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4 Top Myths Surrounding VA Loans

MoneyTipsHome sellers and their agents may be limiting their potential base of buyers by ignoring a growing pool of them. Inside Mortgage Finance recently noted that loans acquired through the Veterans Affairs (VA) Department are rapidly increasing, reaching a holding level of one-quarter of primary insured home loans. This tops the number of loans backed by the Federal Housing Administration (FHA) through the Department of Housing and Urban Development (HUD). It is easy to see why VA backing is preferable from a buyer's point of view. If you qualify, you can purchase a house with no money down (up to a particular loan limit that varies by market) and no Private Mortgage Insurance (PMI) requirement. Yet, sellers shy away from buyers with VA loans, and seller's agents may serve as a screen to exclude VA-backed offers from ever reaching the seller. Why is this so? It makes little sense, since the risk of default is borne by the lending institution and not the buyer. In addition, foreclosures on VA homes are less than the default rate of either standard or FHA mortgages. The main reason appears to be lingering myths associated with VA loans – some with elements of truth from the past and some that simply never had a basis in fact. Let's take a closer look at some of these misconceptions. Slow Process – While the VA is not known for their rapid response to many issues, their record is not bad with respect to loans. Paperwork is involved, but it is comparable to the paperwork necessary to close a standard mortgage. The Veterans Association of Real Estate Professionals (VAREP) states that VA loans can actually close faster than conventional mortgages by up to two days. In general, closing times are comparable between VA and non-VA backed loans. Loan Limits – The basic entitlement for every eligible veteran is $36,000, and lenders will typically allow a loan of up to four times that amount ($144,000) without having to apply any down payment. Thus, some home sellers assume that VA applicants cannot afford their more expensive homes and exclude them from the pool of potential buyers. However, veterans may add some of their own down payment money and qualify for higher loan amounts up to the limits of "conforming loans" (generally $417,000 but higher in some counties with unusually high average home prices). Terms of these larger VA loans are still favorable for qualifying buyers compared to the open market. Qualification Concerns – Historically, minimum credit scores are lower for VA loans than for conventional loans. In times of tighter credit (like today), VA loans become an even better deal as conventional loans become harder to get. Limited Buyers – If you do not live near a military base, you may not even consider that many qualified service members live nearby. There are around 22 million combined veterans and active duty military in the U.S., according to the National Center for Veterans Analysis and Statistics. The National Association of Realtors estimates that around 16.4 million of these service members have mortgage loans, with 12% of those as VA loans. That leaves a potential of over 6 million veterans as buyers, not to mention those who hold non-VA loans and may retain their entitlement for the purchase of a different home. If you are selling your home, please do not exclude VA-backed loan applicants from your pool of buyers. They have put up with enough during their service time to our country and do not need any added difficulty in finding the home of their dreams. MoneyTips is happy to help you get free refinance quotes from top lenders. Photo ©iStockphoto.com/vgajicOriginally Posted at: https://www.moneytips.com/4-top-myths-surrounding-va-loansVA Loans — What Are They?How We Paid For Our Homes (Infographic)How We Made Our Down Payments (Infographic)

How One Engineer Made His Hobby Pay Off

For years, Jacques Hopkins wanted to make money online with a flexible side gig. Now the former electrical engineer has found a niche that has become his career: teaching people to play modern songs on the piano in 21 days, all over the internet.

Hopkins didn’t make the transition overnight. He and his wife had been saving for years before he started his own business. Here’s how they did it — and how you can turn a hobby into your main hustle.

From engineer to entrepreneur

Piano teaching wasn’t Hopkins’s first entrepreneurial idea. He tried a few that didn’t take off, including an invention that turned regular desks into standing desks. He learned from that experience that he didn’t want to sell physical products.

But he could sell lessons online, from anywhere. So he developed a more accessible and efficient method of teaching piano than the formal lessons he took from ages 5 to 17.

And so began his side business, Piano In 21 Days. The company’s tagline says it all: “I help regular people learn to play modern songs on the piano in as little time as possible.” What started as YouTube videos of Hopkins playing pop songs became a 21-day online course.

Hopkins knew the project would be more successful if he could devote more time to it — so he quit his day job. “The website took off once I was focusing on it eight hours a day,” he says.

