President Donald Trump has taken steps to ease certain costs for Medicare beneficiaries and has proposed other changes, while Democrat challenger Joe Biden has some ideas of his own for the program.
Original Source: cnbc.com
If you’re like the majority of homeowners in the U.S., you make your mortgage payment monthly, with the idea that someday you’ll own your home outright. As you continue to pay off your total balance, your home equity rises and you become one step closer to owning your home.
The downside is, mortgages, like any other type of loan or line of credit, come with interest. That means you pay the total balance owed, plus the annual interest rate applied to your mortgage loan. Additionally, your lender also assigns specific payment schedules and other terms to your loan, some of which you might find favorable, others not so much. That’s where refinancing comes in.
What does refinancing mean? In the most basic sense, refinancing is a way to alter your mortgage terms by replacing your old mortgage with a new one that is better fit for your financial situation. A lower interest rate, more manageable payment schedule, a shorter loan term, or consolidating multiple mortgages are just a few of the ways refinancing your mortgage can be beneficial.
In this post, we’ll answer some important questions, such as, “what does refinancing mean?”, “when is refinancing a good idea?”, and “what are the pros and cons of refinancing?”. For fast answers on the subject of refinancing, use the links below to navigate ahead. Or, read end-to-end for a complete overview.
What is Refinancing?
Pros and Cons of Refinancing
What is Refinancing?
Refinancing, also known as “ a refi”, is a way for borrowers to restructure their mortgage, auto, personal, or other loan type for more favorable terms. During the mortgage refinance process, you might make one or several of the following adjustments to your mortgage:
Secure a lower interest rate
Switch to a longer or shorter loan term
Change from an adjustable-rate mortgage to a fixed-rate mortgage
Cash-out some of the equity you’ve built in your home
Consolidate multiple mortgages into a single payment
Sounds pretty good, right? It can be. Anytime you’re dealing with changes to a loan, it’s a good idea to read the fine print, take a close look at the pros and cons, and really understand what happens when you refinance.
What happens when you refinance?
When you refinance a loan, whether it be a mortgage, auto, or some other line of credit, you’ll need to start by paying off your original loan, which you can do with the help of your refinanced one, after you’ve been approved for a new loan, of course. Once you have settled up with your original lender, you’ll be left to pay off your new loan according to the payment terms outlined by your new lender.
Am I eligible for a refinance?
Think back to when you applied for your original mortgage — you likely filled out an application, they checked your credit score and lending history, assessed the property, and proposed a mortgage option for you based on your financial profile.
The process for refinancing is essentially the same. The new lender will consider your credit score, lending history, the value of your home, how much you want to borrow, and your income and assets before approving you for a new mortgage. Ideally, your finances would be in a shinier state than when you got your first mortgage, and you’ll likely be asking to borrow less money, therefore, a refinanced mortgage could offer you a more agreeable interest rate or loan terms.
When it comes to determining eligibility, it’s ultimately up to your lender to decide. According to Rocket Mortgage, homeowners looking to refinance should consider the following criteria before applying:
How long you’ve owned the house: Generally, you must have the title for a minimum of six months.
Your credit score: Your lender is ultimately the one who decides what they consider to be a “creditworthy” score, but there are some basic benchmarks you can use to help. A good credit score is considered 670 and higher on the FICO scale and 660 and higher on the VantageScore model.
Your current home equity: The general rule of thumb is that homeowners should have a minimum of 20 percent home equity in order to qualify for a refinance. 20 percent is also the minimum equity needed if you want to get rid of your mortgage insurance.
Other debts: In addition to assessing your credit score and other financial metrics, lenders will typically consider your other debt obligations before approving you for a new loan. Take a look at how you’re managing your current debts before applying for a refinanced mortgage.
Closing costs: When you close on a loan, you’re typically responsible for paying closing costs, including, appraisal fees, title fees, credit check fees, and more. Before applying for a refinance, take a look at your monthly budget to determine whether or not you can afford to pay the closing costs on a new loan. ProTip: Use our budgeting calculator to help!
