Itemizing Your Mortgage Interest Deduction On Your Taxes

At the beginning of the year, your lender will send you Form 1098, showing how much was paid in interest and points in the previous year. Note that you'll only receive 1098 if you paid more than $600 in interest during the tax year.

To itemize the deduction, you'll want to report them on Schedule A, Form 1040. This is the section where you'd also list deductions for charitable donations or medical expenses. 

Tax law is constantly changing and requires professional guidance, especially when it comes to deductions. If you need a recommendation for a knowledgeable tax professional, don't hesitate to contact us. And when it comes to home financing and enjoying the perks of homeownership, we're the top choice! Get in touch with us today and find out how much you qualify for.