Do You Really Understand Your Mortgage APR?

Everyone wants to know they’re getting a fair and reasonable mortgage offer. The federal government supports the annual percentage rate disclosure (APR) as the benchmark barometer of loan cost when mortgage shoppers begin their quest to find a good deal on a home loan, which is why it’s so important to understand what goes into a mortgage APR and how you can harness this knowledge to find the best loan for you.

Quick APR Tidbits

The annual percentage rate is a disclosure seen in the origination of new credit or in advertisements of various credit products such as loans and credit cards. You won’t, however, see APR on a mortgage loan statement as the APR is used as a cost measure at application. APR is simply a function of the costs of the mortgage loan added to the interest rate and re-amortized based on the size of the loan you’re seeking over the loan term (e.g. 360 months for a 30-year fixed-rate mortgage). The sole purpose of APR disclosure is to make credit shopping easier.

  • The APR does not change your loan amount.
  • The APR does not change your payment.
  • Your note rate is what determines your principal and interest mortgage payment.

Why Your APR Is Higher Than Your Note Rate

The annual percentage rate is higher than the note rate because APR takes into consideration the fees (whether or not you are actually paying them) adds them to your loan amount and re-calculates the figure over the loan term, thus the APR rate disclosure is higher. This rate vs. APR relationship can seem convoluted because you are not paying the fees based on the APR rate, but rather the note rate, as the note rate is the real cost of funds.

For example, it is not uncommon to see a 30-year fixed-rate mortgage with a note rate at 3.875% and an APR of 4.137%. The 26 basis points spread between the 4.137% and a 3.875% is the fees disclosed as expression of cost based on the size of the loan you are applying for.

APR can be best used to distinguish amongst mortgage offers in order of priority, starting with the highest APR offer, and working down.

Keep in mind that a mortgage with a lower note rate and a higher APR may actually be a lower cost mortgage for you than a loan with a lower APR but a higher note rate. How long you keep the mortgage plays a big role in the cost of the loan.

What You Need to Examine When Comparing Mortgages

  • Loan term
  • Loan program
  • Loan amount
  • Note rate
  • Total payment
  • Closing costs
  • Recapture

Remember that examining the APR of a mortgage offer can only help with determining which mortgage offer has better terms and fees. The APR does not take into consideration which mortgage loan makes the most financial sense for you because it is not the driver of your monthly principal and interest payment or closing costs.

Some Extra APR Tips

If you’re getting a no-cost mortgage, where your lender is providing a credit for closing costs, the APR is still calculated as though you’re paying the fees because your lender must disclose it appropriately to meet federal regulations in the origination of residential mortgage loans.

If the APR is more than 0.25% higher than the note rate, pay closer attention. The majority of the time the mortgage has discount points associated with it, which is by far the biggest driver of higher APR. If you received disclosures that show a substantially higher APR than the interest rate and you don’t understand the disparity between the annual percentage rates on your disclosures and/or mortgage quote versus the note rate ask your loan officer. Don’t be afraid to ask questions even if they seem silly or redundant.

As a well-informed mortgage consumer, you have a duty to yourself to make certain you understand all of the many intricate facets of the mortgage loan you are seeking. Doing this discovery research will help you make the determination as to which mortgage loan is most suitable for you.

Keep in mind that one of the biggest factors in what determines your note rate is your credit score. Taking some time before applying for a mortgage to build a good credit score can save you thousands over the life of your loan. You can check your credit scores for free on Credit.com to see where you stand and make a plan to improve.

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This article originally appeared on Credit.com.

This article by Scott Sheldon was distributed by the Personal Finance Syndication Network.


What to Do If Your Car Loan Outlasts Your Car

What happens if your car loan lasts longer than your car? While you may have every intention of driving a car long after it’s paid off, an accident (and inadequate insurance), expensive repairs, or mysterious problems your mechanic can’t fix could leave you with a vehicle that’s out of commission even though you’re still making payments. 

“Longer-term loans are increasingly prevalent,” says Melinda Zabritski, senior director of automotive credit with Experian. Nearly half (48.2%) of model year 2014 vehicles purchased used were financed with loans of between 61 and 72 months, according to Experian Automotive data. 

What can you do if you find yourself in this position? Here are four possible options.

1. Pay Off the Debt 

Of course, paying off the balance of your loan would be your best option, but what if you don’t have that kind of cash sitting around? Or what if you need those funds for a down payment on another vehicle? In that case you may have to use another loan to pay off the car loan so that you can get the title and dispose of the vehicle. One option might be a 0% or low-rate credit card balance transfer offer. In many cases, you can have those funds deposited into your bank account and use them for whatever debt you want to pay off. Make sure you understand the fees that will be charged (usually 2% to 4% of the amount transferred) and that you can pay the debt off before the low-rate offer ends. (You can find Credit.com’s picks for the best balance transfer credit cards in America here.)  

