5 ways credit cards can offer a break on back-to-school purchases

• July 29, 2024

By Melissa Lambarena | NerdWallet

As back-to-school season approaches, your kids may have outgrown their clothes — but they don’t have to outgrow your budget.

Families with children in elementary through high school plan to spend an average of $874.68 on clothing, shoes, school supplies and electronics, according to data from the National Retail Federation. For college students and their families, the expected amount on items for the coming year is an average of $1,364.75.

Here’s how credit cards can cut some of those costs.

1. Rewards

Reward rates vary by type of card, but a decent return for cash-back credit cards might range from 2% back per dollar spent to 5% back on rotating bonus categories. Those rewards can be redeemed for cash or a statement credit to offset school purchases, for example, or applied to future travel.

A credit card that earns cash back generally requires good credit (typically, FICO scores of 690 or higher). A rewards credit card is ideal only if you pay your balance off in full every month to avoid interest charges. Otherwise, the steep interest rates on these cards will cancel out the value of rewards.

You can leverage these kinds of credit cards with purchases already allocated in your budget like gas, certain utilities or groceries, said Barbara Quan, accredited financial counselor and manager of financial education at Golden 1 Credit Union, in an email.

2. Sign-up bonuses

A credit card sign-up bonus can be worth hundreds of dollars if you meet the minimum spending requirement with planned expenses. If you’re seeking a new credit card, it’s one way to potentially defray the costs of back-to-school spending or lessen the costs of other expenses.

“Many cards offer hundreds of dollars in cash back or rewards points after meeting a minimum spending requirement within the first few months,” Quan said. “By strategically timing your back-to-school shopping to coincide with this period, you can earn the bonus while purchasing necessary items like clothes, supplies and electronics.”

Quan suggested doing research to select a card that aligns with your spending patterns and overall financial goals. A budget that outlines projected expenses during the bonus period can also help you track your progress and prevent overspending, she added.

3. Interest-free windows for purchases

Certain gadgets and supplies carry hefty price tags. A rewards credit card with an introductory 0% annual percentage rate can offer breathing room for large purchases. You still have to pay monthly, but you won’t be charged interest during the promotional period.

A word of caution, though: A store credit card may also offer an interest-free promotion that might sound like a true 0% introductory APR, but is actually a deferred interest offer. Typically advertised as “special financing” or “no interest if paid in full,” a deferred interest offer means that interest is postponed but continues accruing in the background, to be applied at a later date if you don’t finish paying off the balance by the deadline.

A deferred interest offer can still be a useful way to finance a purchase, but you’ll need to make absolutely sure you can pay it off on time to avoid owing interest charges retroactive to the time of the original purchase. The ongoing interest rates on these store credit cards can run high, so these charges could be a pricey surprise that derails your finances if you’re not prepared to cover them.

4. Online shopping portals

Multiply your credit card rewards by shopping through the card’s bonus mall or linked offers. For example, a credit card issuer might offer a discount or additional rewards if you use that card to shop with select merchants.

Before you hit the stores in person or online, browse your credit card offers by logging into your account. If you find some money-saving opportunities, map out a plan that maximizes the value of your purchases.

5. Credits

A few credit cards may offer credits for streaming services, meal plan subscriptions, grocery or restaurant delivery services, or other useful options that could save money or simplify the transition back to school. As you adjust to a new schedule, such a credit could potentially save you money on a music subscription for the car ride to school, or a meal prep service that gives you some time back.

Look up your credit card online or log into your account to see whether it provides any helpful credits.

Melissa Lambarena writes for NerdWallet. Email: [email protected]. Twitter: @LissaLambarena.

The article 5 Ways Credit Cards Can Offer a Break on Back-to-School Purchases originally appeared on NerdWallet.

​ Orange County Register 

More than half of US renters who want to buy a home fear they’ll never afford one

• July 29, 2024

By Matt Egan | CNN

The dream of homeownership feels out of reach for many American families.

The vast majority (86%) of current renters in the United States say they would like to buy a home — but can’t afford one, according to a CNN poll conducted by SSRS released Monday.

