Boomerang home buyers are coming back

Millions of Americans who lost their homes during the foreclosure crisis are now poised to become homeowners again.

That's according to a new report from RealtyTrac, which estimates that 7.3 million so-called "boomerang buyers" will return to the U.S. housing market over the next eight years.

Foreclosures and short sales skyrocketed after 2007 during the darkest years of the financial crisis and Great Recession. But with the economy gaining momentum and hiring picking up, many foreclosed on homeowners are in a position to buy again.

Half a million home buyers: Homeowners can recover from foreclosure in as little as three years, but seven years is the "conservative" amount of time it takes to rebuild a credit score, according to RealtyTrac. That means many homeowners who lost their homes in 2007 should be able qualify for a new home loan this year.

More than 500,000 people will fit this description in 2015, according to RealtyTrac. The number jumps to 1 million next year, peaks at 1.3 million in 2018, then tapers off by 2022.

A home in Vegas: RealtyTrac identified several markets with the most potential for boomerang buyers.

They include cities that were hit hard by the foreclosure crisis, but now have home prices that are affordable for the median homebuyer.

Las Vegas is arguably the epicenter for boomerang buyers. Several hard hit cities in California, such as Merced, Stockton and Modesto, are also prime candidates.

Retirement cities: Boomerang buyers are likely to be from either Generation X or the Baby Boom generation, according to RealtyTrac.

So cities that attract people nearing retirement age, like those in Florida, or metro hubs with jobs such as Chicago and Atlanta are on their list. 

_____________________________________________________________________________________
More Stories:

     

  

10 tax breaks for retirement savers

Saving for retirement can decrease your tax bill or boost your refund. But there are also penalties if you take money out of retirement accounts too early or too late. Here's how to minimize taxes on your retirement savings.

401(k)

Employees can defer paying income tax on up to $18,000 they contribute to a traditional 401(k), 403(b) or the federal government's Thrift Savings Plan in 2015. Income tax won't be due on this money until it is withdrawn from the account.

IRA

You can defer income tax on up to $5,500 by contributing to a traditional individual retirement account in 2015. IRA contributions aren't due until April 15, so you can make a contribution shortly before filing your taxes to reduce your tax bill or boost your refund.

Roth IRA

Roth IRAs have the same contribution limits as traditional IRAs, but the tax treatment is different. Roth IRA contributions are made with after-tax dollars, but withdrawals in retirement are tax-free.

Roth 401(k)

Roth 401(k)s don't offer a tax break in the year you make a contribution, but your savings grow without the drag of taxes, and you won't be taxed for withdrawals in retirement from accounts that are at least five years old.

Catch-up contributions

Workers ages 50 and older can contribute an extra $6,000 to a 401(k) and $1,000 to an IRA as catch-up contributions to boost their retirement nest egg and realize even bigger tax savings. However, you can no longer contribute to a traditional IRA once you reach age 70½.

Saver's credit

Workers with adjusted gross incomes below $30,500 for singles, $45,750 for heads of household and $61,000 for married couples in 2015 can claim the saver's credit in addition to the tax deduction on their retirement account contributions. The credit is worth between 10 percent and 50 percent of the amount saved in a 401(k) or IRA, up to $2,000 for individuals and $4,000 for couples, with bigger credits going to people with lower incomes.

Avoid the early withdrawal penalty.

Retirement account withdrawals before age 59½ typically trigger a 10 percent early-withdrawal tax. But there are a variety of ways to avoid the penalty if you use an IRA withdrawal for certain purposes, such as college costs, buying a first home, paying for large medical bills or purchasing health insurance after a job loss.

Remember to take required minimum distributions.

Withdrawals from 401(k)s and traditional IRAs become required after age 70½. Required minimum distributions are typically calculated by dividing the account balance by an IRS estimate of your life expectancy. Those who fail to withdraw the correct amount face a stiff 50 percent tax penalty on the amount that should have been withdrawn.

Delay 401(k) withdrawals while working.

If you remain employed after age 70½ and don't own 5 percent or more of the company you work for, you can delay withdrawals from your current 401(k), but not IRAs or 401(k)s from previous jobs, until you actually retire.

Time your retirement account withdrawals.

If you accumulate savings in traditional and Roth retirement accounts and taxable investment accounts, you will have some control over how much you will pay in taxes each year because you can time your withdrawals from each type of account. While you will owe income tax on withdrawals from traditional 401(k)s and IRAs, your Roth IRA distributions will provide tax-free retirement income.

_____________________________________________________________________________________
More Stories:

  

ID thieves stealing tax refunds still a big problem, IRS says

You may not be the only person trying to get your tax refund from the IRS this tax season.