Financial details: Part of the loan application process involves lenders taking a look at the greater picture of your finances, such as, your income and assets, homeowner’s insurance, title insurance, etc. Make sure you have this information handy to make the refinance process more efficient if you choose to proceed.
Types of mortgage refinancing
Now that you know the basic refinance definition, it’s time to dig a little deeper. It probably comes as no surprise to you, but it’s important to know that there’s no one-size-fits-all refinance. There are several different types of mortgage refinancing that depend on the outcome that you’re looking for.
Rate-and-term refinancing: This type of refinance only adjusts the rate and/or term length of the loan.
Cash-out refinancing: Allows borrowers to adjust the mortgage length and/or term, plus, it increases the amount of the loan. Cash-out refinances are generally used when homeowners want to borrow extra money to make home improvements or other big purchases.
Cash-in refinancing: This is basically the opposite of a cash-out refinance. With cash-in refinancing, you’d pay down more of the principal balance to decrease your loan amount, generally in exchange for a lower mortgage rate.
Note: Another reason some homeowners choose to refinance is to consolidate their debts; instead of making mortgage payments to separate lenders for multiple mortgages, you could refinance and lump all of your mortgages into a single loan.
Pros and Cons of Refinancing
Like any financial decision you’ll make in your lifetime, it’s a good idea to consider the pros and cons of your decision. With that said, let’s take a look at some of the benefits and risks associated with refinancing.
The advantages of refinancing are simple: making your mortgage terms work better for you. That could mean getting a lower interest rate, which would translate to interest savings, you could secure more manageable monthly payments which might work better for your budget, or you could adjust your loan terms to better suit your lifestyle and financial situation.
Penalty fees: Some mortgage lenders impose penalty fees if you pay off your mortgage before the term ends. These fees vary by lender, but could potentially add up to thousands of dollars.
Closing costs: As we mentioned, there are several closing costs associated with refinancing. Keep these costs in mind as you weigh your options.
Longer loan length: Should you choose to extend the length of your loan term in favor of lower monthly payments or some other benefit, you’ll be stuck paying off your mortgage longer, which could be problematic for certain homeowners.
So far, we’ve answered “what is refinancing?”, “what happens when you refinance?”, “what are the types of refinancing?”, and “what are the pros and cons of refinancing?”. If you still have some lingering questions, we’re here to help by answering these refinancing FAQs.
Does refinancing hurt your credit?
One of the costs of refinancing is that it may impact your credit temporarily. When you apply for a loan, your lender will check your credit score , conducting something that’s called a hard credit inquiry. Hard credit inquiries can drop your credit score by a few points, but it won’t impact your score forever.
Bottom line: Refinancing can hurt your credit score temporarily. However, if the savings and benefits are worth it, a quick dip in your score probably isn’t something to be too concerned about, especially if your credit is in good standing.
Is refinancing a good idea?
It depends. Everyone’s financial situation is different, so it’s important to take a close look at your current situation, assess whether you’re eligible for refinancing, and really understand what it means to refinance.
When is refinancing worth it?
Refinancing may be worth your while if you can qualify for a lower interest rate or secure better loan terms than you started with. Some financial experts say that refinancing can be a good idea if you can lower your interest rate by at least two percent.
How do I calculate the break-even period?
Something to consider when you’re refinancing your mortgage is how long it will take you to reap the benefits of your new loan after considering closing costs. Use the worksheet below to help you anticipate your break-even period.
There are plenty of nuances to know about refinancing. As you consider whether it’s the right move for you, let’s recap some important points:
What does it mean to refinance?: Refinancing a loan is when you pay off your original loan and take out a new loan, ideally with more favorable loan terms like a lower interest rate or more manageable payment schedule.
When is it a good idea to refinance?: That depends on your unique financial situation. Refinancing can help you save money on interest and offer other important benefits, but it’s important to consider the benefits and risks in the context of your own finances.