Among those same renters who can’t afford to buy a home right now, 54% think it’s unlikely they’ll ever be able to, the poll found.

The findings underscore the damage done by the one-two punch of surging home prices and elevated mortgage rates, creating an affordability crisis. And given that homeownership is the ticket to wealth generation in America, that pessimism exacerbates the risk that the divide between the haves and have-nots will only grow.

Younger people especially are having trouble buying a home right now. The CNN poll found that 90% of renters younger than 45 say they’d like to buy but can’t afford it, compared with 79% of those age 45 and above.

Not surprisingly, younger Americans are more hopeful that situation will change.

Most adults (53%) younger than 45 who want to buy but can’t afford it believe it’s at least somewhat likely they’ll eventually be able to buy a home. That’s compared with just 32% of those 45 and older.

‘Homeownership seems impossible’

Even some working parents in high-paying jobs are struggling to keep up with the spike in home prices.

Brent Bjornsen, a 39-year-old pediatrician and father of two in Phoenix is renting a home as he digs out from student debt.

“Buying a home is absolutely something we would love to do,” Bjornsen told CNN. “It seems out of reach.”

Bjornsen said his wife works part-time at an elementary school. The couple was dealt a financial setback when Hurricane Harvey flooded their Houston apartment.

“We’re straddled with seemingly insurmountable debt,” he said. “Homeownership seems impossible…and that hurts for two kids of Baby Boomers and feels like a disappointment.”

Two-thirds of Americans currently renting (68%) say their family owned a home when they were growing up, according to the CNN poll.

High rates. Even higher prices

The good news is that mortgage rates — one of the main obstacles to homeownership — have eased a bit. in recent months. And if the Federal Reserve is able to deliver interest rate cuts this fall and winter, rates could fall further.

However, home prices continue to rise. A price spike that began during the pandemic has pushed home ownership out of reach for many.

The median existing-home price climbed to a record of $426,900 in June, according to the National Association of Realtors. That was 4.1% higher than a year earlier and the second straight month of record home prices on data going back to 1999.

Among renters who want to buy but can’t afford it, 40% say the biggest barrier is saving for a down payment, according to the CNN poll.

Nearly a third (31%) say the biggest obstacle to buying a home is high interest rates. Just 17% say the inability to qualify for a mortgage is the biggest hurdle.

‘We have given up’

Jeremy Andersson, a digital marketing specialist living north of Atlanta, is among those Millennials who have lost hope.

“We have given up on homeownership,” Andersson told CNN.

The 40-year-old father of twin toddlers wanted to buy a home when his wife became pregnant in 2019.

“We felt the societal pressure to buy a house because that’s the American Dream, right? Have a family and buy a house,” he said.

Seventy percent of Americans call owning a home essential to achieving the American dream, the CNN poll found. That includes about two-thirds (65%) of those currently renting.

But like other families, Andersson and his wife were dismayed by what they could afford.

“I’m not going to pay $350,000 for a run-down house. It almost seems laughable. We can’t find anything affordable for a family of four,” he said. “I’m not going to play your game anymore. I’m done.”

In some markets, starter homes are fetching nearly three times that price.

$1 million starter homes

According to Zillow, the typical starter home is now worth $1 million or more in 237 cities. That’s up from just 84 cities in 2019 before Covid.

Perhaps that’s why many homeowners don’t think they’ll be able to buy in this market.

The CNN poll found that just about one-third (32%) of current homeowners think they could afford to buy a similar home in their neighborhood today.

Even among households earning $100,000 a year or more, most doubt they’d be able to afford to buy something similar today.

“We did everything we were supposed to do. We went to college. We did well. We got jobs. We’re not felons,” Andersson said. “I’ve worked my tail off and so has my wife.”

This situation has taken an emotional toll on Andersson.

“At first, I wondered if I was a failure as a father or husband because I can’t get my kids a lawn to play on,” he said. “It’s taken a lot of soul-searching to understand this is not my fault. It’s the fault of a poorly planned system.”

