Guide to Managing Your Money Banking, Credit, Homebuying. Guía sobre Cómo Manejar su Dinero Banca, Crédito, Compra de Vivienda

Transcripción

1 Guide to Managing Your Money Banking, Credit, Homebuying Guía sobre Cómo Manejar su Dinero Banca, Crédito, Compra de Vivienda 1

2 Index / Indice Banking Basics... 5 Credit...11 Taxes Buying a Home Mortgage Basics Steps in Buying a House Glossary Conceptos Básicos sobre Bancos Crédito Impuestos Comprando una Casa Conceptos Básicos sobre Hipotecas.39 Pasos en la Compra de una Casa Glosario We are deeply grateful to Mutual of Omaha Bank for making this financial literacy guide possible. The text for this directory was updated by DFW International 2013 summer interns Trang Nguyen, Miguel Perez, Vy Dang, and Mengdan Liu. Photographs were provided by Briselda Luna, Will Richey, Ghitta Torrico, Elvia Wallace-Martinez and Miguel Perez. Featured in some photos are the 2012 fall interns Shahryar Rizvi, Ambreen Pathan, Mutinta Haamiyanda, Ronald Babineaux, Danny Rojas, Shannon Suvarna and Maria Saldana. Other photos feature interns Miguel Perez and his family, Vy Dang, Eva Calvario and Claudio Durand. 2

3 DFW International Community Alliance is the portal to international DFW, a region in which 44% of the residents are New Americans. Our MISSION is to build mutual understanding and respect by linking diverse international cultural communities. Guide to Managing Your Money Banking, Credit, Homebuying Guía sobre Cómo Manejar su Dinero Banca, Crédito, Compra de Vivienda DFW International Community Alliance 9064 Stone Creek Place, Dallas, TX president@dfwinternational.org This Guide may be downloaded from our website. Copyright 2015 all rights reserved 3

4 An investment in knowledge pays the best interest. Benjamin Franklin (USA) ANNE MARIE WEISS ARMUSH PRESIDENT AND FOUNDER Many immigrants come from countries in which banks are not trusted, and choose not to involve themselves, even at the most basic level, with the U.S. banking system. According to a 2006 report by the Federal Reserve Bank of Chicago and the Brookings Institution, only 63% of immigrant heads of households have checking accounts, and only 27 % of Mexican immigrants have checking accounts. This is of major concern in North Texas, where 44% of the residents are New Americans, and where 3/4 of our newcomers were born in Mexico. Whether they are suspicious of the banking system or lack knowledge about the range of available bank services and their eligibility for such services, many keep large amounts of cash at home rather than saving it in an accounted insured by the FDIC. They rely on check cashing, money transfer, or pay-day loan operations that charge higher fees and interest rates than do banks. They don t know how to repair their credit or to develop a credit history that might enable them to secure a loan to start a businesses or to purchase a home. Despite the growing momentum to help more American families become financially secure, immigrants financial literacy needs are consistently overlooked. We re pleased to present this guide that describes -in simple language and format- the tools immigrants need to navigate the U.S. banking system and other financial services. When immigrants are better equipped to make informed financial decisions, they will reach self sufficiency more quickly and integrate into their new communities more successfully. President and Founder 4

5 Banking Basics Banking Owning a checking or savings account is the first step in allowing consumers to enhance their financial security and climb the economic ladder. It s risky to keep your money in cash at home in a mattress or other hidden spot where it could be lost, stolen, or destroyed. Banks keep your funds safe from fire, theft, or accident. When you keep your cash in your drawer or under the mattress and your home catches fire or you are the victim of a burglary, your cash is most likely gone forever. If the same situation strikes your bank, your money is protected. A bank does not charge for cashing a check if you have a checking account there. Using a storefront check-casher is very expensive and costs the household an average of $40 per payroll check. You can lose a significant amount of family income to the enormous check cashing fees charged by these stores. You don t need to worry about a bank being a safe place for your money. 5