To learn more about where your finances stand, check out the Mint app to set financial goals, glean insight into your financial health, and more.
The post What Does Refinancing Mean? Refinance Your Mortgage appeared first on MintLife Blog.
Original Source: blog.mint.com
States can typically waive repayments of most unemployment insurance if there is no fraud involved. But that’s not the case for the Pandemic Unemployment Assistance program.
Original Source: cnbc.com
Many major health insurance carriers have waived cost-sharing fees for telehealth visits related to Covid-19, but these waivers soon end for some plans.
Original Source: cnbc.com
As businesses across the United States reopen, business owners are trying to figure out how to keep their employees and customers safe from the potential spread of COVID-19. As such, experts are gearing up for a possible wave of COVID-related liability suits in the coming months. To stem the possible tide of litigation, some states have passed protection laws, and Congress is considering a federal mandate. In the meantime, here are some tips to help you shore up your own defenses.
What is COVID-19 business liability protection?
As many businesses continue to experience the negative economic effects of the pandemic and the virus continues to spread across the country, business owners are weighing how to reopen safely. Some business owners are concerned that they will be sued, as has happened to some major retail chains.
Liability protections would shield businesses, schools and other institutions from such lawsuits as long as the businesses were operating in good faith and were following approved safety guidelines. Such protections would require the complainant to prove, without a shadow of a doubt, that the business in question was negligible in its efforts to reduce potential exposure to COVID-19.
What steps can you take now to protect your business against COVID-19 lawsuits?
As lawmakers consider their next move, legal experts are providing outside advice to small business owners who are looking to avoid COVID-related lawsuits. Andrea Sager, a small business attorney and entrepreneur, even created a free, downloadable liability waiver for consumers to sign before they enter a business. Though she believes a judge could choose to not enforce the document, she said it was important that reopening businesses cover their bases.
“I’m trying to ensure that my clients and all the small businesses are protected to reduce their liability,” Sager said. Businesses that have a brick-and-mortar presence should have customers sign a waiver, because “these lawsuits are going to take off,” she said.
In addition, Sager noted the following suggestions for businesses that are trying to prevent costly COVID-related claims:
Get familiar with your insurance policy.
Though not every business insurance policy is the same, there may be language in your agreement that helps with litigation costs. Even if your policy has general liability insurance, Sager said it might not be enough.
“We know that not all insurance companies act the same way, and there will be some small businesses that say, ‘I can just call my insurance company,'” she said. “But that company will come up with some loophole to leave the business owner high and dry. Without the federal law, I think that even if a small business owner has insurance, not all of them will be covered.”
Implement CDC guidelines.
Some states don’t have mask mandates or social distancing policies in place, but businesses can establish their own policies. By enforcing guidelines set by the Centers for Disease Control and Prevention, you can establish a standard that could hold up in court.
By enforcing stricter rules, “if somebody wants to sue you, you can say, ‘Look, this will go a lot further to protect people coming to my place of business,'” Sager said. “By following the law and taking it a step further, you can ensure that you won’t be held responsible.”
Reopen only if you can do so legally.
Governors have set the rules for which types of businesses can reopen. If your business is not allowed to reopen and you do so anyway, you could be hit with fees or arrested by local police. If your business is hit with a COVID-related lawsuit, a judge can note that you willfully ignored state rules and thus cast an unfavorable judgment against your interests. Before reopening, be sure to check local and state guidelines to make sure your business is cleared to reopen.
Communicate with your customers and employees.
When dealing with any kind of safety precaution, it’s imperative to share your efforts with your employees and the general public. For example, if people coming to your business know you require a mask, they should have no excuse for showing up without one. If they do, you can point to your rules and deny them entry without fear of any credible backlash in court.
Your employees should be among the first to know about your safety precautions. However, make sure to consider the stipulations of the Americans with Disabilities Act (ADA), Sager said.