Saving for the jump

Before Hopkins quit his engineering job, he and his wife, Niki, prepared to lose that income. The first step: paying off their mortgage. Then, Hopkins says, “the money we were putting toward the mortgage started going to a savings account.” Niki also received a pension from a previous job, which helped them build savings.

The family amassed enough to live on for a year, frugally, without much support from the piano business. “We wanted to make sure we had enough savings so that if this failed miserably, we would still be able to have money to live on and time for me to find another job if I needed to,” Hopkins says.

Building a ‘security blanket’

In the event that Piano in 21 Days did fail miserably, and Hopkins couldn’t find work, the family had a backup: a $20,000 emergency fund. “That was sort of a security blanket that was just sitting there,” he says.

Hopkins had started the fund years before. He had very little debt and was able to contribute about $500 per month. After two years, he saved about $12,000. Once he and Niki got married, they gradually increased the fund to about $20,000.

“You just attack it,” he says of building the fund. “Five, six, seven hundred dollars a month — whatever you have.”

The benefits of working online

Hopkins, his wife, who is expecting, and their toddler daughter are based in Baton Rouge, Louisiana, but Hopkins can live and work from anywhere. Most of his work involves talking with prospective customers on the phone, as well as marketing and growing the business. He occasionally posts a new YouTube video, tweaks the website and posts on social media. He outsources other tasks.

Hopkins and his family take advantage of his flexibility by traveling often. For example, last summer they spent three months in France. “We’re having a blast,”  he says. But even when Hopkins is on vacation, he talks with prospective customers. “I’m not going to stop taking those phone calls,” he says.

Lucrative earnings and European vacations are far from the only benefits of Hopkins’s work. He loves that he’s helping people all over the world. “When I worked a real job I was hardly able to see my impact, but now I get feedback daily from people thanking me for helping them learn to play piano,” he says. “That’s really what keeps me going.”

Inspiration for others

Want to make money online like Hopkins? Start by exploring his favorite resources. He says he was most influenced by Tim Ferriss’s “The 4-Hour Work Week,” which inspired him to pursue a side gig when he was still in college. He also recommends Jeff Walker’s “Launch,” which is specific to building an online business.

“I wish I would have known sooner that running your business purely on the internet was possible,” Hopkins says.

Laura McMullen is a staff writer at NerdWallet, a personal finance website. Email: lmcmullen@nerdwallet.com. Twitter: @lauraemcmullen.

How to Gift Stock to a New Grad

Graduation season is in full swing and for many Americans that means one thing: It’s time to head to the ATM.

Cash is expected to be the go-to gift again this year for new grads, followed by greeting cards and gift cards, according to survey results released this month by the National Retail Federation. The appeal is obvious: The recipient can spend the money how she pleases, there’s no hassle with receipts or returns and minimal effort is required of the giver.

If you like the idea of giving cash but want something with more oomph, consider stock. It potentially has a longer shelf life and higher returns. A gift of stock also helps a recipient learn how to invest.

There are some considerations unique to gifting stock, however, including understanding the intended recipient’s immediate financial needs. Here are four questions to consider before you give stock.

1. Are stocks the right gift?

It’s generous to help someone invest for the future, but be cognizant of the recipient’s pressing needs. Does the new grad have high-interest credit card debt? Is he facing uncertain job prospects? Does she have forthcoming expenses (moving to a new city, for example) that could push her into debt?

If “yes” is the answer to any of the scenarios above, the gift of investments may not be practical. Even worse, a cash-strapped new grad could be tempted to sell the stocks and forgo the long-term benefits while also triggering taxes.

If the gift is for a minor, there are ways to limit when or how she’ll access that investment. By setting up a custodial account, you’ll manage the account on her behalf until she’s of age (generally 18 or 21 years old, though some states allow you to specify an older age). At that point, she’ll be free to do with it as she pleases.

» MORE: Give your child the gift of stocks

2. To transfer or to buy?

There are two basic ways to give stocks: transferring shares you already own or buying new ones. Deciding which is best will depend on your current holdings and the tax implications for the recipient.

Since the gift is being made with the recipient’s best interest in mind, you should know that transferring shares to them means you’re also transferring any capital gains tax burden for those shares. When it comes time to sell, they’ll face realized capital gains based on the stock’s value when you first bought it.