2. Roll It Into a New Loan 

An auto dealer may work with you to roll the balance of your loan on your current vehicle into a new loan. Technically “you can’t roll negative equity into a loan,” says Bob Harwood, vice president at CarLoan.com. but there are ways around it. A dealer can try to inflate the value of the trade-in and/or loan more than the value of the car. “Banks will put a cap on how much over value on a car (you can borrow),” he says. “It’s usually around 120% to125% if you have decent credit.” But with less than stellar credit, they may lend only 100% to 110% of value of the new vehicle — or even less if you have very poor credit. (It’s a good idea to know where your credit stands before applying for a car loan. You can get a free credit report summary, updated monthly, at Credit.com.) 

And, yes, they will want your old vehicle even if it’s now a junker, says Harwood, if only to try to increase the value of the trade-in to make the deal work. 

3. Park & Pay 

You could simply park the vehicle and continue to pay off the loan. When it’s paid off, you can then get the title back and donate it to charity, sell it, or use it as a trade in on another vehicle. 

But be careful: This strategy assumes you have a place to safely store it. And you may need to keep tags and/or a minimum level of insurance on the vehicle. Your homeowner’s insurer (or your landlord’s), for example, may not look kindly on an inoperable untagged vehicle sitting on blocks in your driveway. Or your city may require these types of vehicles to be garaged. Check with your insurance company, your DMV and city or municipality to find out what’s permissible.

4. Call a Bankruptcy Attorney 

You may be able to use bankruptcy to get out of this mess. “Bankruptcy can be a ticket out of this type of situation,” says Atlanta bankruptcy attorney Jonathan Ginsberg.  “If you qualify for a Chapter 7 you can surrender the vehicle and cancel the installment contract and owe nothing,” he explains. What if you don’t qualify? You may look into Chapter 13, which Ginsberg says may offer several outs: “’Cram down’ the loan to the value of the vehicle, ‘redeem’ the vehicle for the fair market value, or surrender the car and pay any deficiency at pennies on the dollar.”

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This article originally appeared on Credit.com.

This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.


PayPal Faces $25 Million Penalty Over Alleged Illegal Credit Sign-Ups

The Consumer Financial Protection Bureau has proposed that PayPal refund $15 million to customers and pay a $10 million civil penalty to settle allegations that it engaged in a series of deceptive business practices with its PayPal Credit product, formerly known as Bill Me Later.

Federal regulators allege that PayPal signed up customers who didn’t want PayPal Credit accounts, failed to honor promotional offers, unfairly steered customers to use the product, and let fees pile up while mishandling billing disputes.

The CFPB made the allegations and proposed the settlement in a lawsuit filed in a Maryland federal court this week. Among the more serious claims: that PayPal often charged late fees and interest on balances with pending disputes, “even when the disputes concern defendants’ own practices, including failing to reverse a charge associated with double billing through PayPal Credit or failing to process a refund requested by a merchant for returned merchandise.”

PayPal — which has 165 million active accounts worldwide — is currently owned by eBay, but will soon be spun off as its own company.

“From the first encounter a consumer may have had with PayPal Credit, there were problems. Tens of thousands of consumers who were attempting to enroll in a regular PayPal account, or make an online purchase, were signed up for the credit product without realizing it,” said CFPB Director Richard Cordray. “One reason so many consumers ended up having this product, unbeknownst to them, was that PayPal set the default payment method for all purchases to PayPal Credit. Other consumers were simply not able to select another payment method when they tried to pay….Finally, once enrolled, consumers encountered headache after headache. PayPal failed to post payments properly, lost payment checks, and mishandled billing disputes that consumers had with merchants or the company itself.”

What PayPal Says

PayPal didn’t answer questions about the lawsuit and the accompanying proposed consent order, but issued a statement to Credit.com.

“PayPal Credit takes consumer protection very seriously. We continually improve our products and enhance our communications to ensure a superior customer experience. Our focus is on ease of use, clarity and providing high-quality products that are useful to consumers and are in compliance with applicable laws,” the firm said in its statement.

PayPal, founded in 1998, has had a mixed history when dealing with consumer disputes. The service has always been a challenge for financial regulators, as it is not a traditional bank, and standard consumer protections that apply to credit cards don’t apply to PayPal accounts. PayPal was acquired by eBay in 2002. Bill Me Later, which acts a bit more like a credit card and gives consumers the option to make online purchases and pay for them in the future, was acquired by eBay in 2008. It was rebranded as PayPal Credit last year.