6 All U.S. banks have to follow federal and state laws and regulations, so there is no need to worry. At most banks, funds are insured by the FDIC, a government agency that guarantees each person s money up to $100,000. If something happens to the bank, you will still receive your money. Cash is not safe. When you have a bank account, there s no need to carry cash. If you need cash, you can easily access your funds from almost anywheres. Remember: All U.S. banks have to follow federal and state laws and regulations, so there is no need to worry. Not a single person has lost money in a bank or credit union that was insured by the FDIC since it began. Checking accounts Checks are a safe and convenient way to pay for things without carrying a large amount of cash. They make paying bills and tracking personal spending 6

7 MAKER DATE WRITTEN AMOUNT CHECK NUMBER BANK Robert Duvall Two hundred and fifty only October 9, LEGAL AMOUNT PAYEE SIGNATURE simple and convenient. Each time you write a check, the bank keeps a record for you and helps you check your account balance either online or on the ATM machine. The bank creates a record of how much you spent, and where. That can help you manage your money effiectively and avoid spendng more than you had planned. When opening a checking account, it is important to ask about any fees or restrictions associated with the account. Take the time to read through the information about checking accounts that each bank will give you and ask a representative any questions you have. Different banks may have different requirements for documents for new accounts, but usually two forms identificaation and address are required. Ask your bank which of the following IDs they will accept: Driver s license or state ID Passport U.S. military ID Alien Registration card Matricula Consular card Major credit card or gas card Joint accounts can be opened with another person, such as a spouse or business partner. If one person dies, all the money in that account is under the control of the other account owner. 7

8 An overdraft occurs when you write a check/withdraw more money than you have in your account. Make sure you do not over withdraw from your check account, which may lead to a negative balance on it. It is serious issue because your bank account with be closed if you make several overdrafts. Savings accounts A saving account is used to set aside your extra money for future use. Saving even small amounts of money, one can build wealth slowly but steadily over time. Money in a savings account is not intended for everyday expenses like purchasing a new music CD. Instead, it provides you with a safe place to save money that will be used at a later date. Perhaps you want a big-screen TV or need a new washer and dryer. A savings account helps you plan ahead. It is a convenient place to put away funds for future purchases and watch your balance grow. When you deposit money into a savings account, you re also giving yourself a safety net against emergency expenses like doctor bills instead of relying on credit cards to be your lifeline. Many financial experts recommend having 3 to 6 months of living expenses saved up in an account to help you get through difficult times. Moreover, a benefit for having money in a savings account is that it also earns interest from the bank every month, whether or not you put money in or take money out from your account. The key to a successful savings account is to deposit more money than you withdraw. A benefit for having money in a savings account is that it also earns interest from the bank every month, whether or not you put money in or take money out from your account. Some banks may charge you for a fee each month to maintain your saving accounts, but not always the case. These fees are usually small, such as a dollar or so per month. For this reason, you should always shop around and compare what different banks are offering. Regular Savings Account earns interest either every other month or quarterly Allows deposits and withdrawals. May require a minimum balance to keep account open. May limit the number of times you can withdraw money. 8

9 Money Market Account - you can earn a higher interest than regular savings accounts. Probably will require a higher minimum balance. Provides checks for withdrawals (may be a limit on number of checks that can be written). Certificate of Deposit (CD) - generally earns higher interest than regular or money market account. Requires that money stay in an account for a fixed period of time (from a few months to five or more years). If money is withdrawn before the end of the term, you may have to play a penalty. Checking (and savings) accounts at most banks are manageable online. At the end of every month, the bank will send you a statement in the mail that contains a record of all the money that you put in and took out during that month. You can also ask to have it sent to your . 9

10 10

11 Credit card Credit For buying online or in a store anywhere in the world, a credit card is incredibly convenient and useful. Having a credit card permits you to buy something that may require more money than what you have on hand right now. Whenever you rent an apartment a credit card can make it easier to connect electric or internet service. However, it can be a serious problem if you charge too many things on the card and cannot pay the bill. It s important for you use credit responsibly avoid having too much debt. Your bank may offer you different types of bank cards. ATM card - is used only to make deposits or withdrawals through an ATM (automatic teller machines). The ATM with a branch that belongs to your banking system is usually free. If you use the ATM that is does not belonging to your bank, they might charge you a fee. Debit card - when you use it, money is deducted from your checking account Credit card - is issued by a bank, retail store or business, and permits you 11