For example, if you’re gifting 100 shares of a company that you bought at $25 a share and the recipient sells when the stock’s trading at $40 a share, they’ll pay taxes on a capital gain of $1,500. If instead you were to buy and gift new shares of that same stock when it was trading at $35 per share and they sold it at $40, they would only pay capital gains on $500.

If you still want to transfer shares of an existing holding, the process varies depending on how you hold the stock — in a paper certificate, with a brokerage or through direct registration with the company. Contact the institution that oversees your holdings to find out what steps and paperwork are needed to complete the transfer.

In general, you’ll need the following: a description of the securities you’re gifting (company name, ticker symbol and number of shares), your account number and your contact information, as well as the recipient’s full name, Social Security number, contact information and the account where the investment should be transferred.

If the recipient is a newbie to the world of investing and doesn’t have a brokerage account, you may be able to transfer stocks through the Direct Registration System. This will put the recipient on the books as an investor with the company.

If you’re looking to give a stock you don’t currently own (or you don’t want to part with your own shares), you have choices. Much like a transfer, you’ll need to direct this purchase to an account in the recipient’s name by buying shares directly through the issuing company or a brokerage.

Several websites cater to people who want to give stock, including GiveAshare.com, SparkGift.com and Stockpile.com, but there can be a premium for novelty. Buying one share of a company and having the certificate framed could cost as much as twice the stock’s current trading price on GiveAshare, for example. For any of these sites, be sure to check fees, which may be higher than a traditional brokerage.

» MORE: How to buy stocks

3. How generous do you want to be?

Whether you’re transferring shares or buying new ones to kickstart a new grad’s investment portfolio, there are likely limits to your generosity. The IRS agrees.

You can give annual gifts up to $14,000 (which includes the value of stocks) to any number of recipients and you’ll be exempt from paying federal gift taxes. Go above that amount and you’ll owe.

Your altruism has other tax implications, as well. You get a tax benefit when transferring stock by avoiding capital gains taxes on that investment, but as noted above, the recipient assumes that burden. For new investments, there’s no capital-gains tax benefit for the giver and the cost basis for the recipient is the value of the investment at the time of purchase.

4. What lessons do you want to impart?

Cash may be king at graduation, but it’s also here today, gone tomorrow. Stock gifts can be memorable and meaningful beyond the potential for financial gains, as Alex Whitehouse’s story shows. As a toddler, he received 10 shares in a utility company from his grandfather.

“At first I was just excited to receive something in the mail with my name on it, but later on it sparked an interest in the stock market and an appreciation for the impact of reinvested dividends,” says Whitehouse, who is now president of Whitehouse Wealth Management in Vancouver, Washington. “That gift had a huge impact on me. It led me on the path to becoming a financial advisor.”

Now, Whitehouse helps his clients pay this forward, recommending grandparents gift stock to their grandchildren, particularly shares of companies that will resonate with the younger generation.

Stock gifts require more planning than stuffing money into a greeting card. But by making that effort, perhaps you’ll spark an early interest in investing or help the recipient plan for the future — and it’s impossible to predict where that may lead.

Anna-Louise Jackson is a staff writer at NerdWallet, a personal finance website. Email: ajackson@nerdwallet.com. Twitter: @aljax7.

If at First You Miss a Financial Goal, Try, Try Again

Setting a short-term financial goal is good, and achieving one is even better. But what should you do if you miss a goal you set for yourself?

Don’t get discouraged if your plan to buy a car, take a vacation or save money didn’t quite go as planned. Life happens. Here’s how to get back on track.

Embrace failure

Mindset is a huge part of financial health.

First, find the bright side. Even if you didn’t save as much money as you had hoped, imagine if you hadn’t set that goal at all. You’d still be back where you started — with the same amount in the bank. So kudos on making progress and getting serious about your finances.

Then, look at the setback as a learning opportunity. Rather than simply extending a goal’s deadline when the original timeline doesn’t pan out — or worse, taking on debt to finance the rest — diagnose where your savings plan went awry.

“Once you’ve reached that goal, or more importantly not reached that goal, I really think it’s important to look back at the spending habits and trends over the time and compare it to the budget you set up,” says Robert P. Finley, a chartered financial analyst, certified financial planner and the principal of Virtue Asset Management in Illinois.