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​ Orange County Register 

Olympic basketball: U.S. women open pursuit of gold with rout of Japan

• July 29, 2024

VILLENEUVE-D’ASCQ, France (AP) — A’ja Wilson scored 24 points and Breanna Stewart added 22 to help the U.S. women’s basketball team beat Japan 102-76 on Monday night in the Olympic opener for both teams.

The Americans now have a 56-game Olympic winning streak that dates to the 1992 Barcelona Games.

The last of those victories before Monday also came against Japan when the two teams played for the gold medal in the Tokyo Games three years ago. The U.S. came away with a 90-75 win for its seventh straight gold medal.

Now Monday’s victory tipped off the run to keep that streak going.

Japan, which was severely undersized against the U.S., used its frenetic style of shooting 3s off drives to the basket to try and keep the game close.

It worked for about 17 minutes as Japan only trailed 37-32 with 3:01 left before the half. The U.S. then scored 13 of the final 19 points before break, including a three-point play by Wilson with 8.2 seconds left to open up a double-digit lead.

The Americans, who next play on Thursday against Belgium, put the game away in the third quarter. Chelsea Gray had nifty passes to Wilson for easy scores and the U.S. was off and running. Japan never threatened.

Maki Takada scored 24 points, and Mai Yamamoto added 17 for Japan, which hit 15 3-pointers. The U.S. made only four of its 20 3-point attempts.

This was Brittney Griner’s first game internationally since she spent time in a Russian prison in 2022 after she was sentenced to nine years in jail for drug possession and smuggling. Playing for her country again was a far-fetched idea at that point. Ten months later, she was free after a high-profile prisoner exchange.

Now, 19 months later, she’s suiting up for the U.S. in the Paris Games — her first trip to play overseas since returning from Russia.

Griner was huge in the 2021 gold medal game, scoring 30 points. It was the most points scored by an American player in a gold medal contest.

She had 11 points and nine rebounds Monday. With Wilson grabbing 13, the Americans had a dominating 56-27 advantage on the boards.

Sabrina Ionescu and Kelsey Plum each added 11 points for the Americans.

The U.S. had a scary moment in the second quarter when Kahleah Copper collided with Rui Machida on Japan and was down for a minute before getting up and walking off and holding her side. She returned in the fourth quarter and looked fine.

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Nigeria 75, Australia 62

Ezinne Kalu made her first four 3-pointers and scored 17 of her 19 points in the first half Monday as Nigeria earned its first win in women’s basketball at the Olympics since 2004, upsetting Australia.

Nigeria failed to qualify for the 2016 Rio Games and went winless in Tokyo. Australia is led by coach Sandy Brondello from the WNBA’s New York Liberty and came in ranked third in the world, compared to 12th for Nigeria.

In other women’s games Monday, Germany won its Olympic debut, beating Belgium and host France topped Canada in front of a spirited crowd.

​ Orange County Register 

Over in Paris, First Lady and Mayor Bass start countdown to LA 2028 Olympics

• July 29, 2024

This weekend as Paris kicked off the 2024 Olympic Games, First Lady Jill Biden and Los Angeles Mayor Karen Bass joined together in the City of Lights to start the countdown to the 2028 Olympic Games in L.A.

In less than 1,500 days the Olympics arrive in America and the U.S Presidential Delegation to the opening ceremony is trying to make every moment count as they study the logistics of the Paris Games, meet with regional stakeholders and, of course, find time to cheer on Team USA athletes. The delegation includes Bass, Biden, US. Sen. Alex Padilla, U.S. Ambassador to France Denise Campbell Bauer and Chair of LA28 Casey Wasserman, among others.

Biden set off the official countdown clock at a Saturday morning reception hosted at the U.S. ambassador’s residence in Paris, where she thanked Bass and Wasserman for their efforts to make the Olympic flame “shine brightly in our nation once again,” according to White House pool reports.