12 to purchase products and services on credit. The money is borrowed and must be repaid later. The bank will add interest charged if you do not pay the full amount on time. Secured or prepaid credit cards you can use this method to start building your credit or rebuild your credit. Usually you have to deposit $200 or $250 which becomes your credit limit. Secured credit card is a good choice for anyone who has never had a credit card, has been turned down for a credit card, or is currently in bankruptcy. Credit report If you ve ever applied for a credit card, loan, insurance, or a job, there s a file about you. This file contains information on where you work and live, how you pay your bills, and whether you ve been sued, arrested, or filed for bankruptcy. Companies that gather and sell this information are called Consumer Reporting Agencies (CRAs). The information CRAs sell about you to creditors, employers, insurers, and other businesses is called a credit report, Banks and other companies use your credit report to assess your credit worthiness. So at times when an individual has been turned down for a loan or credit it is the information held in the credit report which is an issue. TYPE CARD BANK CARD NUMBER SECURITY CODE EXPIRATION DATE TITULAR NAME COMPANY LOGO 12

13 Taxes Types of taxes Income taxes: tax taken from the money you earn from working. National income tax filings are due April 15th. Payroll taxes: collected from your paycheck by your employer and used to support government programs like Medicare and Social Security. Property taxes: cities and counties collect these taxes from everyone who owns a home, land, or vehicle. Sales taxes: a tax included in the price of a purchase. Taxes can be required by cities, counties, and states, so the amount varies in different locations. The sales tax rate for Dallas, TX is 8.25%. 13

14 14

15 Buying a Home Home ownership is often referred to as the American Dream. The US has the highest rate of home ownership in the world and two out of three families own their own home. Homeowners don t need to worry that the rent payment may increase and that there is a disagreement with the landlord. Owning a home is an opportunity to settle down and gain a sense of belonging in a community. When you go home after a long day s work, you feel safe and comfortable staying in your own place. It can give you personal satisfaction to have a home of your own to share and enjoy with family and friends. Home ownership is about security and comfort, and your first starter home may be a step toward the larger dream home you purchase in the future As you pay down your mortgage loan over the years, you are creating a positive credit history. The equity in your home can offer financial flexibility under the right circumstances. There are also tax advantages to owning a home as well. For example, the mortgage interest and property taxes can be deducted from your income for tax purposes. Buying a home is the single largest investment most people ever make. Home prices have come down slightly during the past ten years and interest 15

16 rates remain historically low. As real estate values generally rise over time, lenders view real estate as low risk and marketable because it is a tangible asset. Even if you don t have enough money left at the end of the month to invest in stocks and bonds, simply paying for the place where you live can help you amass a substantial net worth. However, owning a house means that you have to take responsibility to pay all the utility bills, repair and maintenance of your home. Even more, the property taxes and homeowners insurance may increase over time. If your future income is uncertain, or if you don t want to deal with all the mortgage, taxes, insurance, utilities and maintenance, it s not yet a good time to buy a house. Buying a home is not the right choice for everyone. Some reasons why you should not buy include: Your relationship with a spouse or significant other is uncertain and may change. You need more time to decide which part of the area is a good match for you. You are planning to relocate to another city within a short time (2-3 years). Your job situation is not stable. 16

17 Mortgage Basics Many banks and credit unions offer home loans, and some lenders specialize in mortgage loang. A mortgage is a loan to finance the purchase of your real estate such as your home or property. When you have not saved enough money to pay cash for a new home, a bank or credit union can lend you the money. Your lender advances you a certain amount of money, which you repay over a specified period of time. The purchased property secures your repayment of the loan because the bank will take possession of your property if you default on the mortgage. Lenders must provide borrowers with documents that list the terms and payment associated with the loan. This is called a disclosure or Good Faith Estimate. Check with a mortgage expert for details about financing options. Most lenders have at least one employee in each branch who specializes in mortgages. A fixed rate mortgage has the same interest rate over the entire term of the loan. An adjustable-rate mortgage has an interest rate adjusted periodically according to market conditions. 17

18 Mortgage payments can generally be divided into four parts: principal, interest, taxes, and insurance. Principal is the amount of money borrowed from the lender, or the loan balance that the borrower owes the lender. Interest is the cost that lenders charge borrowers for borrowing the principal. The interest rate is based on the current overall rate environment, as well as your financial profile and the specific features of your loan. Taxes refer to the required payments for city, county or other local authorities such as property taxes. You pay property tax as part of your monthly mortgage payments to lenders, and they will pay it annually or semiannually on your behalf. This process is known as an escrow. Insurance is required to cover damage and liability related to your home. Mortgage payments have to be made on due dates. Losing job, long illness and other unexpected extreme situations may impact your ability to pay your mortgage loan. In some circumstances you might lose the ownership of the property if you fail to manage the mortgage payments. Therefore, if you cannot make the payments in a timely manner, you need to contact your lender immediately and make arrangements. 18

19 Steps in Buying a Home You might think that the first step in buying a home is to find a home you like. However, it is much better to participate in a class for first-time homebuyers before you begin searching for a home. The steps listed below are recommended in the home buying process. 1. Prequalification First of all, you should discuss your needs and your personal situation with a mortgage professional. This free consultation with a lender is usually referred to as a prequalification analysis. It s important to know the price range of the home you can afford, especially for first-time home buyers. The mortgage lender will look at your credit, income, assets, liabilities and the amount you have saved for the down-payment, and will assist you to find an appropriate loan program. The lender will discuss your household budget to determine how much you can spend on a mortgage each month. Your credit report will be reviewed and the lender will explain the factors generally associated with financinc a home, such as interest rates, terms, points, fees, etc. The most common qualifying guidelines require you to devote a maximum of 38% of your gross monthly borrowers income to your combined debt payments. The total of your mortgage, car loans, credit cards, etc. should be no more than 38% of your income before taxes, social security and other withholdings. 19

20 The Qualifying Process Since every family has different situations, the mortgage specialist can guide you through the process. If you are not immediately qualified for a loan due to lack of credit, the lender can explain how to establish credit by opening a bank account or using a secured credit card. He may even be able to include in the calculations the income of other employed family members or the support of a family member with an established work record. This free prequalification will help you to narrow your home search range without wasting time and effort. 2. Required documents When you apply for a mortgage, some documents are required. Recent pay stubs for one month for each job you hold showing the yearto date information plus W-2s for the most recent two years. If you are self-employed, you can submit tax returns. Proof of other income such as social security or pensions can also be offered. Bank statements. Two most recent months bank statement for each account you have, including retirement and investments (CDs, stocks, etc) Copy of your driver s license, social security card and permanent residence card, if applicable. 3. Choosing a real estate agent A good real estate agent can help you find the home that you want in neighborhoods that meet your needs, and they will also provide you with data on recent home sales in the area. This agent is like a trusted friend. This service is at no cost to the buyers, since the seller pays the real estate agent s commission. 4. Making an offer on a home The listing price and selling price are often different. Your real estate agent will help you develop the offer and present it to the seller. You will propose a purchase price, the time frame in which you d like to take ownership, the amount of your down payment and any conditions that must be met prior to sale. A partial down payment deposit called earnest money is often required to demonstrate that your offer is a serious one. Sometimes an offer is accepted immediately. But if you want to negotiate, your real estate agent will help you during negotiations. 20

21 5. Go into contract Begin reaching a sales agreement after the offer is accepted. This is to say that both you and the seller have discussed the price and terms for the sale and a sales contract is drawn up. Once you and the seller sign it, the contract becomes a legally binding document. Generally the contract will indicate an option period during which buyers can back out from the purchase. 6. Have a home inspection A home inspection will find out any repairs that the home may need, which is also not expensive. If the building has some condition such as a foundation or plumbing problem or a leaking roof, you ll want to find out so you can negotiate the repairs with the seller. Your real estate agent can provide a list of professional home inspectors who can offer you their opinion. Your agent can also advise you about arranging any special inspections that may be needed for things like termites, lead paint, or soil contamination. 7. Get an appraisal Your lender will help you check out if the home has a fair market value in order to make sure the home is worth as much (or more) than your contract price. 8. Receive loan approval If a lender doesn t approve your home loan, don t take it personally. An opportunity to review is provided and credit worthiness can be strengthened by taking appropriate remedial actions. 9. Home owners insurance You must buy hazard insurance from a reputable company with a replacement cost and liability coverage. The lender will require insurance before closing as a condition for loan approval. 10. Closing On closing day, ownership of the property will be transferred from the seller to you, and you will sign documents and be aware of your rights to the property you have purchased, your agreement to repay the money you have borrowed, and the lender s right to the property if you default on the loan. 21

22 Finally, according to the terms agreed upon by you, the seller and the lender, a closing agent at a title company will help coordinate and disburse loan proceeds and all other payments related to the transaction and ensures legal documents are received. 22

23 Glossary Account: A banking service that manages a customer s money. There are two types: savings and checking accounts. Automated teller machine (ATM): A specialized computer used by bank customers to manage their money, for example, to get cash, make deposits, or transfer money between accounts. Bad or bounced check: A check that cannot be processed because the customer s account does not have enough money to pay it. Banks charge a service fees for each bad check, and writing bad checks can lower your credit score. Balance: The exact amount of money contained in a deposit account according to the bank. Clear: When the amount of the check you have written is subtracted from your account, your transaction is clear or your check has cleared the bank. Closing: The consummation of a real estate transaction. The closing includes the delivery of a deed, financial adjustments, the signing of notes, and the disbursement of funds necessary to complete the sale and loan transaction. Down payment: The amount of cash that a buyer pays up front for the purchase of a house. Debit card: A card you use to withdraw money from your bank account to take cash out or to make a purchase. The amount of cash or purchase will be subtracted from your deposit account. Deposit: Money you put into your savings account. Direct deposit: A deposit made directly into your account by the payer without the use of a check or deposit slip. Typical direct deposits include Social Security payments and automatic payroll deposits. Earnest money: A portion of the down payment delivered with a purchase offer by the purchaser of real estate. Delivered to the seller, or an escrow agency, by the purchaser with the purchase offer as evidence of good faith. Also known as a deposit. Endorse: To sign the back of a check and authorize the check to be exchanged for cash or credit. 23

24 Equity: The ownership interest; i.e. portion of a property s value over and above the liens against it. Escrow: An item of value, money, property or documents, held by a third party until the terms of a contract are met. For example, borrower deposits lender funds to pay taxes and insurance premiums when they become due. Federal Deposit Insurance Corporation (FDIC): An independent agency of the United States government that protects customers from the loss of their deposits if an FDIC insured financial institution fails. Fixed interest rate: An interest rate which does not change during the loan term. Foreclosure: A legal process of seizing a property mortgaged to pay the defaulting borrower s debt when a borrower fails to keep up loan payments. Interest: The fee paid to lender by borrower for lending the money for a certain period of time. Non-sufficient funds (NSF): The lack of enough money in an account to pay a particular check or payment. This is also known as insufficient funds or overdraft. The bank generally charges the checking account holder a fee for overdrawing the account. A check with insufficient funds will be returned unpaid to the person cashing it. This has a negative impact on the check writer s history of handling his or her account, and may prevent opening of future accounts. Payee: The person, company, or organization to whom a check is made payable; a person or company who is to receive money. Personal identification number (PIN): A secret combination of letters or numbers you use to gain access to your account through an electronic device such as an online bank account or an ATM. Percentage point: One percent of the loan or a measure of the interest rate. Power of attorney: A legal document giving authority to one person to act on behalf of another. Prequalification: Before the actual application for a loan, this document states how much money a prospective home buyer may be eligible to borrow. 24

25 Principal: the amount of money remaining unpaid, or the loan balance that the borrower owes the lender. Reconcile: The process used to determine if the balance in your account register matches the balance reported by the bank on your account statement. Also called balancing your account. Statement: A monthly accounting document from your bank that lists all of your transactions within a particular month, the checks you wrote that has processed during that month and your account balance at the beginning and end of the month. Term: The time limit within which a loan must be repaid. For example, a home mortgage may have a 30-year term, meaning it must be repaid within 30 years. Title: The legal evidence of ownership rights to real property. Title insurance: An insurance policy that protects a lender and/or homebuyer against any loss resulting from a title error or dispute. Withdrawal: Money taken out of your saving account. 25

26 26

27 Conceptos Básicos sobre Bancos Bancos Ser titular de una cuenta corriente o una caja de ahorros le permitirá proteger su dinero y progresar económicamente. En un banco su dinero está resguardado de pérdidas, robos o accidentes. Ocultar su dinero en efectivo, bajo el colchón o en otro lugar de su casa, es realmente peligroso pues pueden robárselo, destruirse o perderse. Si usted está obligado a cambiar sus cheques en una casa de cambio, perderá una importante cantidad de sus ingresos, pagando enormes intereses por ese cambio. Normalmente esos intereses promediarán unos $40 por cada cheque de nómina, lo que afectará seriamente su economía. Si usted tiene una cuenta corriente en un banco, no deberá pagar nada por cambiar un cheque. Los bancos en EE.UU. cumplen con leyes federales y estatales destinadas a garantizarle que el dinero que usted deposite en ellos esté siempre a su disposición, aunque algo le ocurra al banco. En la mayoría de ellos, los fondos están asegurados por la FDIC, una agencia gubernamental que le garantiza hasta $ el dinero que usted tiene depositado. 27

28 Teniendo una cuenta bancaria, ya no necesitará llevar dinero en efectivo en sus bolsillos. Usted podrá acceder fácilmente a su dinero desde cualquier lugar en que se encuentre (aca debería explicar cómo) RECUERDE QUE: Todos los bancos de EE.UU. cumplen con leyes federales y estatales que garantizan su dinero. No debe preocuparse por la posibilidad de perderlo. Desde que la FDIC comenzó a funcionar, nadie ha perdido el dinero depositado en un banco o cooperativa. Cuentas corrientes Los cheques son un medio seguro y conveniente de pago para efectuar sus compras, por lo que no necesitará llevar dinero en efectivo para efectuarlas. Otra de las ventajas es que pagando sus compras con cheques, en el banco queda un registro de dónde y cuánto dinero gastó, y usted puede disponer de este registro para ordenar su economía y evitar que sus gastos sean mayores a los previstos. Al abrir una cuenta corriente, es importante que lea con detenimiento la información que cada banco le proveerá para que sepa cómo operar con ella, qué cosas están permitidas, cuáles no y cuáles son los intereses con los cuales el banco se maneja. 28

29 La mayoría de los bancos le pedirá su dirección y dos comprobantes de identificación para abrir una cuenta. Muchos bancos aceptan la matrícula consular. Averigue en el banco cuáles de las siguientes identificaciones son aceptadas. Licencia de conducir o identificación del estado Pasaporte ID militar de EE.UU. Tarjeta de Registro de Extranjeros Tarjeta de Matrícula Consular Tarjeta de crédito o tarjeta de gasoline TITULAR DE LA CUENTA FECHA DE EMISION CANTIDAD EN NUMEROS NUMERO DE CHEQUE BANCO EMISOR Robert Duvall Two hundred and fifty only October 9, CANTIDAD EN LETRAS NOMBRE DEL COBRADOR FIRMA Una cuenta puede abrirse con otra persona socio, esposa, etc--, siendo ambas titulares de esa cuenta. Si una de ellas muere, todo el dinero de esa cuenta queda a disposición del otro titular. Emitir un cheque por una suma mayor a la que dispone en su cuenta, es una falta grave. Se denomina sobregiro (giro en descubierto). Si realiza sobregiros en muchas oportunidades el banco puede sancionarlo cerrándole la cuenta. Cuentas de ahorro Las cuentas de ahorro se utilizan para guardar dinero para poder realizar alguna compra importante en el futuro, como podría ser adquirir artículos para el hogar, un auto, pagar una matrícula universitaria o un fondo de retiro. Este proceso se denomina inversion. Se considera que cada familia debería tener disponible en su cuenta de ahorro una suma de dinero equivalente a tres veces 29