Identity thieves are stealing people's Social Security numbers and other key pieces of personal information in order to file a fraudulent tax return and claim a refund, the IRS warned Monday.

The scammers typically file the fraudulent return early in the season, beating you to the punch. And when you file, that may be the first time you learn your identity has been stolen.

If you're owed a refund and have had your identity stolen, you will have to wait until your case is resolved before the IRS can cut you a check. That typically takes about four months, according to the IRS.

The agency, however, has been taking several steps to prevent fraudulent returns from being paid out. It said it has stopped 19 million suspicious returns since 2011, protecting more than $63 billion in fraudulent returns.

Identity thieves can get your personal information in a variety of ways, the IRS said. While you can't protect yourself entirely against identity theft, you can take certain precautions to reduce your odds of being victimized.

"Taxpayers should protect their computers and only give out their Social Security numbers when absolutely necessary," said IRS Commissioner John Koskinen in a statement Monday.

More specifically, the IRS recommends that you do not carry with you either your Social Security card or any documents with your Social Security number or Individual Taxpayer Identification Number (ITIN) on them. And just because a business or doctor's office asks you for those numbers doesn't necessarily mean you have to give them. (Here's guidance from the Privacy Rights Clearinghouse on when you should not share your Social Security number.)

Protecting your computer from being hacked by using firewalls and anti-virus software can help, as can updating security patches and frequently changing your passwords to all of your online accounts.

Checking your credit report once a year, as well as your annual Social Security earnings statement, will offer some indication whether anything unusual has been reported in your name.

And do not give out personal information over the phone, by email or on a Web site, unless you've initiated the contact and know who you're dealing with.

The IRS has more information here on how to protect yourself against identity theft, how to spot the signs of whether your identity has been stolen and the steps you should take if it has.

To prevent Identity Theft, Angel Debt Solutions has partnered with Kroll Advisory Solutions to provide our clients with Identity Theft packages as low as $14 a month* To enroll, call us today 616-730-2164.

*in most states.

_____________________________________________________________________________________
More Stories:

  

7 Ways to Trick Yourself into Saving More Money in 2015

These simple strategies can help you squeeze more out of your budget -and end the year with a lot more cash socked away than you started with.

If your New Year’s resolutions included growing -or starting- your savings, you’re already ahead of the pack.

Only about a third of Americans recently surveyed by Fidelity made any kind of financial resolution this year; and of those who did, just over half were aiming to stash more cash.

Kudos to you for taking this important step toward financial security.

Want to make sure your good intentions aren’t derailed before the month is out? The key is taking initial actions that will make repeating good habits easier.

We tend to revert to our long-run tendencies, To effect real changes, you have to make some structural change in the environment.

With that wisdom in mind, the seven life changes that follow will help you save more money this year.

1. Use Inertia to Your Advantage

Research has shown that people are victims of inertia: If you aren't used to saving money with regularity, it’s likely going to feel like such a chore to start that you’ll never bother -or, you’ll quit after one account transfer.

But when your money is already being saved automatically, inertia works in your favor, since it’ll take more effort to stop saving than to do nothing. That is why a growing number of 401(k) plans offer automatic enrollment with a default monthly contribution rate.

Still, you may need to stick a hand in the machine if you want to have financial freedom in retirement, since the default rate (often around 3% of salary) won’t get you far in your golden years. Most planners recommend saving at least 10% of income.

Even if you set up your own plan, you probably haven’t touched your contribution rate since; more than a third of participants haven’t, according to a TIAA-CREF survey.

You can benefit from another relatively new feature called “auto-escalation.” Offered by nearly half of companies, auto-escalation lets you set your savings rate to bump up annually at a date of your choosing and to an amount of your choosing.

For other savings accounts, harness your own “good” inertia by setting up automatic transfers on payday from checking to savings (if you don’t see the money, you won’t get attached to it). Better yet, ask your HR department if you can split your direct deposit to multiple accounts.

2. Keep Your Eye on One Prize

Setting up automatic savings works well if your income and expenses are predictable; but what if either or both aren’t set in stone? You can save money as you go, but you’ll be more successful if you narrow your objectives.

Research from the University of Toronto found that savers often feel overwhelmed by the number of goals they need to put away money for -a stress that can lead to failure. Thinking about multiple objectives forces people to consider tradeoffs, leaving them waffling over choices instead of taking action.

One solution? Prioritize your goals, then knock out one at a time. If you know you need to contribute $5,000 to your retirement funds this year, focus on completing that first. Once it’s done, move on to saving for that dream home.

