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Y
Paying for a college education trails
only a home purchase as the largest expen-
diture a typical American family will make
in a lifetime.
To prepare for future college expenses,
MFS Investment Management, an asset
management firm, offers the following
savings strategies to ensure enough money
is saved to pay for college expenses.
Lesson One: The simpler the better
529 college savings plans are an
investment vehicle created to help fami-
lies save for college tax-free. Besides
tuition, they can be used to pay for addi-
tional fees, room and board, books and
other required supplies at accredited col-
leges, universities and vocational schools.
A 529 savings plan offers several bene-
fits. Earnings are tax-deferred and quali-
fied higher education withdrawals are free
from federal tax. 529s possess a wide range
of investment options including asset allo-
cation funds. The investor controls the
assets and can contribute up to $12,000
per year (or $24,000 for married couples)
per beneficiary without any federal gift-
tax consequences.
"Investing in a 529 plan allows parents
to control their own destiny when it
comes to paying for their child's college
education," says Bruce D. Harrington, vice
president and director of product develop-
ment at MFS Investment Management.
"Don't take the risk of relying on financial
aid or scholarships."
Lesson Two: Be prepared for growing
expenses
According to Oregon State Treasurer
Randal Edwards, "Families need to start
saving as early as possible to prepare for
the ever-growing cost of higher education.
If college costs continue to rise, parents
can reasonably expect a four-year degree
to cost as much as a quarter-million dollars
in 10 years."
There are a variety of tools and
resources that help predict future expenses
at different classes of higher education.
Use of these planning tools can help place
a dollar figure as a goal for savings.
Lesson Three: Do the right thing
"No matter what your relation is to a
child - parent, grandparent, aunt, uncle or
family friend - you can set up a 529 plan to
help," says Harrington. "With most 529
plans, there are no age, income or state
residency restrictions. Financial advisors
or tax professionals are good sources for
further information."
Many states allow participants to open
a 529 account with a minimum contribu-
tion of just $250, which makes it afford-
able to set up an investment program. By
making monthly contributions to a 529
plan, investors can practice disciplined
investing to fund college needs.
A major issue was resolved when
President Bush granted 529s tax perma-
nency. On Aug. 17, the president signed
legislation that makes permanent the tax-
free status of 529s for qualified with-
drawals, which had been set to expire in
2010.
Lesson Four: Ask an expert
College investing programs come in
many shapes and sizes today. Consumers
often seek the insight and guidance of an
investment professional to help navigate
the waters.
"529s may appear complex, but they
have emerged as the premier college sav-
ings vehicle," says Kyla M. Doyle of the
College Savings Foundation (CSF), a
Washington, D.C.-based not-for-profit
organization. Doyle is also assistant vice
president, and manager of product devel-
opment at MFS Investment Management.
"Consulting an investment professional
will not only help you choose the right
college plan, but can also help you select
the investment options that best fit your
needs and tolerance for risk. You should
also consult a tax professional for tax
advice applicable to your specific circum-
stance."
With the variety of 529 options avail-
able to consumers, the financial barrier to
paying for college is less strenuous. For
more information contact a financial
advisor, call (866) 529-1637 or visit
www.mfs.com.
Courtesy of ARA Content
Are you one of those people who
considers life to be pretty good? You're
thinking about getting married, have a
good job, nice car and money to pay off
the student loans. You have spare time
to spend hangin' out with your friends.
The only negative in your life right
now is having to pay rent and dealing
with roommates. For many Americans
in their late 20s and early 30s, the
"whoosh" sound of paying rent each
month eventually turns to thoughts of
owning your own piece of the
American dream. However, the process
of actually buying a home can seem
overwhelming, even daunting, to some.
"First-time homebuyers can feel
intimidated by or even `out of control'
during the whole home-buying
process," says Jim Ferriter, executive
vice president for GMAC Mortgage.
"But there's hope. An experienced loan
officer, combined with innovative
products and services, can help a first-
time homebuyer better understand
their financing options and boost their
confidence in purchasing their first
home."