Details of the CFPB allegations include:

  • Deceptively advertised promotional benefits: The CFPB alleges that PayPal failed to honor advertised promotions, such as a $5 or $10 promised credit toward consumer purchases.
  • Abusively charged consumers deferred interest:The CFPB alleges that PayPal offered consumers limited-time, deferred-interest promotions, and that PayPal purported to let consumers pick how payments would be applied to these promotional balances. But consumers who attempted to contact the company to get more information or request to apply their payments to promotional balances often could not get through to the company’s customer service line or were given inaccurate information. Many such consumers were hit with deferred-interest fees that, due to the company’s conduct, they could not avoid.
  • Enrolled consumers in PayPal Credit without their knowledge or consent: The CFPB alleges that the company often automatically enrolled consumers in PayPal Credit when those consumers were signing up for a regular PayPal account or making purchases. The company enrolled other consumers while they tried canceling or closing out of the application process. Many consumers ended up enrolled in PayPal Credit without knowing how or why they were enrolled. They discovered their accounts only after finding a credit-report inquiry or receiving welcome emails, billing statements, or debt-collection calls for amounts past due, including late fees and interest.
  • Made consumers use PayPal Credit for purchases instead of their preferred payment method: The CFPB alleges that the company automatically set or preselected the default payment method for all purchases made through PayPal to PayPal Credit. This meant consumers used PayPal Credit even when they intended to use another method of payment such as a linked credit card or checking account. Other consumers were not able to select another payment method, finding that their purchases were charged to a PayPal Credit account even when they affirmatively selected another payment. Many of these consumers incurred late fees and interest because they did not know they had made purchases through PayPal Credit.
  • Engaged in illegal billing practices: The CFPB alleges that the company failed to post payments or failed to remove late fees and interest charges from consumers’ bills even when the consumers were unable to make payments because of website failures. Numerous consumers reported that the company lost payment checks or took more than a week to process checks.
  • Mishandled consumer disputes about payments:The CFPB also alleges that PayPal mishandled consumers’ billing disputes and made billing errors.

In addition to granting refunds, PayPal Credit must improve its consumer disclosures, the CFPB said, to ensure that consumers know they are enrolling or using the product for a purchase.

As we’ve previously reported, a credit line through PayPal Credit can impact your credit scores. If you use the PayPal Credit service, be sure to understand the credit effect it is having. You can get a free credit report summary every month on Credit.com to see where you stand.

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This article originally appeared on Credit.com.

This article by Bob Sullivan was distributed by the Personal Finance Syndication Network.


Preventing Online Identity Theft

Online identity theft has become a massive problem for the stores, for the banks that issue cards, and for the consumers who use them. Yet, online shopping is a convenience that few of us want to give up. So what can you do to prevent or at least minimize online identity theft?

To help us learn how to avoid online identity theft, we contacted Shaun Murphy. He’s the CEO of PrivateGiant.com and an expert in security and privacy.

Q: How frequent is identity theft that is caused by online shopping?

Mr. Murphy: This year alone has seen documented cases of identity theft north of 500k individuals for online shopping and banking and upwards of 100 million individuals for the highly published (and forgotten) medical/healthcare breaches. This is according to a group that tracks these issues and releases summaries and stats for these id theft issues.

I’d like to highlight that these are the documented cases. Undocumented or cases not reported are obviously impossible to track at scale.

Q: You suggest using throwaway debit cards. What can be done to minimize the fees that they charge?

Mr. Murphy: Certainly credit cards are king when it comes to protection and convenience, but a theft of your credit card number will require you to change automatic billing, re-establish online shopping accounts, etc.

These prepaid debit cards are great tools if you do your research. Look for the fees they charge. Some of them have a fee per transaction, so you’ll want to only use these cards for fewer/larger purchases.

An activation fee is very common across all the ones I have seen. Generally a $3 to $4 charge to activate the card is added to the amount you want loaded on the card. These cards will also have a reload fee, which is slightly lower than the initial activation so don’t throw away the card when you’re done. Instead, you should save it for a future reload. If the reload fee is the same, shred the card when done!

This is not an ATM card, so do not use it as such. If you have any remaining balance on these cards, you should convert them into online gift cards like Amazon for example.

Load the card and use it fast. Don’t let these things sit for months or years.

Write the card information somewhere secure. If you lose the physical card, you can always convert it to an online gift card versus paying some huge card replacement fee.