During her speech, the First Lady waxed poetic about the allure of Los Angeles, praising its surf and skate culture and noting that international fans will find themselves reflected in the multicultural fabric of the city.

“Under the endless blue skies of Los Angeles, breakdancers glide on concrete plazas, surfers coast on crashing waves, and rollerbladers spin in skate parks by the beach,” Biden said. “It’s a city where new generations of dreamers shape our culture in music studios and on movie sets. A city where communities from around the world live side by side, their cuisines merge, and though the lines of culture blur, their identity as one city becomes brighter and more defined.”

Bass introduced the First Lady and shared her own hopes for the 2028 games. She also thanked Paris Mayor Anne Hidalgo for her hospitality, saying, “We know that our partnership will not end at the close of the games, that will be another amazing legacy of Olympic cooperation.”

Casey Wasserman, who is leading the LA28 Olympic and Paralympic Games, told a little-known story about the role President Joe Biden played in helping bring the Olympics to Los Angeles.

Wasserman recalled how in 2015 he was unable to get then-President Barack Obama to pay attention to the Association of National Olympic Committees’ General Assembly in Washington D.C. — a key first event in L.A.’s effort to secure the Olympic bid.

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“In case you hadn’t notice, the IOC (International Olympic Committee) and some of its leadership feels that they are like heads of state and expect to be treated and get that kind of welcome,” said Wasserman.

Fortunately, then-Vice President Biden stepped in to save the day, Wasserman recalled, by making a last-minute appearance at the conference.

“He came on stage and spoke for 20 minutes and blew the room way,” said Wasserman. “And I will tell you it set the stage for a totally different relation with the Olympic Committee for our two-year journey to bid for the game. That was a really special moment.”

Also in attendance at the LA28 reception in Paris on Saturday was tennis legend and Long Beach native Billie Jean King, who won 39 Grand Slam titles and was once ranked number one in the world.

“To Billie Jean King, it’s wonderful to see you,” said Jill Biden. “You’ve always inspired us to chase down our dreams, on and off the court.”

While at the games this weekend, King found time to link up with fellow Long Beach homie and Long Beach Polytechnic High School Alumni Snoop Dogg.

Met the incomparable @SnoopDogg.

Both of us were born and raised in Long Beach, California, and graduated from Long Beach Polytechnic High School.

LBC forever in our hearts.#Olympics #paris2024 pic.twitter.com/GlQ9DxzRvi

— Billie Jean King (@BillieJeanKing) July 29, 2024

The rap icon, whose real name is Calvin Cordozar Broadus Jr., was hired by NBC to be part of its broadcast team for Paris Games.

His unusual appointment comes amid a push to bring viewers back to the Olympics, which hit an all time low of 15.5 million prime-time viewers during the 2016 Tokyo Games — less than half the viewers of the London 2012 games.

So far Snoop has been serving up the smiles, be it by freestyle rapping at the opening ceremony or proudly cheering on American gymnast Simone Biles while wearing a t-shirt with a giant photo of her face. Also in attendance at Biles’s highly anticipated return to the Olympics on Sunday were some of Hollywood’s biggest stars including Tom Cruise, Jessica Chastain, Greta Gerwig and Cynthia Erivo.

Both Snoop and Bass served as Olympic torch bearers in the rally leading up to the opening ceremony, which Bass described as “incredible” despite the sporadic rainfall.

Amidst all the fanfare Bass also carved out time to meet with French elected officials and strategize how the city of L.A. can use their expertise to maximize the benefit it reaps from the games.

“We look forward to leveraging this experience when we return home, connecting our local small businesses, creating local jobs, and making lasting environmental and transportation improvements throughout the Los Angeles region,” she said in a statement.

Bass flew home to Los Angeles on Sunday evening, but will be back in Paris for the closing ceremony on Aug. 11 when she will receive the official Olympic flag from Paris Mayor Hidalgo.

​ Orange County Register 

Marine dies in rollover accident while training at Twentynine Palms

• July 29, 2024

A Marine involved in a vehicle rollover at Marine Air Ground Combat Center Twentynine Palms has died, military officials said Monday.