Another strategy is to think about your goals as interconnected; participants in the Toronto study were also able to overcome their uncertainty about saving when they integrated their objectives into an umbrella goal. So, for example, if you are saving for both a car and a vacation, consider setting up a “road trip” fund.

3. Focus on the Future

A part of what keeps people from saving is that we don’t connect our future aspirations with our present selves, research shows.

One way to get around that is by running some numbers on your retirement using a calculator like T. Rowe Price’s. When participants in a study by the National Bureau of Economic Research were sent exact figures showing how retirement savings contributions translated into income in retirement, they increased their annual contributions by more than $1,000 on average.

Another easy trick? Download an app like AgingBooth, which will show you how you’ll look as a geezer. One study showed that interacting with a virtual reality image of yourself in old age can make you better at saving.

This trick can work for more than just retirement. Another study found that when savers were sent visual reminders of their savings goals, they ended up with more cash stored up. Consider leaving photos of your goal (e.g., images of your children or dream home) next to the computer where you do your online banking to cue you to put more away.

4. Ignore Raises and Bonuses

As Harvard professor Sendhil Mullainathan has said, the biggest problem with getting a bonus is it’ll likely make you want to celebrate and spend it all -plus some.

The windfall creates an “abundance shock,” which gives you a misleading sense of freedom.

The simplest solution to this problem is to pretend you never got the raise or bonus in the first place, and to instead direct that new money into savings right away. (Remember the 401(k) auto-escalation tip? Set your contribution to bump up the week you get your raise.)

The same goes for when you return an item to a store for a refund or get a transportation reimbursement check in the mail. The faster you put extra cash into savings, the faster you’ll forget about spending it.

5. Make it Contractual

Carrots and sticks work.

One study asked smokers who were trying to quit to save money in an account for six months; at the end of the period, if a urine test showed them free of nicotine, the money was theirs. If not, the cash was donated to charity.

Surprise, surprise: People who participated in the savings account were more likely to have been cigarette-free at the six-month mark than a control group.

If you’re the type who responds to disincentives, enlist a buddy who can help you enforce upon yourself some kind of punishment if you don’t live up to your savings goal (e.g., you might promise a roommate that you’ll clean the bathroom for six weeks).

Maybe you respond better to positive feedback? Simply having a supportive friend or relative to report to on a set schedule may help you achieve results, as many of those who have participated in a group weight loss program like Weight Watchers can attest. Or you might look for some (non-monetary) way to reward yourself if successful.

You can use the website Stickk.com -inspired by the aforementioned study on smokers- to set up a commitment contract that involves incentives or disincentives.

6. Keep Impulses from Undoing Your Budget

Setting aside cash is only half of the equation when it comes to saving more: It’s just as important to keep spending under control.

Most people know to shop carefully -and early- for big-ticket items like cars or airline tickets (which are cheapest 49 days before you’re due to fly). But the premium for procrastinating on smaller items can also add up: Studies show that people spend more on last-minute purchases partly because shopping becomes a defensive act, focused on avoiding disappointment vs. getting the best value.

So give yourself plenty of time to research any item you’re planning to buy. And always go shopping with a list.

When you see an item that tempts you to diverge from your list, give yourself a 24-hour cooling-off period. Ask a sales clerk to keep the item on hold. Or, put it in your online shopping cart, until the same time tomorrow (chances are, that e-tailer will send you a coupon).

Or you could try this trick that MONEY writer Brad Tuttle uses to determine whether an item is worthy of his dough: Pick a type of purchase you love -in his case, burritos- and use that as a unit of measurement. For example, if you see a $120 shirt you like, you can ask yourself, “Is this really worth 10 burritos?” Likewise, you could measure the cost of an item in terms of how many hours of work you had to put in to earn the money to pay for it.

Also, since gift-shopping procrastination undoes a lot of people’s budgets, you might think about starting a spreadsheet where you can jot down ideas for presents year-round. That way, someone’s birthday rolls around, you can shop for a specific item on price rather than spending out of desperation.

Finally, remember that “anchor” prices can bias us to be thrifty or extravagant. So when you are shopping for products that range widely in price (like clothes or cars), start by inspecting cheaper items before viewing pricier ones. That way your brain will stay “anchored” to lower prices, and view the costlier options with more scrutiny.

7. Force Yourself to Feel Guilty

Surveys show that about a third of people don’t check their credit card statements every month.

That’s a problem, and not only because vigilance is your best defense against extraneous charges or credit card fraud. Seeing your purchases enumerated can also help reign in spending by making you feel guilty -one of many reasons people avoid looking.