You can do this by asking yourself a series of questions, Finley says, including:

The answers will help you determine if your goal was feasible. You can’t avoid paying a fixed amount for some things, like your mortgage or rent, but other spending categories, like eating out, have more wiggle room.

» MORE: Short-term or long-term, budget and save for your goals

Make adjustments

Based on your self-audit, make some adjustments to your savings strategy. If you’ve already cut your budget as much as possible, it might be time to find a way to make more money — at least until you reach your goal.

If you have your heart set on a vacation, for instance, you may be willing to take on a weekend job, babysit or work a side hustle to make ends meet, says Stephanie Genkin, CFP, the founder of My Financial Planner LLC in New York.

Or, you could make compromises to reach your goal sooner rather than later. “We’re looking at something that’s similar, yet maybe a little more affordable,” says Tony Madsen, CFP, the founder of NewLeaf Financial Guidance LLC in Minnesota. “Instead of going to Maui, is there a different trip that you can do altogether that becomes affordable for you?”

Whatever route you choose, avoid taking on debt to achieve a goal that’s not an absolute necessity. “The worst scenario is to charge it and then add 15% debt interest to your overall net worth,” says Finley.

Be your own cheerleader

As you pursue your goal for a second time, monitor your progress regularly. Madsen recommends setting check-ins at a cadence that’s comfortable for you. The goal is to analyze and adjust as you go.

Be sure to celebrate each milestone you hit along the way, too. Like most things in life, financial goals don’t have to be executed to perfection.

“If you ride a horse, you are sometimes going to fall off,” says Norman M. Boone, CFP, the founder and president of Mosaic Financial Partners Inc. in California, in an email. “The key to success is getting back on, resetting your goal and continuing to move forward.”

Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

Woman sues Jelly Belly for not listing sugar as ingredient in its Sport Beans

A California woman has sued Jelly Belly, claiming it engaged in deceptive labeling and advertising practices by promoting its Sports Beans as a performance aid.

Jessica Gomez filed the class-action lawsuit earlier this year, according to Legal Newsline.

>> Read more trending news

At the heart of Gomez's complaint is that the company used evaporated cane juice instead of sugar in the Sports Beans ingredients list. In 2016, the FDA issued a guidance urging companies not to substitute the term evaporated cane juice for sugar. However, the FDA recommendations are not legally binding, according to Forbes.

Gomez claimed she would not have bought the product if Jelly Belly had been truthful about the product’s ingredients instead of advertising that the Sports Beans are suitable for athletes and contain carbohydrates, electrolytes and vitamins. 

According to Forbes, Jelly Belly stated in a motion to dismiss that the lawsuit is "nonsense." The company defended its Sports Beans product, and said the sugar content is clearly stated on the label's Nutrition Facts panel.

Military Spending Around The World (Infographic)

MoneyTips President Trump announced his budget for America this week, including $639 billion in military spending. How does this compare to other countries and earlier budgets? If you're having trouble making your budget balance, see if you can lower your interest payments through a personal loan. Originally Posted at: https://www.moneytips.com/military-spending-around-the-world-infographic/788 How Your Federal Tax Dollars are Spent (Infographic) Illegal Immigrants Contribute Billions In Tax Revenue How Your Federal Tax Dollars are Spent (2014)

Forgotten lottery ticket worth $24 million found days before deadline

A lottery player’s luck almost ran out this week after a ticket worth more than $24 million was nearly forgotten in their home.

An anonymous individual with a Lotto ticket came forward to claim the winnings two days before their ticket was set to expire.

News coverage of the unclaimed Lottery prize escalated in the days leading up the deadline, causing the individual to check their house, where they discovered the winning ticket in a pile of other old tickets, the New York Lottery said.

The individual went to a lottery office in Lower Manhattan on Tuesday. The ticket was set to expire Thursday.

>> Read more trending news

Lottery rules allow winners to claim their prize up to a year after a drawing.

“We are thrilled that this lucky winner was able to locate this life-changing ticket,” said Gweneth Dean, director of the Commission’s Division of the Lottery. “We look forward to introducing this multimillionaire who came forward in the nick of time.”

The New York Lottery said they will reveal the identity of the winner after a security background check review.

The winning numbers were 05-12-13-22-25-35 and the bonus number was 51.

VA Loans — What Are They?

MoneyTipsVeteran's Administration (VA) loans are invaluable for homebuyers. Their advantages include little or no money down, qualifying with a lower credit score, competitive interest rates, potentially lower closing and auxiliary costs, and no private mortgage insurance requirements. VA loans are administered through approved lending institutions, and backed through an entitlement of up to $36,000. This entitlement can guarantee a home loan of up to $417,000 and possibly higher in some high-cost counties. You may qualify for a VA loan if you're an active duty service member, a veteran in good standing, a current or discharged National Guard or Selected Reserve member, a spouse of a service member who died on active duty, or a spouse of a veteran who died as a result of military service. Your lender will require a Certificate of Eligibility, which requires different evidence depending on your status (usually a completed form DD 214 or DD 1300, or a statement of service from the appropriate commanding officer). Get more details on eligibility and the proof required here. Types of loans covered by the VA include: Traditional fixed rate loan: Typically a 15- or 30-year fixed loan with equal payments over the life of the loan, covering some principal plus all accrued interest. Graduated Payment Mortgage (GPM): Lower monthly payments for a few years (typically five years), then a gradual increase and a leveling-off to a larger payment for the remaining term. This effectively delays a portion of the interest and adds it back to the principal balance. Adjustable Rate Mortgage (ARM): Issued at a lower-than-market interest rate and adjusted later in the life of the loan (based on market values plus a fixed margin). The upsides are similar to a GPM, but they are less predictable in later years. Growing Equity Mortgage (GEM): Sets up a gradual increase in payments with all the increase applied to the principal. This greatly reduces the overall interest paid and can cut the payoff time of the loan in half. GEMs can be arranged to adjust to a typical index like an ARM, or as a fixed rate similar to a GPM. Certain specialty loans are available, such as Adaptive Housing Grants for specific disabilities and Native American Direct Loans. Check the VA website for current options. Lenders will make evaluations as they normally do, but will take VA backing into account. For VA loans, a score as low as 620 will generally qualify for a loan (compared to mid 700s for non-VA loans). Lower scores will require explanation, but may still qualify. A debt-to-income ratio of less than 41% will usually qualify (compared to 36% or less for most non-VA loans). Good credit management practices help, such as paying credit cards on time and maintaining a low balance and credit utilization (credit balance divided by total available credit). Before engaging a lender, check your credit reports using Credit Manager by MoneyTips to make sure there are no errors. Bankruptcy or past foreclosure doesn't automatically disqualify you from a VA loan, but will require stricter verification to prove creditworthiness. There are fees involved, including a VA funding fee (usually between 0.49% to 2.4% of the loan). Check with your lender to verify all fees related to VA loans. Remember — a VA loan is still a loan — it is not a gift. You do have to repay it. MoneyTips is happy to help you get free refinance quotes from top lenders. Photo ©iStockphoto.com/michaeljung Originally Posted at: https://www.moneytips.com/va-loan-what-is-it4 Top Myths Surrounding VA LoansHow We Made Our Down Payments (Infographic)How We Paid For Our Homes (Infographic)

Hardworking 11-year-old surprised with lawn mower, equipment to start his own business

An 11-year-old is thanking a local business for surprising him with a gift that will help him with his own business this summer.

Q’yaron Godson of Fayetteville, North Carolina, has been hunting for a summer job.

>> Watch the news report here

“I’m getting older, so I have to find something to do,” Q’yaron told WTVD. “I can’t just sit in the house and play all my life. I have to get outside and do something at least.”

He asked a local lawn care business if he could join their team but was turned down. But he refused to give up.

“If I can’t find a job, I’m going to make a job,” said Q’yaron.

He asked the business if they could help him find a used lawn mower, so he could mow lawns over the summer.

>> Need something to lift your spirits? Read more uplifting news

A local repairman learned about Q’yaron and was inspired to help.

“I just admired him for trying,” said William Moss, owner of Moss Small Engine Repair. “Most kids nowadays don’t want to do things like that.”

Moss and his wife bought Q’yaron a brand new lawn mower, weed whacker and gas cans to help him launch his small business.

Q’yaron was shocked and grateful for the surprise.

“I just want them to know that I’m very thankful to have everything I have now, and God bless them all,” said Q’yaron.

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