The Marine was part of the Tactical Exercise Control Group overseeing a service-level exercise on Saturday, July 27, when the vehicle flipped. The exercises, which include live-fire and combined arms use, are designed to qualify Marine battalions for upcoming deployments and missions.

While it is unclear what the Marine was doing, officials said the rollover occurred with a high-mobility multi-purpose vehicle.

The lightweight vehicle is four-wheel drive, agile and carries military weapons from machine guns to anti-tank missile launchers. It can travel through deserts and jungles and climb 60-degree slopes while traversing 60 inches of water.

The Marine was first treated at Robert E. Bush Naval Hospital in Twentynine Palms and then flown to Desert Regional Medical Center in Palm Springs, where doctors pronounced him dead on Sunday, July 28.

No other Marines were injured in the incident.

“We extend our deepest condolences to the family, friends and colleagues of the Marine during this difficult time,” Marine officials said in a statement.

The Marine’s identity will not be released until after all next-of-kin notifications have been completed. His unit is based at Twentynine Palms.

The Marine Corps has had its share of fatal vehicle rollovers. In 2021, the  U.S. Government Accountability Office released a report that reviewed rollovers in both the Marine Corps and Army and found that between 2010 and 2019, the two service branches reported 3,753 non-combat vehicle accidents, in which 124 people died. Vehicle rollovers were the cause of death in 63% of the accidents.

Related links

Report finds 124 Marine and Army deaths caused by non-combat accidents, offers 9 recommendations
Families of military killed in training band together to push lawmakers into action
More military die in training than in war; here’s what’s being done
Special Operations Raider killed in training at Camp Pendleton is identified
One Marine dead, others injured in ACV rollover at Camp Pendleton

The report was prompted in 2019 at the request of lawmakers spurred on by families whose relatives had died in the accidents. Among the most vocal were the parents and then-fiancee of 1st Lt. Conor McDowell, 24, who died in a training rollover accident in the Las Pulgas area of Camp Pendleton on May 9, 2019. Six other Marines suffered moderate injuries.

Less than a month before McDowell died, another Camp Pendleton Marine, Staff Sgt. Joshua Braica, 29, a member of the 1st Marine Raider Battalion, was also killed in a rollover accident. The men were two of six killed and nine injured in a two month period that year.

The GAO made recommendations, and both the Marines and Army agreed to implement greater safety procedures in the vehicles and on the ranges.

In December, a Marine died at Camp Pendleton when an Amphibious Combat Vehicle rolled over. The vehicle was training on land when the rollover occurred. Fourteen others inside the vehicle were also injured but then released after being hospitalized.

Marines are investigating the cause of this weekend’s rollover at Twentynine Palms.

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​ Orange County Register 

4.9 earthquake strikes near Barstow, felt throughout Southern California

• July 29, 2024

A 4.9-magnitude earthquake shook parts of Southern California on Monday afternoon, July 29, the U.S. Geological Survey reported.

The quake, which occurred at around 1 p.m., was centered about 10 miles northeast of Barstow at a depth of roughly 7.5 miles, according to the USGS.

The quake’s epicenter was near the Calico fault, which crosses the Mojave Desert, and was about 30 miles from the San Andreas fault, according to seismologist Dr. Lucy Jones.

“It will not change the probability of a San Andreas earthquake,” Jones said in a tweet.

A 3.5-magnitude earthquake struck shortly after in the same area followed by a second aftershock of 2.7, according to the USGS.

The earthquake could be felt across the region, causing a few hard jolts in cities including Pasadena, Redlands and Temecula.

There were no immediate reports of damage or injuries.

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​ Orange County Register 

Defense attorney says ‘Alec Baldwin committed no crime; he was an actor, acting’

• July 10, 2024

By MORGAN LEE and ANDREW DALTON

SANTA FE, N.M. — A defense attorney told jurors Wednesday that the shooting death of cinematographer Halyna Hutchins was an “unspeakable tragedy” but that “ Alec Baldwin committed no crime; he was an actor, acting.”