“Do not ask your employees to sign a waiver, because there are completely different considerations there with workers’ compensation and possibly even ADA measures to consider,” Sager said. Measures vary by state and by employee, “because if you can allow your employees to work remotely, you should do that for as long as possible,” she said.
What liability protections have some states already established?
In the absence of a federal mandate for COVID-related business liability protection, some states have taken it upon themselves to create their own policies. As of August 2020, measures have already been taken in Wyoming, Utah, Oklahoma, Arkansas, Alabama, Georgia and North Carolina, while lawmakers in Minnesota, Iowa, Illinois, Ohio, Pennsylvania, New York, New Jersey, South Carolina, Mississippi, Tennessee, Louisiana, New Mexico and Arizona have legislation in the works. Though provisions vary by state, here are some overarching themes that lawmakers have implemented:
Retroactive protections. The first case of COVID-19 in the U.S. was diagnosed in Washington state on January 20. Due to a lack of testing at that time, it’s impossible to know when the virus spread to different parts of the country. As such, states that have put their protections in place have backdated their rules. For example, Iowa’s law covers any liability dating back to Jan. 1, while states such as Louisiana, Kansas and Alabama have opted to cover only as far back as mid-March, when widespread shutdown orders were put in place.
Doesn’t protect willful negligence. As more states begin to establish mandatory mask policies, or even reverse some shutdown measures, state governments are stipulating that COVID liability protection rules will not protect businesses that fail to comply with public safety measures. If it can be proven that a business failed to meet guidelines at the federal, state or local levels, they can be found guilty of gross negligence and left vulnerable to a liability lawsuit.
Protections for health care providers. In addition to protections for retail and other brick-and-mortar establishments, some states have baked amendments into their provisions that protect health care providers from liability. Because these businesses are often visited by sick individuals, this kind of measure actively protects against the potential for a person to file claim that their COVID-19 diagnosis was directly linked to the business. Yet like other small business owners, medical practitioners can be shielded from potential litigation as long as they properly follow guidelines.
Some major retail and fast-food chains have already been hit with COVID-related lawsuits. Last month, CNBC reported that Walmart, Safeway, McDonald’s and Amazon have faced such litigation. Once open, a business runs the risk of becoming a transmission site for the virus, regardless of how it operates. That’s why any discussion about business liability protection at the state and federal levels have been an all-encompassing topic.
Each state’s anti-liability measure is different. What may have passed in Wyoming is likely to differ in many ways from the bill passed in Ohio, for example. If your small business is in any of the states listed above, or if your state legislature is currently examining a similar measure, you should pay close attention to the guidelines laid out by your elected officials. Failing to meet the state’s guidelines could leave you wide open for crippling legal fees, exhaustive court expenses and a costly settlement.
What the federal government is considering
Senate Republicans recently unveiled their stimulus plan to the country. GOP members stressed the importance of the bill’s litigation protections. In fact, so important was the measure that Senate Majority Leader Mitch McConnell called it a “red line” issue, stressing that the bill would not pass without the provision.
“We need to provide protection, litigation protection, for those who have been on the front lines,” he said on Fox News back in April. “We can’t pass another bill unless we have liability protection.” He echoed that sentiment while speaking with reporters after the bill’s introduction, even though top Democrats have balked at the bill in its entirety for various reasons.
If passed, the proposed bill would standardize business liability protection during the pandemic. Like the provisions already passed at the state level, the federal liability protections would shield health care providers and employers, as well as school districts, from any lawsuits levied against them for exposure to the novel coronavirus. If a business were to be found guilty of gross negligence that led to the COVID-19 exposure, that business could still be targeted for a small business lawsuit.
While it’s still unclear what, if any, measures Congress will pass, Sager said she hopes the litigation protections make the final cut. Without them, she said, scores of businesses in states that don’t have any provisions in place could be forced to shut down because of deep legal fees.
“Unfortunately, there are some governors that want to leave it up to the local governments to make a response,” she said. “The mandate should come from the federal government because we need something that will be enforceable throughout the whole country.”
Original Source: business.com