By Barbara O’Neill, USDA eXtension program
Want to be a more knowledgeable investor? The Cooperative Extension System has a free online home study course for beginning investors called Investing for Your Future (IFYF).
IFYF consists of 11 free-standing modules that cover topics like investing basics, mutual funds, selecting financial professionals and more.
Each month, a new investment topic is added to the IFYF course to keep up with current financial trends. You can find a list of the topics covered dating back to 2004 in the course’s archive.
The IFYF course has won several national awards and is updated regularly for changes in tax laws, financial products, and other current information. It is one of many free online resources contained within the eXtension Personal Finance Web site for consumers.
When you apply for a mortgage, it can sometimes be hard to understand how much of a monthly payment you can afford. Oftentimes you have to factor in additional fees and property taxes that add to the base cost of your monthly payment.
You can’t always rely on a mortgage broker or lender to ensure that you’re getting a responsbile loan that you can afford.
That’s why the Consumer Finance Protection Bureau (CFPB) introduced the Ability-to-Repay rule.
Under the new rule, lenders have to ensure that you can pay back the loan plus interest over the long term.
According to CFPB, in order to do that, lenders will need to verify the following before they can issue you a loan:
- Current income or assets;
- Current employment status;
- Credit history;
- The monthly payment for the mortgage;
- The monthly payments on any other loans associated with the property;
- The monthly payment for other mortgage related obligations (such as property taxes);
- Other debt obligations; and
- The monthly debt-to-income ratio or residual income the borrower would be taking on with the mortgage. (Debt-to-income ratio is a consumer’s total monthly debt divided by their total monthly gross income).
These rules will help protect you from lenders who might try to sell you an irresponsible mortgage that you can’t afford.
Learn more about the Ability-to-Repay rule.
It’s easy to get into debt. It’s much harder to get out of it.
Fortunately, there are credit counseling agencies that can help you get your finances in order. They can help you figure out a budget and stick to it while managing your debt and avoiding future financial pitfalls.
However, not all credit counseling agencies are the same. Some offer free or low-cost services while others charge high fees or might not be trustworthy. The following tips will help you choose the right credit counseling agency.
Look for Agencies with a Good Reputation
Most reputable credit counseling agencies are nonprofits that offer free or low-cost services. However, the fact that an agency is a nonprofit does not guarantee that it is affordable or that it has a good reputation. Here are some tips for selecting a credit agency you can trust:
- Ask family members and friends if they can recommend an agency. It’s best to pick one that has been around for several years and has a well-established reputation.
- Use credit agencies or credit counseling services referred by credit unions, banks, universities or military bases.
- Choose a credit agency that’s been approved by the Federal Government.
You can also check out state and local consumer agencies to find out if a credit agency has complaints.
Compare Services and Costs
Once you have a list of agencies you can trust, the next step is to take a closer look at the services and costs they offer so that you can choose the one that best serves your needs. Be careful with credit agencies that charge high fees for services that you can get for free somewhere else.
Some of the most common services offered by credit agencies include:
- Professional, person-to-person assistance with managing your money and debt.
- Help putting together a family budget and sticking to it.
- Free workshops and educational material.
Ask Lots of Questions
Before finally choosing a credit agency, it’s worth writing down a list of questions you might have so that you can avoid surprises such as hidden fees or limited services. Here are some questions to help you pick the right credit agency.
- Are there different fees for different services? Some agencies might charge for initial consultations or a monthly fee. Be careful with agencies that pay their employees more depending on the services you sign up for.
- Will you be signing a contract before getting counseling? If so, be sure to read the contract before signing it.
- Does the agency have the right certifications to provide credit counseling? It’s best to use agencies that have been certified by independent organizations.