Baldwin’s lawyer Alex Spiro emphasized in his opening statement in a Santa Fe, New Mexico, courtroom that Baldwin, who is on trial for involuntary manslaughter, did exactly what actors always do on the set of the film “Rust,” where Hutchins was killed in October, 2021.

“I don’t have to tell you any more about this, because you’ve all seen gunfights in movies,” Spiro said.

Special prosecutor Erlinda Ocampo Johnson said in her opening statement that before the shooting, Baldwin skipped safety checks and recklessly handled a revolver.

“The evidence will show that someone who played make believe with a real gun and violated the cardinal rules of firearm safety is the defendant, Alexander Baldwin,” Johnson said.

Spiro replied that “these cardinal rules, they’re not cardinal rules on a movie set.”

“On a movie set, safety has to occur before a gun is placed in an actor’s hand,” Spiro told the jury.

The first witness to take the stand was the first law enforcement officer to arrive at Bonanza Creek Ranch after the shooting. Video shown in the courtroom from the body camera of Nicholas LeFleur, then a Santa Fe county sheriff’s deputy, captured the frantic efforts to save Hutchins, who looked unconscious as several people attended to her and gave her an oxygen mask. In the courtroom, Baldwin looked at the screen somberly as it played.

Later in the video, LeFleur can be seen telling Baldwin not to speak to the other potential witnesses, but Baldwin repeatedly does.

When special prosecutor Kari Morrissey asked whether the sheriff’s deputy handled the situation ideally he responded, “Probably not. But it’s what happened.”

Spiro pressed LeFleur on why he left the word “accidental” out of his description of the shooting call during his questioning by the prosecution. LeFleur said it was not intentional.

Johnson in her opening walked the jurors through the events leading up to Hutchins death. She said on that day, Baldwin declined multiple opportunities for standard safety checks with armorer Hannah Gutierrez-Reed before the rehearsal in the small church about 20 miles (32 kilometers) from the courthouse where Hutchins, “a vibrant 42-year-old rising star,” was killed. She said Baldwin instead “did his own thing.”

“He cocks the hammer, points it straight at Miss Hutchins, and fires that gun, sending that live bullet right into Miss Hutchins body,” said Johnson, a relative newcomer to the case, appointed in late April by the Santa Fe district attorney’s office.

During the presentation, Baldwin trained his eyes downward on a notepad, away from the jury. He watched Spiro intently during his opening. His wife Hilaria Baldwin and his brother, actor Stephen Baldwin, were among the family and friends sitting behind him.

The 16 jurors — 11 women and five men — come from a region with strong currents of gun ownership and safety informed by backcountry hunting. Four of the jurors will be deemed alternates while the other 12 deliberate once they get the case.

Hutchins’ death and the wounding of director Joel Souza nearly three years ago sent shock waves through the film industry and led to one felony charge against Baldwin, 66, that could result in up to 18 months in prison.

“It killed an amazing person,” Spiro said. “It wounded another, and it changed lives forever.”

Baldwin has claimed the gun fired accidentally after he followed instructions to point it toward Hutchins, who was behind the camera. Unaware that it was loaded with a live round, he said he pulled back the hammer — not the trigger — and it fired.

“No one saw him intentionally pull the trigger,” Spiro said.

But he said even if Baldwin had pulled it and was lying, Spiro said, it still would not have been manslaughter.

“On a movie set, you’re allowed to pull that trigger,” Spiro said, adding, “that doesn’t make it a homicide.”

The lawyer emphasized that the responsibility for safety lay with the film’s armorer, Gutierrez-Reed, who has already been convicted of involuntary manslaughter, and assistant director David Halls, who pleaded no contest to negligent use of a deadly weapon in exchange for his testimony at trial.

Baldwin had been told “cold gun” before getting the revolver, not knowing there was a live round in it.

“It had been checked and double checked by those responsible for ensuring the gun was safe,” Spiro said. “He did not tamper with it he did not load it himself. He did not leave it unattended.”