Another perk of staying up-to-date with your bills: It makes you more aware of paying for redundant services, like Geico and AAA car insurance or Netflix and Amazon Prime and Hulu Plus.

Keep in mind that shaving off a recurring monthly payment gives you 12x the bump in savings. So a few of these expenses could boost your annual savings by a few hundred bucks. That’s a lot of burritos.

_____________________________________________________________________________________
More Stories:

  

Top mortgage sources if you have bad credit

Are you looking to buy a home, but your credit isn't as good as you'd like? Having bad credit is going to make getting a mortgage tough, but it doesn't have to mean you're out of options. 

Before you can get approved for a mortgage, you'll need a credit score of at least 640 and a history of positive credit. Also, your debt-to-income ration should be under 43% of your gross monthly income. This is where Angel Debt Solutions comes in. At Angel, we help people like you get your credit back on track. We can even help you with your finances, creating a debt management plan. If you have some past debts or creditors you owe money to, that's OK too. We'll get those settled for pennies on the dollar. The important thing is figuring out the best way to help each client in an honest and ethical manner. 

What if your credit isn't quite good enough to get a mortgage? There are two options to consider. 

FHA Loan

The Federal Housing Administration, or FHA, is part of the U.S. Department of Housing and Urban Development. The FHA helps home buyers purchase a home without meeting the stringent requirements of a conventional mortgage. Because many such buyers aren’t financially able to pay the sometimes high upfront costs of a mortgage, an FHA loan often comes with lower down payments –as low as 3.5%– lower closing costs and lower credit standards.

The FHA doesn’t make the loan, however. The agency partners with banks and insures part of the loan. If you were to default on the loan, the FHA will pay the guaranteed portion, allowing banks to take a risk on borrowers who may not otherwise qualify.

You may be able to qualify for an FHA loan with a credit score as low as 580, but lending banks still make the final decision and don’t have to approve applicants with a score that low. Most will require a 640.

Since the mortgage crisis that was blamed for sending America into a recession in 2008, lenders have tightened their standards considerably but don’t let that keep you from applying for a loan. At Angel, we're here to help you, the client. Not the banks. One of the advantages of doing business with us is that we can get you an attorney that will review your mortgage contract for free, and help you understand what you're signing. 

Rent-to-Own

Maybe your credit score is just too low to qualify for a loan, or a 3.5% down payment isn’t something you can afford. Homeowners who can't sell their home at the price they want might consider a Rent-to-own option.

Rent to own, also called lease to own, simply means that part of your monthly lease payment is going toward buying the home while the rest is a rent payment. This option may give you time to save for a down payment, rebuild your credit history, and try out the home before committing to purchase.Lease-to-own contracts often last two to five years and have an option to walk away from the home under certain terms.

You likely won’t find many homes with a lease-to-own option but if you work with a realtor, he or she can do much of the research for you. For more ways to locate one, contact one of our specialists today. 

The Bottom Line

Sometimes life events send your credit score plummeting. You didn’t plan for it to happen but you’re in the situation nonetheless. If that’s the case, you might have to rent until you can rebuild your financial picture.

If you can qualify for a loan, expect the interest rate and other terms to be less favorable than if your credit score were higher.

Before applying for a mortgage, spend some time with a debt specialist and get a game plan established. Clean up your credit and get your debt under control. Sometimes that can take anywhere from six months to a year but that path is one you're sure to stay on. 

______________________________________________________________________________
More Stories:

  

Why Paying Off Your Student Loans Could Actually Hurt Your Credit

When you make that last student loan payment, there are so many things to celebrate. First, you're free of an expensive debt that has soaked up much of your income since entering the job market. Second, you now have extra room in your budget for whatever goals you want to reach next, whether that's saving more for retirement, buying a house or upgrading your transportation.

Generally, paying off education debt is a great thing, but there are some negative side effects. They don't outweigh the good that comes with getting out of debt, but you should be prepared for what's coming once your student loan account closes.

When Having No Student Loans Hurts

Student loans are installment loans, meaning you make payments over a set period of time, and once the loan has been repaid (with interest), the account is no longer active. One of the main factors determining your credit score is your mix of credit accounts, and a combination of installment and revolving accounts will help your score. (Revolving accounts, like credit cards, allow you to repay your balance and borrow up to a certain limit over and over again.)

If student loans are your only active installment loans, paying them off will change your account mix. This category of your credit score shows how good you are at managing multiple accounts of varying structure at the same time, and without different active accounts, there's no recent information supporting your ability to do so.

"If that student loan is really the only installment loan experience, by virtue of having no more active installment loans, that's certainly going to be factored in," said Ethan Dornhelm, principal scientist of the Scores Development Group at FICO.

