SayEducate

Your adult offspring may come to you asking you to co-sign their loan. As a parent, you want to do what you can to help your children succeed, and sometimes that involves helping them out with their credit.

Contrary to popular belief, you may learn the hard way that co-signing could be the worst decision you made and for the following reason:

If your child is late with payments or defaults on a loan, the creditor may not be required to notify co-signers (you) when a borrower falls behind. This requirement varies from state to state, but the result could be the same: your credit rating gets whacked in the process.

A better option to help your child build a solid credit history is to have them co-sign your loan or credit card. Statements are sent to you and your child can still access a line of credit while building up their credit history.

Many parents fail to realize that their own credit history is at risk when they co-sign for a loan. You can’t intervene when you are not aware of the problem.

(Source: BottomLine Personal)

By Heather Johnson

They act like magic wands opening doors for you and letting you buy anything you want, but be warned that these seemingly innocent pieces of plastic have the power to tie you down irrevocably with chains of debt. The day you wake up to this fact and decide to get rid of all but one or two of your credit cards, you find yourself with two problems:

• Canceling credit cards can hurt your credit score.
• Once you cancel the cards, no matter what the consequences, you’re left wondering how best to dispose of them so that they are not misused.

The first issue is relatively easy to deal with:

• Cancel the cards that are relatively new and keep the ones that you’ve had for a while. This helps you establish a longer credit history.
• Once you cancel your cards, you will see a dip in your credit score, but with good credit behavior where you pay all your bills on time, do not exceed spending limits and limit your expenditure, your score will rebound to its original status within a few months.

Now that you’ve cancelled your cards, one problem has been taken care of.

The next thing to do is to make sure you don’t lend your cards to misuse by miscreants. Simply throwing them in the trash can is the worst thing you could do, especially in these days when it’s so easy to have your identity stolen. Use your ingenuity in disposing of cancelled credit cards:

• Shred your cards or tear them into small pieces before you throw them out. Spread the pieces into two or three trash bags so that they cannot be put together again.
• Scratch the magnetic strip on the card with a knife or any other sharp object.
• If your card has an embedded smart chip, dip it in water and microwave for a minute to destroy the data on the card.
• If you are still paranoid about your card holding personal information, dip it in a solution of acid, nitric or hydrochloric.

Whatever method you choose, make sure your cards do not end up leaving you penniless even though you no longer use them.

Your home loan consists of four elements, two that you are probably aware of, and those are the principal and interest. Two additional elements, taxes and insurance, must also be considered when applying for a loan, secondary elements which can be the deciding factors in whether you get approved for a loan or not.

Which brings us to an important question — if you are in the market for a new home, have you factored in what your property taxes and homeowners insurance premiums will be?

Some things for you to consider:

You may have a general idea how much taxes you’ll be paying annually for your home, but there are factors which can skew these numbers tremendously, even in the same taxing district.

For example, taxes on a three bedroom ranch home could be higher than on a four bedroom colonial, because the width of a ranch home is wider than with a colonial. Other factors that can make a difference include: the age of the home, location, and property size.

Homeowners’ insurance isn’t as easy to figure out today as it was in the past. You may think that $500 annually will cover your insurance needs but discover that your home is in a flood plain, necessitating that you take out expensive flood insurance which is only available through the federal government.

You also discover that since your home is a little too close to the ocean, where all homes have seen rates double, triple, even quadruple since the 2005 hurricane season. What had once been a fairly small expense, home insurance isn’t any longer.

You’ve done your homework finding an excellent mortgage loan. Now go and check out what you’ll be paying for property taxes and homeowners insurance to see if you can really afford your new home.