Spiro has in recent years become one of the most sought-after defense attorneys in the country. His clients have included Elon Musk, New England Patriots owner Robert Kraft, and Megan Thee Stallion.

Baldwin — the star of “Beetlejuice,” “Glengarry Glen Ross” and “30 Rock” — has been a household name as an actor and public personality for more than three decades.

Spiro said in concluding his opening that witnesses will attest that “no actor in history” has “intercepted a live bullet from a prop gun.”

“No one could have imagined or expected an actor to do that,” the lawyer said.

The ‘Rust’ shooting case

Alec Baldwin shooting: ‘Rust’ gun supervisor gets 18 months in prison
Alec Baldwin pleads not guilty to involuntary manslaughter charge
Grand jury indicts Alec Baldwin in fatal shooting of cinematographer on movie set in New Mexico
Alec Baldwin’s codefendant gets 6 months probation on gun charge
Troubled Alec Baldwin movie ‘Rust’ looking near Palm Springs, Nevada border for new filming location

Prosecutors have two alternative standards for proving the charge. One is based on the negligent use of a firearm. The other is proving beyond a reasonable doubt that Baldwin acted with total disregard or indifference for the safety of others.

Testimony at trial will delve into the mechanics of the weapon and whether it could have fired without a trigger pull. Prosecutors say it couldn’t have.

“That gun the defendant had asked to be assigned worked perfectly fine as it was designed,” Johnson said.

Attorney Gloria Allred sat in the front row of the courtroom audience, a reminder of Baldwin’s other legal difficulties. Allred is representing “Rust” script supervisor Mamie Mitchell and Hutchins’ sister and parents in a civil lawsuit against Baldwin and other producers.

Allred said that from her observations in court, the jury appeared to be riveted by testimony and evidence including the police lapel camera video.

Dalton reported from Los Angeles.

​ Orange County Register 

House-rich, cash-strapped: Advice for older homeowners

• July 10, 2024

By Taylor Getler | NerdWallet

For many homeowners of retirement age, much of their net worth is tied up in their home equity, their home value minus any remaining liens. Home equity makes up 47% of the net worth of a median white homeowner age 62 or older, 81% of total net worth for older Black homeowners and 89% of total net worth for older Latino homeowners, according to the Urban Institute.

If you’re looking for ways to cover expenses after retirement, you may consider converting some of your home equity into cash. “There is no universally ‘best’ source of cash flow in retirement,” says Andy Panko, owner of Tenon Financial in Metuchen, New Jersey, and a retirement income certified professional. But those who hesitate to draw from their home’s well of equity “may be depriving themselves of a great source of cash flow during their retirement years.”

It’s important to think through what you hope to leave behind, if anything. If your goal is to leave your home as a legacy, “you should generally try to avoid having any form of mortgage against the property outstanding when you die” says Panko. However, if this isn’t your main priority, “it could make sense to ‘unlock’ the equity in your home and use it during your lifetime via some form of mortgage.”

Options include a home equity line of credit, home equity loan, reverse mortgage or home equity investment. The right loan product for you depends on your reason for needing the cash, says Anneliese Lederer, senior policy counsel for the Center for Responsible Lending in Washington, D.C.

Here’s what to consider if you’re thinking about accessing your equity.

HELOCs: for qualified borrowers who want flexibility

If you need cash to finance a multistep project — for example, making some upgrades to your home to improve accessibility — the first option to consider is a home equity line of credit, or HELOC.

A HELOC is a flexible line of credit that you can borrow from as needed, up to a certain limit. You typically have 10 years to draw from the line, during which time you’re only required to make payments on the interest.

After 10 years, you can’t draw any more, and payments will include both principal and interest. HELOC interest rates are usually variable, meaning they move up and down with a banking base rate known as the prime rate.

If you’re retired, you may be required to show alternative income documentation to lenders to qualify for a HELOC. This includes any pension income, Social Security income or disbursements from retirement accounts. Just like any applicant, you’ll have to prove that you can keep up with monthly payments.