You’ll also want to make sure they do not allow over-drafting or going negative on your balance. Steer clear of any prepaid card that asks for SSN or banking information to register. The only registration you should need is at the point of sale at the store.

Keep in mind these things can be a very useful tool to shield your personal accounts, but they are not a replacement for credit cards for day-to-day use. For replacing that vulnerable credit card, I recommend going digital. Check out Apple Pay.

Q: Can credit cards with low limits be used safely for online purchases?

Mr. Murphy: It really depends on the card and what else you use it for. If your card has a $200 limit and you use it to buy groceries in addition to your mobile apps account, you might find yourself unable to buy groceries if your card was stolen or used for malicious purposes.

Q: How do thieves use your online purchase to steal your identity?

Mr. Murphy: There are a few ways. The first is if they have direct access to your account details like your home address, phone number, account number, expiration date, etc. This gives them enough information to call your bank and, given some social engineering skills, change the billing address and issue new cards. That’s the first step in becoming you.

Perhaps they don’t have your account details. What if they know the high school you went to, your first pet’s name, your best friend’s name in grade school? Remember those security questions online sites ask you? If they have that information and social engineering skills, they can reset your password on sites and take over your online self. Once they have access to your email account via this process, they can easily reset/change any and all passwords to all of your online accounts. It’s scary and it happens

Q: How important is it to only shop at secure sites?

Mr. Murphy: That is crucial. If you’re buying something online and the site isn’t secure (has a lock icon in the URL bar or says https with no X or error symbol on there), then you’re at tremendous risk for personal information leakage. If the site isn’t secure, anyone on your network, on their network, and anywhere in between will see your information transmitted in plain text (human readable credit card numbers, expiration dates, etc.). It doesn’t matter if the site is trustworthy; your connection to them is not.

Now the site itself may be storing all of your information in the clear, which happened to Target a couple years back. If they get hacked, you get hacked. Big online retailers spend big bucks making sure that does not happen, but you have no visibility if smaller sites are secure on their end. That’s why it’s so important to shield your payment and personal details.

While there’s no way to completely prevent online identity theft, you can take some measures that will make it less likely that you’ll become a victim.

Shaun Murphy is CEO of PrivateGiant.com and recognized as an expert in security and privacy. He began developing and deploying commercial and government communication systems where there’s such a great push and investment for privacy and security in 1995. Today he’s concerned with the amount of personal information that the tech giants (Facebook, Google, and such) acquire, accumulate, and correlate about us even if we never consented. He’s devoted his work into making technology more secure for the users. You can find him at PrivateGiant.com or on twitter @PrivateShaun.

Gary Foreman is a former financial planner and purchasing manager who founded TheDollarStretcher.com and newsletters in 1996. You can follow Gary on Twitter or visit Gary Foreman on Google+.

This article by Gary Foreman first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


Why Lifestyle Inflation Is Killing Your Budget

Congratulations! You got a raise, came into an inheritance or sold your home for a profit. No matter what has brought more money into your budget, it’s important to manage that money wisely. Just because you have greater access to money doesn’t mean you should increase your spending accordingly.

The Basics of Lifestyle Inflation

Think back to your first adult job. Likely that paycheck left you with little money for the finer things in life after monthly expenses were paid. Now that you are making more, do you still dream about all you could have with a higher income? This perpetual dissatisfaction and increased spending in accordance to increased income is called lifestyle inflation.

When you get a financial boost that should put you ahead on your big financial goals (or help you pay off debt), if you fall victim to lifestyle inflation you stay in the same financial position. While your monthly expenses rise to keep up with your income, your ability to build wealth is limited. The money is going to non-wealth-building things like more clothes or a bigger car.

This tendency to spend more when you have more can come from feeling competitive with your peers, entitlement from working hard that makes splurging seem justified and even just lack of willpower. While spending more can sometimes makes sense and lifestyle inflation can seem unavoidable, this can get in the way of a secure financial future if it goes unchecked. Check out these tips on combatting lifestyle inflation. 

1. Keep a Budget

Although making a budget may seem obvious, people tend to “forget” to adjust that budget when their circumstances change. Before you start spending or even thinking about spending, it’s important to crunch the after-taxes and expenses numbers to see how this extra money is really going to affect you. This perspective can help you balance your finances more accurately and help you to be more conscious about where your money is going.

Keep in mind that if you put all that spending on your credit cards, you could hurt your credit in the long run. Increasing your credit card spending above 35% of your credit limits can have a negative impact on your credit scores. You can see how your credit card spending is impacting your credit scores for free on Credit.com.

2. Assess Your Values

While you are living in the rat race, it can be hard to remember what really matters in life. Instead of thinking of the next material item you “need,” it can be a good idea to step back and look at the big picture. Consider what success really means to you and use your wealth to get you there.

3. Prioritize Savings & Goals

It’s a good idea to always pay yourself first — your future self, that is. When you come into money, think about your financial goals and how this increase can help you reach them faster or more comfortably. Whether it is the amount you contribute to retirement or how much you pay down on debt, these changes may seem to be taking from your new spending balance, but can actually help you in the long run.

4. Pick & Choose

That doesn’t necessarily mean you shouldn’t celebrate your change in circumstances. It can be a good idea to build some balance in your budget and plan for a reward of your hard work if you want one. Avoiding lifestyle inflation doesn’t mean you are cheap or a no-fun money hoarder. Just be careful and conscious about where you spend. Identify which purchases really make you happy and which ones will still make you happy about in three months, a year or even ten years.

5. Avoid Comparing

You may feel like you need to spend more to keep up with your family, friends, co-workers or even strangers — but it’s a good idea to remind yourself that you don’t need to lead the same life they do. Everyone has different priorities and circumstances. You can always find someone who has something better than you do and you can always spend more, but it’s important to make an effort to steer clear of peer-pressure spending and focus on what is important to you.

Lifestyle inflation can really sneak up on you when your finances are growing gradually. All of a sudden, you drive a nice car, pay more for clothes, upgrade your housing and eat out whenever you please. This may sound great, but it’s important to make sure you are actually enjoying your inflated lifestyle and not just spending because it’s possible while squandering future goals.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.


Woman Sues Debt Collector, Wins $83 Million

A Missouri jury ordered a debt buyer to pay nearly $83 million to a Kansas City woman it pursued for a $1,000 credit card bill she didn’t owe, NPR affiliate KCUR reports. The jury found Portfolio Recovery Associates LLC guilty of violating the Fair Debt Collection Practices Act, for which it will pay $250,000 in damages, as well as maliciously prosecuting the woman, Maria Guadalupe Mejia, over the debt that did not belong to her. For the malicious prosecution, the jury awarded Mejia $82,990,000 in punitive damages.

PRA Group Inc., which owns Portfolio Recovery Associates, sent an email statement to Credit.com:

“This outlandish verdict defies all common sense,” wrote spokesman Michael McKeon. “We hope and expect the judge will set aside this inappropriate award, and we plan to file motions to make that request formally in the near term. Any fair reading of the facts of this case makes plain that a verdict of this size is not justice by any means, and cannot stand.”

Portfolio Recovery, one of the nation’s largest debt buyers, sued Mejia in February 2013 over the credit card debt, though the actual debtor turned out to be a man in Kansas City, Kansas, with a name similar to Mejia’s. The company pursued Mejia for the debt for 15 months after she first received notice of the lawsuit. In a written statement to KCUR, Mejia said, “The lawsuit terrified me.”

Fear is a common consumer response to debt collectors, whether the debt is legitimate or not. The first thing consumers should do when they hear from a debt collector is ask the collector to validate the debt in writing — it’s crucial to know your debt collection rights as a consumer, so you don’t end up paying a debt you don’t owe or letting the collection account unnecessarily damage your credit standing. (You can see if a collection account is affecting your credit scores for free on Credit.com.)

If you’re unsure of how to approach a debt collection situation, you may want to consult a consumer law attorney, who may review your case for free, to help you understand whether the collector is violating your rights.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.


Waitress Allegedly Stole $1,000 by Adding Extra Tips to Credit Cards

A former waitress was arrested May 5 for allegedly stealing more than $1,000 in false tips from unsuspecting patrons, reports WTSP in Tampa, Fla. Victoria Lynn Bachmann, 21, worked at Ozona Blue restaurant in Palm Harbor from March 11 until she was fired April 10, after the the restaurant management discovered her alleged fraud, according to an arrest report.

Bachmann is charged with grand theft for the $1,074.15 in cumulative tips she is accused of adding to 134 customers’ credit and debit cards — that’s an average of about $8 additional tip per check. The restaurant, which is pressing charges, accused Bachmann of entering tip amounts into the point-of-sale system that differed from what her customers wrote on their receipts, and the restaurant was ultimately liable for the fraudulent charges. Consumer protections on credit and debit cards generally protect the cardholder from fraud liability.

Those consumer protections are nice, but they vary depending on whether you’re using a credit card or debit card, the type of transaction that occurred (like whether the physical card was stolen or just the information was used for a card-not-present transaction) and how much time has elapsed between when the fraud occurs and when the cardholder reports it. The simple solution to all those caveats is to check your card activity daily, so you see fraudulent transactions as soon as they hit your account. The sooner you report the fraud, the more likely it is you can resolve it quickly and prevent any future problems. Left unchecked, credit card and debit card fraud can seriously damage your finances, because high credit card balances may be reported to credit bureaus and damage your credit score (until the fraud is resolved), or a thief could spend funds in your checking account that you need for bills. (You can see how your credit card spending is affecting your credit scores for free on Credit.com.)

You could also just make a habit of paying servers in cash. Still, anyone who uses a credit or debit card should closely review account activity for anything suspicious, because even if your chances of encountering a rogue server are low, there are lots of ways you may become a victim of fraud or identity theft.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.


The Little-Known Database That Can Sink Your Mortgage

One of the benefits of government-backed home loans is that they tend to have more flexible and forgiving requirements when it comes bankruptcies, foreclosures and other derogatory credit.

The wait time for a VA or FHA loan in the wake of one of these events can be considerably shorter than for conventional financing.

But that flexibility can disappear in a hurry if your bad debts are federal ones. Default or delinquency on federal loans can delay or derail your shot at landing another government-backed loan, including home loans.

A Clear CAIVRS

If you’re on the hunt for a government-backed home loan, mortgage lenders will run your name through a specialized database that tracks tax liens, defaults and delinquencies on a host of federal obligations.

The Credit Alert Interactive Voice Response System, or CAIVRS, is maintained by the U.S. Department of Housing and Urban Development. This database logs current delinquencies and defaults and foreclosures within the last three years on a range of federal debts.

Government agencies that may report to CAIVRS include:

  • Department of Agriculture
  • Department of Education
  • Department of Housing and Urban Development
  • Department of Justice
  • Department of Veterans Affairs
  • Federal Deposit Insurance Corporation
  • Small Business Administration

Federal student loans and FHA loans are two of the most common sources of CAIVRS hits. The Internal Revenue Service doesn’t report to this database, although federal tax liens will show up on credit reports and can make it more difficult to obtain a loan. (You can get free annual credit reports under federal law.)

Potential homebuyers who discover their name is in CAIVRS should first check to be sure they haven’t wound up there by mistake. Whether a government agency made a mistake processing a payment or HUD failed to remove your name from the list following corrective action or the end of a required waiting period, inaccuracies aren’t entirely uncommon.

Borrowers can’t access the CAIVRS database themselves, so talk with your lender about how best to proceed if you’re surprised to hear you’re on the list.

For those rightfully in the CAIVRS system, your options may be limited. You’ll need to have a clear CAIVRS record in order to close on a government-backed mortgage.

Clearing Your CAIVRS

If you’ve defaulted or are delinquent on federal student loans, the ideal solution is repaying the debt in full. That’s also not a realistic solution for many would-be borrowers. The more common path to regaining loan eligibility is establishing a repayment plan with the debt holder.

Lenders and loan programs can have varying requirements. Mortgage lenders will factor those new student loan payments into your overall affordability picture. If you’re not able to show at least 12 months of on-time payments under that repayment plan, the outstanding balance may count against a lender’s cap on derogatory credit.

That alone can make it tough to qualify for home financing. This year’s average college graduate has about $35,000 in student loan debt, according to education planning hub Edvisors.

For homeowners who lose a government-backed loan to foreclosure, the only real option is to wait it out. There’s typically a three-year seasoning period from the date the government agency pays a claim on your foreclosure.

Consumers will often need to spend some or all of this time rebuilding their credit. How far your score falls depends on a host of factors, including what of credit you had before the delinquency or default. You can get a free credit report summary, updated monthly, at Credit.com.

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This article originally appeared on Credit.com.

This article by Chris Birk was distributed by the Personal Finance Syndication Network.


6 Carpooling Tips for Commuters

Roughly three-fourths of Americans drive to work alone. It’s easy to understand why – driving solo means leaving your house and office on your own time, the ability to stop for any errand you like, or to catch up on the phone with colleagues, friends or family. But carpooling has its advantages too – namely, it could save you some serious dough.

Let’s say you commute 15 miles to and from work each day. With the IRS standard mileage rates at 57 cents per mile, you’re spending nearly $4,300 per year commuting. If you carpooled even half the time, the extra money could be used as you wish – to build up savings, pay down debt, budget for vehicle repair and maintenance or even to take a vacation. The argument for carpooling is a strong one.

Not sure you’re ready to take the plunge? Below are some tips worth considering as you figure out whether carpooling is right for you.