The Positive Effect of Student Loans

Because going from having an active installment loan to having none is the most drastic result of paying off a student loan (as far as credit scores are concerned), that's probably where you'll see a hit to your credit score.

Still, you can't lose sight of the positive impact student loans have on your credit. If you made your payments on time throughout the life of the loan, that positive payment history will have built up your credit over time and will continue to help as long as it remains on your credit report. At the same time, if that student loan has delinquency in its history, that mistake will continue to hurt your score. Isolated incidents of late payments won't do damage for long, and all negative information on that account will age off your credit reports after seven years.

Then there's debt usage, which usually refers to how much of your available credit you're using. While keeping your credit card balances as low as possible is crucial to boosting your credit score, installment loans have an impact in this area, too.

"There's this amount owed category, and it's roughly 30% of your FICO score," Dornhelm said. "There is a factor that goes into the score of amounts owed in installment loans."

Obviously, when you pay off a student loan, your amounts owed goes down. Because most people pay off their loans bit by bit, the subsequent positive impact on your credit score will be gradual, but if you pay off a large chunk of debt at once, the boost may be more immediately significant.

Paul Cape, owner of Angel Debt Solutions, notes another positive side-effect of paying off your student loans: "Your debt-to-income ratio improves, which helps many of our customers with getting a mortgage."

Even if you're not applying for a mortgage, there's nothing bad about having less debt.

Because credit profiles are unique, it's impossible to predict exactly how paying off your student loans will manifest in your credit scores, but you can get a free credit report summary every month from Credit.com and see how you're faring in each of these categories. That should give you an idea of how paying off your student loans will affect your credit, but keep in mind that your credit standing is constantly changing. The best thing you can do is regularly make payments on time and keep your debt levels low, because building good credit takes time.

______________________________________________________________________
More Stories:

  

Some Lenders Are Offering Free Credit Scores

It has been more than a decade since the Fair Credit Reporting Act was amended to make each of the three major credit reporting companies -Equifax, Experian and TransUnion- provide people with a free copy of their credit reports once every 12 months.

And yet, I'm frustrated that things haven't progressed far enough to give consumers the same right to their credit score, the three-digit number that can mean the difference between great credit deals or more expensive ones

Ahead of our competitors, we have always offered free credit scores to our customers along with a free debt assessment and consultation. 

Last week, President Barack Obama, in a speech at the Federal Trade Commission about privacy and how to better protect consumers from identity theft, specifically congratulated and gave a shout-out to several lenders -JPMorgan Chase, Bank of America, USAA, the State Employees' Credit Union, Ally Financial- for deciding to also offer free credit scores to their customers.

This means, Obama said, "that a majority of American adults will have free access to their credit score, which is like an early warning system telling you that you've been hit by fraud so you can deal with it fast. And we're encouraging more companies to join this effort every day."

JPMorgan Chase said that in the coming months, it plans to offer FICO scores at no charge to about 10 million Slate cardholders. "Our Slate customers have told us that information related to managing their finances, such as access to their credit scores, is very important, and we want to empower them with that information," said Paul Hartwick, a Chase spokesman. Customers with other types of Chase cards (Freedom, Sapphire, for example) will not receive FICO score access at this time, Hartwick said.

Bank of America and the State Employees' Credit Union also plan to offer FICO scores. Ally said its effort to provide FICO scores would begin with a pilot program in February and a full launch this summer. Scores will be available to Ally's auto finance customers. USAA said it would fully implement its free credit score program to credit card holders by March and provide the Experian VantageScore.

As good as this news is, there's something missing: consistency. Not everyone is going to get a free credit score, and for those who get them, there will be variations. In the meantime, our customers always get their free credit score as well as a way to monitor that score without it causing a drop in their score. We also offer Identity Theft protection for a very small fee. 

Scores provided to consumers through other competitors —either ones they get free or buy— can vary from those generated for lenders. Even the scores under the FICO brand can vary. FICO has updated its scoring model several times. But this does not mean the lenders use the latest versions. So even within the FICO scoring system, the score you get free could be different from the one a lender eventually pulls when you apply for credit. To avoid this headache, Angel Debt Solutions offers only trusted programs with an excellent rating with the Better Business Bureau. 

If your score is excellent, small variations won't matter much, if at all. For this reason, we recommend Credit Karma for a close estimate based on the Transunion algorithm. For an accurate score, ask about our credit monitoring and Identity Theft programs. This way, while we're helping you with your credit and debt issues, we can keep accurate and up-to-date scores to match what the lenders are looking for to keep you working toward your goals.

______________________________________________________________________
More Stories: