Financial Tips for Millennials


It’s not too early to start thinking about your financial future!

If you were born from 1980 to 1995, you are considered to be a part of Generation Y, or as commonly known to the public, the Millennial Generation. And let’s face it, you have a lot of financial responsibilities on your plate like student loans or bills. Saving money may be the last thing on your mind, but it is important as that money can be used to put a down payment on a home (since millennials like you are predicted to be the top buyers of 2017) or saving for retirement. The thought of saving in general sounds impossible, but with some simple tips, the thought of savings is possible. It’s never too late to start!

1. Create a game plan – Just like your favorite sports team, the best chances to win is to have a game plan set. All game plans can be set for short term and long term goals and they can be tweaked to fit the current situation you are in. If you are still lost on how to start the game plan, try going backwards; visualize where you want to be in five, ten, even twenty years and how will you reach that goal.
2. Promote good financial habits –Start by saving your dollars and cents and start investing and or putting it away in a saving account, even if it’s a small amount. Put yourself in the “I am paying myself first” mentality and don’t make saving money an option. We aren’t saying when you get a raise, use all of the money from your raise for the “non-fun” options and accounts, but don’t use your raise for all fun options. When you start putting away money in different accounts, you will start building a special kind of interest: compound interest. “Saving $50 a week for a year, which is 52 weeks, will amount to $2,600. When adding compounding interest to the mix, that same $50 weekly to retirement savings at 2% interest (which is a relatively conservative interest rate), you will have saved over $8,000 after three years, over $16,000 after six years, and over $29,000 in 10 years!” says Melissa Lonie, Financial planner at MassMutual. When you use an account that uses compound interest, you can see how much extra money you will accumulate overall.
3. Start a 401(k) plan – When you use your employer’s plan, you are storing away money before taxes can be taken out. If your employer offers a match as well, that is another reason why to use their plan – free money in the long run! However if your employer doesn’t offer a 401(k) plan, you can open up a Roth IRA account. While your contribution to your account will be taxed, the money you earned in interest and withdraw from the account will be tax-free.
4. Pay off your high-interest debt first – Say, for example, you have a high interest credit card that’s 7% or more. If you invest your money in an account that earns you 7%, the amount you paid in interest will eat up the money you have accumulated in your savings. To avoid this situation, pay off any debts you have that are high in interest, from credit cards to student loans.
5. Risk VS. Reward – You might feel “old”, but you have more time on your side compare to Generation X or the Baby Boomers generation. Millennials can afford to take the ride up and down of the stock market. As you get closer to your target retirement date, you can see what’s going on with the market to make shifts to your assets and make lower-risk decisions as well. Another option to think about with Risk VS. Reward is insurance, and we are talking beyond your basic health insurance. When you start investing in life insurance, you are taking advantage of the low premiums while you’re in good health, unlike when you obtain it mid-life with some mid-life health complications. You can also lock in your low premium when you are in your 20’s and 30’s so it won’t increase when you hit your 40’s or 50’s. Life insurance can also be used beyond the death benefit, as it can help with living benefits. The cash value that accumulated in a permanent life insurance policy can be used to help pay for life’s anticipated, or even unanticipated, moments that goes on in your life.

As we predicted before, the millennial generation will be the top buyers for buying a home. With tricks like these that are targeted for the age gap, they can help you secure a more financial future and help you save your hard working income. For more information on investing your first home, contact us at 973-577-7008.

Melissa Lonie can be reached at MassMutual Greater Philadelphia to help live within your means while saving for the future.

How To Obtain A Mortgage If Your Spouse Has Not-So-Perfect Credit

For better or for worse

When you and your future significant other step onto the altar to say your “I Do’s”, the last thing that might be on your mind is your spouse’s credit history. While you do not inherit your spouse’s less-than-perfect credit history, it can still hurt your odds and chances of obtaining a mortgage to start your journey to “The American Dream”. Before you say goodbye to homeownership, or put on your online dating profile “swipe right if your credit score is 620 or higher”, here are some ways the both of you can buy your first home together.

  1. Know what the score is to start with and try to improve it – Before the two of you have a panic attack and get anxiety over the fear of being denied, know what the score is first. You can find out what the three digits score will be from sites like creditkarma.com or freecreditreport.com, which are free, by the way. Once you and your spouse get the score, see if the score is considered low (619-500) or bad (500 or lower). Once you know what the actual number is, try to make a game plan to raise the score. First plan, if you or they don’t do this already, is to make sure your payments are on time. Payment history holds a huge impact on a credit score that can either hurt or help someone. Yet one late payment in general could stay onto the report for up to seven years! Another factor that impacts your score is your debt-to –income ratio (DTI). DTI ratio is determined by the amount of monthly debt one has compared to the monthly gross income they make. Keeping your DTI ratio low is another game plan that can be used on raising a credit score. Pay off majority of debt that was obtained and avoid making large purchases like a car or a $5,000 Prada purse before applying for a mortgage.
  2. Check your credit history for any errors – Any and all kinds of errors, frauds, and unauthorized accounts on a credit history can lead to higher interest rate or a denial for a loan. Find out if you have any on your history and learn how to dispute the errors. Also keep an eye on your report and credit activity. By staying on top, you can prevent any negative activity that can hurt you.
  3. Make a larger down payment on the property – Putting down a high down payment shows lenders how responsible and creditworthy you and your spouse can be in the long run and also lower your loan-to-value ratio; it shows them you are serious on paying your mortgage on time. Lenders typically offer better interest rates to anyone who have a high credit score or who have a large down payment. The other bonus is if you put down 20% or more, you avoid extra fees, like private mortgage insurance, onto your monthly payment.
  4. Be open and honest with your loan officer – We aren’t talking open like how open you are to your father in the confession booth. We are talking about being open and honest about your credit and its history. The best person who can help you buy your first home with your credit situation is your loan officer! If you have financial and income documentation as back up, it will help build a stronger case for the loan officer to present to the lender to get approval.
  5. Going solo – on the loan! – If you’re afraid the co-applicant’s credit history will make the interest rate extremely high or you won’t get approved to begin with, try applying alone on the mortgage. Remember though, when you apply for a mortgage solo, you will qualify for a smaller amount since it’s only factoring in your income and assets for the loan. However, if your co-applicant happens to have a higher income and their debt is low (the lower DTI ratio we talked about earlier) you might want to reconsider going solo and have them apply with you. Not too sure what to do? Ask your mortgage loan officer on what to do and they will be able to guide you on the best way to get approved.

There are many reasons why you would or would not want to marry the person you are with now or in the future. The final factor shouldn’t be their credit history, especially when there are solutions out there to help the both of you purchase a home. And if you happen to come across a situation where your spouse’s credit score is not as desirable as the odor from a dump yard, talk to LO. Your LO is there to help you get to “The American Dream”! However, your LO might not be the best to ask if you should swipe left or right on someone’s profile. For more information on bad credit history, how to repair your credit score, and the best possible loan scenarios for you and your spouse, contact Residential Home Funding at 973-577-7008.

Want To Reduce Your Closing Costs?

How to get the best costs and to finish the deal to homeownership

To obtain a mortgage, we have to pay miscellaneous fees regarding the title, land surveyor, the government for their taxes and recording the deed, and other fees. The closing costs alone can be an additional 6% of the loan.  However, the closing costs are not set in stone and there are ways to reduce the cost itself.

  1. Know that different areas will equal different costs – Yes, not only does the location of your property depend on the price overall, but it can affect your closing costs. Areas where taxes are more expensive will have a higher closing cost overall. It also depends on what state you live in as well. Bankrated.com did a study where they asked lenders representing each state for an estimated closing cost for a $200,000 single family home mortgage with 20% down. As of August 2016, Hawaii’s average closing cost of $2,655 was the highest while the lowest closing cost was in Pennsylvania with $1,837.
  2. Know what costs you can negotiate on – Some of the fees on your closing costs are negotiable. One of the costs you can negotiate will be your homeowner’s insurance. Shop around to see how much each company will charge you, and try to see if there are deals like if you bundle your auto and other insurance together or discounts like if you are buying a new home versus an existing one. Not too sure what other costs are negotiable and which aren’t? Ask your loan officer and they will help you out.
  3. Don’t pay extra points to lower your interest rate – Homebuyers have the option to pay for points in exchange of lowering your interest rate. While interest rates are low as they are now, it might be a cost not worth putting into. However, you can also refinance in the future if rates are lower than they are now.
  4. Take a look at Reissue Rates – Want a discount on your homeowner’s title insurance policy? Take a look to see if you qualify for a Reissue Rate. In most states, the seller has to purchase the home and insurance policy within 10 years to qualify. Take a look at the seller’s policy to find out. If you can’t find that information, your title company can locate it and see if you qualify for a Reissue Rate or not. This task can save you hundreds on closing costs alone.
  5. Ask the seller if they will pay a portion of the costs – If the seller is desperate and the market is struggling, you can ask if the seller can pay a portion of the closing cost. Trust your real estate expert and ask if it’s the right move. If the seller is motivated enough to sell you their property, you might save some money on your cost.
  6. Review the closing cost forms and take a look for red flags – When you shop around comparing costs, feel free to ask questions. For example, if one lender is not disclosing a fee up front, ask why they didn’t include it. If you notice one company is charging dramatically less than another company, ask about the price difference. By reviewing and asking questions, you will know the estimate of your closing cost will be. If you are not sure what you are being charged for, ask your loan officer.

While there is no “one cost” to rule and set them all, closing costs can easily be negotiated. With the tricks and tips we’ve presented, you can channel your inner “car salesman” and negotiate to save hundreds on your closing cost.

Reverse Mortgages

A program where we give you money!

What is a reverse mortgage? What if we told you that there was a way to convert a portion of the equity of their home and turn it into cold hard cash that is also tax-free? If you or you know someone who is 62 years old or older and they need cash, why not take a look into a reverse mortgage? Still confused? Take a look at our video:

What is a Reverse Mortgage?

However, there are some facts and myths that are floating around about reverse mortgages. We are here to help you find out what is fact and what is false.

“If my love one obtains a reverse mortgage, he or she will be giving up ownership of the house that they worked hard on paying for!”

That statement is a myth. When they apply for a reverse mortgage, they are NOT giving up ownership of the home as long if they maintain the property and continue to pay taxes and the home insurance on it. The title and deed are still in their name.

“Reverse mortgages are flexible on how they receive the cash.”

Correct! When they are approved for a reverse mortgage, you can get a lump sum payout, have it in monthly installments, or have it grow to their credit line. By obtaining a reverse mortgage, you will be able to extend the life of your retirement savings and delay their Social Security benefits. And the longer they delay Social Security, the bigger the benefit will be for them.

“If my parents get a reverse mortgage, they will have to stay in the house they got the reverse mortgage on.”

That statement is false. Many customers who received a reverse mortgage use the money to buy another property.

“Oh man, how much are the taxes for the reverse mortgage that was granted?”

There’s always a catch when you are handed over money or even win expensive items like a car: taxes! However, the sum from the reverse mortgage is tax-free. Yes, you heard that right, tax-free! Their retirement savings will stretch out a bit longer with this tax-free income.

“My parents don’t qualify for a reverse mortgage because they still owe the bank x amount of dollars on their mortgage.”

There are only two requirements for a reverse mortgage is that the person obtaining the mortgage must be the homeowner and they are at least 62 years old. So you can still owe a certain amount on your property, but you can still obtain the reverse mortgage. In fact, some customers use their cash on paying off their mortgage. So it can eliminate monthly mortgage payments and they can use the money for other things.

A reverse mortgage is a great way to help your loved ones obtain more cash income that can help their current financial situations.  If you’ve noticed your loved one struggling with their retirement income or needing extra money to help pay for expenses, why not take a look into a reverse mortgage. For more information and how much a reverse mortgage program can help your family member or friend, give us a call at 855-750-0879

Your Credit Score Beyond Obtaining A Loan

Can your credit score hurt landing your next job?

We all know that your credit score can impact several aspects of your life, from obtaining a mortgage to getting approved for a car loan. Your credit score can help you obtain a low, or high, rate depending on the score. However, not only your credit score can affect your interest and qualifications for a loan, it could also affect your job as well!

Some may ask, “Wait… is that even legal?” The short answer is yes. Your future employer can’t take a look at your actual credit score, but they can use the information that can influence their hiring decision. They will ask for you to give permission to access your credit report. What they look for is if you have been turned down for anything because of your credit history.

So what does my credit report say about me that my employer would like to know? According to the Federal Trade Commission, the most common background checks employers will obtain are criminal background and credit report checks. Your credit report verifies your name, current and past addresses, Social Security number, birthdate, and previous employers to verify that you are who you say you are.

The next part of the report they look for are your loans, credit cards, balances, and payments. They look at your credit history for one obvious reason: how well you have managed your finances. Why? Well if you are going to be in charge of managing someone else’s money in the future, they want to know you could at least manage your own finances. Not only that, but they also look to see that if you are financially responsible, you are probably are responsible in other aspects of your life, including work.

Another part of your credit history they look for is your public records. Did you declare bankruptcy at one point or were there any civil judgments against you (like a civil lawsuit or child support case)? Looking at this gives a good insight into issues that are larger than missing a payment or two. With this information, employers look to see if you are able to fully handle your own finances on your own. Also, they also see it as a possible red flag that you do not put work first and you are distracted by your own issues.

So, why are employers running a credit check on me? According to a study from the Society for Human Resources Management (SHRM), the top two reasons why they check are to reduce or prevent theft and reduce legal liability for negligent hiring. If your credit is less than perfect, it’s okay! Responsible people have missed a payment or two and some responsible people have declared bankruptcies. However, just like criminal background checks, they look to weed out the people who made several bad choices like purchasing big ticket items when they already are carrying a substantial debt. With this information, they want to sure they will not hire anyone who is most likely to be in a situation where they might be tempted to steal money from the company or compromise privet client information.

The one question on your mind is: Will my credit history really impact my chances of getting hired? Well, it depends on which position or career field you are entering. If you are applying to be a line cook or a copywriter, your credit store might not be related to your job. However, if you are applying to a position where you will be handling client’s personal information or if you are managing the company or client’s money, your credit score will be more relevant.

Actually, in some cases, your credit score can make you disqualified for a position. For example, if an individual wants to become a mortgage loan officer, they must meet certain credit requirements before they get licensed. If that applicant has serious red flags on their credit report, most likely they will disqualify them from obtaining their license and the employer will most likely pass up the applicant compare to someone who has a better chance of getting licensed.

Before the human resources team makes any conclusions, they will investigate each situation and look at the factors that obtain to the individual before making any final conclusions. If the applicant missed any bill payments, are they missed at the same time, or was it an occurring situation over the years? If they applicant have anything in collections, was it because they were living outside their means or was there a situation (like a divorce) that hurt their ability to pay their loan?

According to the same SHRM study, they found that out of all the organizations that conduct a background check, 80% of the applicants they have hired had at least one piece of negative information on their credit report. In most cases, a mistake or two shouldn’t hurt your chances of getting a job.

So now that you know that employers will run your credit report, what can you do to prepare? First, the most obvious option is for you to get a copy of your credit report so that you know what is on your report in the first place. Not only that, but nearly one out of five consumers have found errors on their credit report. If you found any errors on your report, make sure you correct them before your employer has a chance to see them. Second, if you do have any potential red flags on your report, you can add a 100-word statement disputing or defending the issue. Employers want to know your situation more than you didn’t just pay your bills. Did you lose your job? Did you get a divorce or had any outstanding medical bills? If so, tell them so employers don’t come to their own conclusions.

For more information on your credit report and how it can affect you, contact us at 973-577-7008.

Tricks to Boost Your Credit Score Fast

The national average credit score is 695 and half of consumers fall in the desired 700-plus range. You can get a mortgage with that score or even lower, but you need a score of 740 or higher to get the best rates. While credit history isn’t created overnight, there are some things you can do to improve your credit score quickly.

  1. Pay down your debt/balances – The amount you can borrow versus the amount of debt you are carrying over can affect 30% of your credit score. If you have the cash at hand, try to time your payments before the creditors send in their reports. If you don’t know when they are sending them in, you can call them up and ask. You want to try to lower your debt carrying over before the date of the report. The results will be shown in about one month.
  2. Get a handle on your bills and pay them on time – We’ve all heard it, pay your bills on time and the reward at hand will be a good credit score. However, we all slip up and we may be late once in a while. If you are already late on a payment, make that payment A.S.A.P.! If you normally pay your bills late and you start paying on time, you will see your credit score rise in a month or two. Also, if you are less than 30 days late, you should make a payment before the 30 day mark! Creditors don’t typically report late payments until after the 30 day mark, so try to control the damage as soon as you can!
  3. Open a new account – When you open a new line of credit, your total outstanding line of credit will go up and the utilizations will improve as well. Also, having multiple lines of credit will show the credit bureaus that you can juggle different kinds of accounts. However, don’t go credit card/loan opening happy! Try an additional one at first. If you apply to every line who asks you to open a new card, you will take a hit on the number of recent inquiries and that will not look good to the credit bureaus since it shows you are desperate for more money.
  4. Become an authorized user – Do you have a responsible family member or significant other? If you become an authorized user on their accounts, their good credit history will be piggybacked onto yours as well too. Their good credit history will immediately show up on your report. If it’s an old, established history, it will also increase the average age of accounts you’ve managed that will increase your score. However, be careful on who you piggyback with. Just like their good credit history will show up on your account, their bad history and high debts will also show up as well! You will be able to see the results immediately when you perform this task.

Think these tips will help you get a better rate on your mortgage? Do you make it to the national average or are you so close to that 740 mark? Give us a call and let us help you out.

Create a budget fit for YOU

To budget your finance is to get an estimate of your income and expenditure for a set period of time. Like jeans, there is no budget plan that fits for all. Your friend’s budget might be different from yours. So how do you create a budget that is made just for you?
• Determine your must-haves or budget untouchables – Figure out what NEEDS to be paid every month, even though we wish some monthly payments like electricity and rent should be optional. You might also have some other items that are untouchable and you can’t imagine living without it. For example, if you own a dog or a cat, you would need to budget every month food and litter/supplies for the pet if you want to keep them happy and alive.
• Try to re-negotiate on your bills – Almost everything can be negotiated. The trick is to speak to the right department. For example, if you are signing up for a new cell phone plan, ask if there are corporate discounts. Did you get a great deal on your internet/TV package that is only valid for a year? Talk to the cancellation department and try to negotiate a new plan before the price goes up. Even your rent can be negotiated. When you are looking for a property to rent, use a rental agent that know the specials as well as negotiate the monthly price for you.
• Consider online shopping or shopping at a store that matches online prices – With places like Amazon and Jet.com, they have home essentials that can be delivered to your door quickly at a fraction of the price you will find in a store. All you need to do is do your research before you buy. Some major stores, like Best Buy and Walmart, will match the prices you find on legit sites like Amazon to keep you as a customer in the store. Ask your store for details on the rules for price matching.
• If you won’t cook at home, then don’t kid yourself – Everyone knows that it is cheaper to make your own meals at home than it is to eat out. However, if you know you won’t be able to cook or really don’t trust your cooking instinct, then don’t waste the money you will spend on groceries that you will throw away in the first place. It’s ok if you go out to eat a lot, as long if you can budget it in! Consider smarter choices like saving a portion of your servings for lunch the next day or make smarter restaurant choices. Another great idea is check out deals on restaurants on websites like Groupon or Restaurant.com.
When you budget, you will be improving your financial situation and help you live the life you want to live! What are some of the “untouchables” in your budget? Did you try any of the tricks and it worked? Give us a call at 973-577-7008 and let us know!

FHA Loans and Not-So-Perfect-Credit: The Rundown and FHA mortgage requirements in NJ

We’ve all made some mistakes in the past with credit. Missing a payment here, being late on a payment there. Thanks to the Federal Housing Administration (FHA), you do not need to have perfect credit to buy a home. Did you know that half of all FHA home buyers today have scores below 680?

The FHA mortgage program was launched in 1934 to help boost and stabilize the American housing market. In plain English, it means FHA makes it easier for people to qualify for a home loan compared to a conventional loan. A few advantages of a FHA loan are:

  • An FHA loan is more accessible since you don’t need a high-paying job or the best credit.
  • Credit score requirements are lower, allowing people with not so perfect credit to qualify.
  • FHA Loans have lower down payments that can get as low as 3.5%, and can be used for a purchase or refinance.
  • Your down payment can be gifted from a relative
  • You can roll in all your closing costs
  • You can also get cash out on a refinance

Thanks to some of these benefits and more, FHA loans will play a major role in the U.S. Housing Market.  If you have a low score, be upfront about it and ask your mortgage loan originator. Some lenders will allow a score as low as 580, yet some have additional “investor overlays” requiring a credit score of 620 or higher. But are you curious on how your credit score is “created”?

Credit scores are a way to measure the risk of the applicant’s willingness to make timely payments on their loan. They are measured by risk. Consumers who pay their debts on time usually have higher credit scores than others. It can also be changed regarding how much you owe based on your credit card limits as well as any collections in your credit history. To this date, the FICO credit score is the most common system used by mortgage lenders, scores ranging from 300-850. So when it comes to mortgage approvals, lenders use the scores published by the three well-known, major credit bureaus – Equifax, Experian and TransUnion.

To learn more about your credit and FHA loans rates in NJ, call us at (973) 577-7008.

Happy Rubber Ducky Day!

Today may be Friday the 13th but it is also National Rubber Ducky Day!  Rubber Ducky’s have a long and respected history in the world of children, and most of us remember having at least one as part of our collection of bath-time toys. Rubber Duckies have a clouded history, no one really knows precisely where they came from, but whether it was our own bath time or the song from Ernie from The Muppets, we all knew of them and wanted one! Rubber Duckie day is here to help us remember to appreciate this part of our childhood cleansing ritual.

History of Rubber Ducky Day
The History of the Rubber Duckie, at least its origins, are lost to the mists of time, but what is known is that they first appeared prior to World War I, and were actually shaped like a broad variety of animals. Rubber Duckies were just the most popular of the varieties. During the era of the World Wars, rubber was too valuable a commodity to be used on simple toys, so plastic and vinyl began to be used.

Landon Smart Lawrence was the first to patent a design for these illustrious toys, specifically the variety that was weighted so that, while still buoyant, it would always stand up the right way in the water. While it was a patent for a broad variety of toys, it was the duck that was included in the design. Rubber Duckies also have the distinction of being one of only 53 toys that are included in the Toy Hall of Fame, first established in 2013.

How to Celebrate Rubber Ducky Day
So how does one celebrate Rubber Duckie Day? Well first off, you filthy animal, take a bath with your favorite duckie toy! There are hundreds of varieties out there, ranging from pirate duckies to devil duckies, and everything in between. You can use #RubberDuckyDay to denote it in your social media posts, and maybe take in some of your favorite episodes of Sesame Street to remember that age old song about Rubber Duckies.

Behind the man and his dream

On this day please celebrate Martin Luther King Jr.’s life with me by learning a little behind the history of how this day was declared a National Holiday.

It took 15 years to create the federal Martin Luther King, Jr., holiday. Congressman John Conyers, Democrat from Michigan, first introduced legislation for a commemorative holiday four days after King was assassinated in 1968. After the bill became stalled, petitions endorsing the holiday containing six million names were submitted to Congress.

Conyers and Rep. Shirley Chisholm, Democrat of New York, resubmitted King holiday legislation each subsequent legislative session. Public pressure for the holiday mounted during the 1982 and 1983 civil rights marches in Washington.

Congress passed the holiday legislation in 1983, which was then signed into law by President Ronald Reagan. A compromise moving the holiday from Jan. 15, King’s birthday, which was considered too close to Christmas and New Year’s, to the third Monday in January helped overcome opposition to the law.

Dr. King believed in a nation of freedom and justice for all, and encouraged all citizens to live up to the purpose and potential of America by applying the principles of nonviolence to make this country a better place to live—creating the Beloved Community.

 

On this day, Americans of every age and background celebrate Dr. King through service projects that strengthen communities, empower individuals, bridge barriers, and create solutions.

 

Let’s take this day to help him achieve his and the American dream.