Ferriter, who has more than 25 years
experience in mortgage lending, offers
the following tips for first-time home-
buyers:
1. Save, Just A Little Bit More - Of
course it's important to save money for
the down payment and closing costs.
But there's more to buying a home than
figuring out if you can pay a monthly
mortgage payment. Your costs may be
similar to renting, but now you must be
prepared to maintain a home, too.
Weekly shopping trips to your local big
box home store to purchase everything
from decorating items to a lawn mower
can add up quickly. That's why many
mortgage lenders recommend that first-
time homebuyers have at least three to
six months of additional savings. An
excellent way to save cash is with a
money market account from GMAC
Bank (www.gmacbank.com), which
can be opened with as little as $50.
2. Check Your Credit -- An
individual's credit score will
have a significant impact on
their mortgage loan
approval and interest
rate. A good first step in
the home-financing
process is to check
your credit history.
You can request a
free credit report
from any of the
three credit report-
ing bureaus:
Equifax, Trans-
Union or
E x p e r i a n .
Carefully review
your report and
contact the
credit reporting
bureaus to correct
any misinforma-
tion.
3. Get Pre-
approved --
Before you
start working
with a real estate
agent, consider contacting
a mortgage lender to obtain a
pre-approval credit decision. A loan
officer will review your financial status,
including your income, cash flow and
credit score, to help you determine the
maximum monthly housing payment
for which you may be able to qualify,
and, if qualified, "pre-approve" your
mortgage before you've found a home.
Armed with a credit pre-approval, you
can start searching with a much better
idea of the price range you should be
looking in, and in turn save time as
you'll know the right homes to focus
on.
As you start thinking and preparing
for the pre-approval process, start shop-
ping for the mortgage lender from
which you would like to obtain a mort-
gage for your new home. Because this
process is new, it's easy to go with the
first lender or loan officer
you meet. Instead, take
your time and shop
around. Start by ask-
ing friends, co-
workers and
f a m i l y
m e m b e r s
for recom-
m e n d a -
t i o n s .
W h e n
you've identi-
fied two or
three loan
officers, ask
for references.
R e m e m b e r ,
obtaining a pre-
approval may offer
more confidence
and certainty to
home sellers.
In addition to
pricing (interest rate
and closing costs),
focus on customer
service as well as other
services and tools that
a mortgage lender may
be able to offer you. For
example, in addition to
offering the pre-approval program,
GMAC Mortgage offers a feature called
"HomeCommand," which allows you
to cap a mortgage rate for up to 126
days while you shop for your dream
home, as well as a free, internet-based
home-finder service that can give you a
jump on other house hunters, alerting
you to homes that hit the market that
match your search criteria.
4. Don't Be Afraid to Ask Questions
- Once you've found your new home,
the mortgage lender will help you
through the details of the loan process.
From application to closing, your loan
officer will work through the financing
process with you, just as your real estate
professional will in the home buying
process. Your mortgage loan officer can
also be a valuable source of informa-
tion, so be sure to take advantage of his
or her expertise. Throughout the
process, read all loan documents care-
fully, and involve an attorney, if neces-
sary.
5. Inspect I -- Before you commit to
purchasing a home, don't forget to hire
a licensed home inspector to conduct a
thorough assessment of the property.
An inspector can alert you to any
major problems with the home, and/or
help you understand potential short-
term and long-term home maintenance
issues.
Buying a home for the first time can
seem like you're riding on a roller
coaster. But, by doing your homework,
asking lots of questions, and taking
your time, you can stay "in control"
and discover an overwhelming sense of
accomplishment in buying your first
home.
Courtesy of ARA Content
The Citizen. Auburn, New York
Secure Your Future
Wednesday, January 31, 2007
7
Your Money Matters: Buying First Home Need Not Be Overwhelming
James J. De Vaney
John Michael De Vaney
Jamie Kaim
Funeral Directors
De Vaney - Bennett Funeral Home
"Serving the Geneva area for over 108 years"
181 N. Main St. · Geneva, NY · 315-789-2224
What You Don't Know About Saving for
Your Child's College Education?
315.253.6273
6
Wednesday, January 31, 2007
Secure Your Future
The Citizen. Auburn, New York