If you can’t make your monthly payments, you risk losing your home to foreclosure.

Home equity loans: for qualified borrowers who need a lump sum

If you need to liquidate some of your equity to finance a one-off expense, such as replacing your roof, you may consider a home equity loan.

This is a fixed-rate second mortgage that delivers the money all at once.

As with a HELOC, you’ll have to document your ability to pay before a lender will consider granting you the loan, and a home equity loan can lead to foreclosure if you can’t keep up with monthly payments.

Since the home equity loan has a fixed rate, payments are more predictable than a HELOC with a variable rate.

Transferring a home with a home equity loan or HELOC

There may be implications for your heirs if you can’t pay off a HELOC or home equity loan within your lifetime.

U.S. law prevents lenders from enforcing a due-on-sale provision (in which the loan needs to be paid off in a lump sum after your death) if your inheritors are relatives or a spouse. These “protected” family members could continue making monthly payments on a remaining loan balance. If you intend to leave the home to someone who doesn’t qualify under the U.S. code, you may consider putting them on the loan when you apply to allow for a seamless transfer.

Consult an estate planner for advice specific to your needs and goals. Monique D. Hayes, founder and CEO of Estates Made Easy in Miami, Florida, points out, for instance, that putting a home into a trust may be a bad fit for someone exploring home equity options.

Reverse mortgages: for borrowers 62+ who are struggling with bills

If you need a more permanent financial change that will allow you to stay in your home, you may find that a reverse mortgage is a good fit.

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This loan, also known as a home equity conversion mortgage, or HECM, is backed by the Federal Housing Authority (FHA) and is not required to be paid back until you move or die, when payment becomes the responsibility of your heirs. If you’re expecting to use your equity to help your family build generational wealth, “that’s a big negative of reverse mortgages,” Lederer says, because your heirs will need to sell the property or pay back the loan.

You must be at least 62 years old to qualify for a reverse mortgage, and you are required to meet with a housing counselor before pursuing this option. These counselors provide advice to homeowners for free or at a low cost. You can find a counselor in your area using this portal from the Consumer Financial Protection Bureau. The counselor will look at your goals, financial shortfall and income history to clarify whether a reverse mortgage is an appropriate choice, says Lederer.

Reverse mortgages don’t have income requirements, though they do require that borrowers can pay their obligations such as property taxes and homeowners insurance. Panko says, “A reverse mortgage can be a great solution to someone who’s house-rich and otherwise income not-so-rich.”

Home equity investments: for borrowers who can’t qualify for a mainstream loan

If you can’t qualify for other options and need a solution with more flexible application requirements, you may be interested in a home equity investment or sharing agreement. Traditional lenders don’t offer these — instead, they’re a niche product primarily provided by companies that specialize in these transactions and usually have much lower credit requirements than HELOCs and home equity loans. Some major names that you may see in your research include Point, Unison and Hometap.

A home equity investment allows you to access some of your home’s equity as a lump sum in exchange for giving the company a percentage of your home’s appreciation. Unlike typical loans that require monthly payments, these have one balloon payment that comes due after 10 to 30 years (or when you decide to move), when you’ll have to either sell the home or pay the investment company’s share out of pocket. The amount of this balloon payment is a percentage of the appreciation of your home from the time that you entered the agreement, though these companies will often lower your home’s initial valuation to inflate the amount of appreciation they’re entitled to receive.

You may end up paying out much more than you received. For example, Point outlines that you could owe more than double your initial cash advance in just 10 years if your home appreciates at a relatively low rate of 1.5% per year. The more your home appreciates, the more you’ll owe in the end.

There is no one-size-fits-all approach to overcoming a financial shortfall with your home equity. Weighing your options and speaking with a housing counselor can help you determine the best course of action for your situation, and in the process, can illuminate your goals for your property during your lifetime and beyond.

Taylor Getler writes for NerdWallet. Email: [email protected].

The article House-Rich, Cash-Strapped: Advice for Older Homeowners originally appeared on NerdWallet.

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