1. Split the Costs

Typically, carpoolers take turns driving. Whoever drives that day covers all expenses. If you drive a hybrid vehicle and your friend drives a gas-guzzling Ford F-250, you don’t have to worry about your friend’s extra consumption; you’re only responsible for your own vehicle.

Alternatively, you could offer to drive every day and pick up your passengers. In that case, everyone would reimburse you for the cost of riding in your car. The most convenient way to split the expense is to just charge people with a rate based on how far they are from work. If one friend lives 20 miles from work while the other only lives five miles away, adjust your price accordingly.

Exchanging cash (when so few people carry it) in a crowded car could get complicated. Instead, go digital. Pick a payment service you like best. PayPal, Venmo, Popmoney, Square Cash and Google Wallet are all worthy candidates. Avoid those pesky fees if possible. One way to do that? Ask your fellow carpoolers whether they have the same bank as yours; if so, there’s often no fee for payment transfers.

2. Get in the Fast Lane

According to the 2012 Urban Mobility Report, a rush-hour commuter spends an extra 38 hours in traffic per year. That’s nearly an entire workweek stuck in traffic! You opt out of at least some of that nightmare by carpooling. As a carpooler, you’re allowed to use the carpool lane, also known as the high-occupancy vehicle (HOV) lane, diamond lane or transit lane. Look for the white diamond painted on the road surface. You’ll be able to see the diamonds since the lane won’t likely be covered with cars. The normal minimum occupancy is two or three people.

3. Take Advantage of Better (Maybe Even Free!) Parking

Find out if your company has carpool parking spots, and if they don’t, suggest it. Carpool spots are often premier spots closer to the door. Some parking lots and garages even offer free parking for commuters as part of a green initiative or just to encourage people to patronize the surrounding businesses. There’s power in numbers.

4. You Won’t Owe Taxes on Carpool Payments

According to the IRS, you cannot deduct carpooling expenses. That’s a bummer. But you don’t have to pay income tax on money you receive from carpooling: it’s technically just reimbursement for things like gas and payment toward maintaining items that wear and tear on your vehicle, including replacing tires. You shouldn’t really be making a profit. If a lot of people join your carpool, you may inadvertently begin making more money than you need to cover expenses. If you begin actually earning money while carpooling, that’s income and you’d need to pay taxes on your accidental income stream.

5. Consider Selling Your Car

Perhaps you don’t want to drive; you just want to ride in a carpool. If you find one that is extremely reliable, consider selling your car. This makes sense if you have another vehicle in your household, are a member of a car-sharing service like ZipCar, or are within biking distance of your day-to-day activities. According to AAA, it costs a little more than $9,000 per year to own a car. Selling your car may be even better than getting that raise you’re always lusting after – it’s worth considering.

6. Check Your Insurance

Since you probably aren’t carpooling for profit, you don’t need to upgrade to a commercial insurance policy. However, you still may want to adjust your insurance. Why? You have a lot of passengers in your car, and most basic auto policies will only cover bodily injury up to $100,000. Low priced auto-insurance quotes usually don’t offer any better protection than the state minimum. If you’re regularly traveling with passengers and you were to get into an accident, you could easily be spending more than $100,000 in hospital bills. Contact a licensed insurance agent to determine how much coverage you need for your exact carpooling situation. You don’t want the threat of high hospital bills to negate the money you saved by carpooling.

Keep in mind that your car insurance company may check your credit as part of the application process. You may want to check your own credit beforehand to ensure that everything on your credit report is accurate and up-to-date. You can check your credit reports for free once a year under federal law and you can get two of your credit scores for free every month on Credit.com.

Even if you’re just a rider in the commuting carpool, you may also consider adjusting your insurance. Consider purchasing personal injury protection coverage. This will help to cover any of your medical bills, should the driver’s policy not carry adequate bodily injury coverage.

Carpooling is a smart way of saving money and doing your part to save the planet. Many states, cities, and companies are offering more and more perks for carpoolers. Cities like Sacramento even offer cash incentives for people who commute.

Carpooling can save you money, reduce wear and tear on your vehicle (if you’re splitting the driving) and give you some good company on your commute. All that’s left to do is figure out which radio station to play. But that’s another blog post altogether.

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This article originally appeared on Credit.com.

This article by Rob Infantino was distributed by the Personal Finance Syndication Network.


FBI Calls Out Researcher Who Claimed He Hacked Airplane

Headlines during the weekend screamed that a hacker had taken control of a commercial airliner and been able to make it move “sideways” in flight. Avionics security researcher Chris Roberts, who has previously published substantial research on airplane hacking, was questioned by FBI agents after a flight in April, and his computer equipment seized. In part because Roberts was on his way to a security conference, the incident received a lot of media attention.

Over the weekend, an FBI affidavit surfaced in which an agent claimed Roberts said he had been able to hack airplane controls and make a plane fly “sideways” during a fight. The affidavit offered some detail about how Roberts allegedly tapped into an airplane’s in-flight entertainment system, and from there, escalated privileges until he was allegedly able to issue a command to one of the plane’s engines. That upped the ante on the incident and led to a lot of headlines about airline hacking.

There’s a lot to unpack about this story, but let me get out a few points quickly.

1. There is no evidence that a hacker altered the flight of a plane.

Instead, the FBI says a hacker told them he was able to briefly take control of a plane. These things are very, very different. What we have is a single sentence in an affidavit filed in support of a search warrant in which the FBI claims a well-known avionics security researcher named Chris Roberts claims he was able to issue a command to an airplane engine and make a plane move sideways. We don’t have the flight date or number; we don’t have any other evidence to support the assertion. We don’t even know what it means to make a plane “move sideways.” It’s important to note: the burden of proof for assertions in an affidavit to obtain a search warrant is quite low. The FBI had already seized Roberts’ computer and a series of flash drives that were encrypted, and it wanted the right to keep the equipment and examine it for evidence. An agent asking a judge to sign such an order will throw the whole kitchen sink into the affidavit.

2. This might be hacker-speak.

There is a long history of hackers — or for that matter, anyone trying to call attention to a serious problem that’s not getting the attention it deserves — engaging in hyperbole or puffery. If you read the FBI affidavit, you get the sense that Roberts’ conversation with the agents interviewing him might have gone something like this:  “Yes, I’ve managed to break into the in-flight entertainment system and from there, jump networks and eventually access avionics controls. Why don’t you folks listen? I’ve done it 15 or 20 times! Heck, I once issued a command to an engine! I’m not going to say I was flying the plane, but did I make the thing move sideways a bit? Well, I proved my point, anyway.” Roberts isn’t giving interviews, but before he stopped talking, he did tell Wired’s Kim Zetter that his comments to the FBI were taken out of context. 

“That paragraph that’s in there is one paragraph out of a lot of discussions, so there is context that is obviously missing which obviously I can’t say anything about,” he said.

3. He’s not crazy, though.

The energy being used to investigate Roberts might be better used researching the attacks he’s calling attention to. The GAO issued a report to Congress just a few weeks ago ringing the alarm bell about increased interconnectivity of airplane avionics systems and the risks that poses. Let’s be clear: Roberts has been very public about his research, and he volunteered all this information to the FBI during discussions in February and March. He was stopped for questioning, and his computers seized, after a flight to a security conference in April. The timeline is important. The claim of moving a plane sideways (and what does that mean, anyway? Planes don’t go sideways), is months old, and references a flight that is perhaps much older than that. If he really altered the flight of a plane, there’d probably be other evidence of that by now.

4. Hacking an airplane full of people crosses the line, even with the best of intentions.

Back to the timeline. The FBI says Roberts spoke to them, shared all this information about his ability to hack airplanes, and then a month later tweeted about possibly hacking into an airplane before a flight in April to a security conference. When he landed, the FBI says, agents found evidence that the in-flight entertainment computer (“seat electronic box”) located under his seat showed evidence of physical tampering. If that’s true, Roberts better have a good lawyer. (He does: The Electronic Frontier Foundation is representing him now). Nobody I know would support that kind of research. But please remember: these are merely allegations made in an FBI affidavit. They aren’t even allegations made in an indictment.

Roberts told Zetter the tweets, which might have been an ill-advised poke at airline security, were a joke. And he had told Zetter in the past that he had only attacked avionics using a simulator. So let’s not jump to any conclusions.

Unless you are a security researcher, the bottom line for you, dear airline passenger: You need not be afraid that someone can hack the movie screen on the seat next to you and take control of the aircraft. That is, as Carl Sagan might have said, an extraordinary claim that requires extraordinary evidence, and we don’t even have basic evidence. So don’t worry about your flight today. Some day, there will be something to worry about. Is that 10 years in the future or next month? I cannot say.

What do you do have to worry about today? If I were getting on an airline during the next week or so, I’d be pretty careful about stray cables hanging needlessly out of my carry-on bag; and I’d make sure I didn’t do anything that might look like I was trying to fiddle with the “seat electronic box” under your seat. And I might worry about in-flight entertainment systems being disabled some day soon so FAA and airline researchers can examine Roberts’ research more carefully.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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This article originally appeared on Credit.com.

This article by Bob Sullivan was distributed by the Personal Finance Syndication Network.