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Mortgage Rates Slowly Rising

For the third consecutive week, mortgage rates inched higher, but potential home buyers shouldn’t sweat it too much. Mortgage rates are still hovering below levels from a year ago. When evaluating interest rates, it matters for your monthly payment adjustments. If a .2% increase only changes your monthly payment by a couple dollars, no need to worry. However, a rate change that affects your monthly payment by hundreds of dollars, warrants a closer look and re-evaluating your situation. 

Freddie Mac reports the following national averages with mortgage rates for the week ending March 17:

  • 30-year fixed-rate mortgage (FRM) averaged 3.73 percent with an average 0.5 point for the week ending March 17, 2016, up from last week when it averaged 3.68 percent. A year ago at this time, the 30-year FRM averaged 3.78 percent. 
  • 15-year FRM this week averaged 2.99 percent with an average 0.4 point, up from last week when it averaged 2.96 percent. A year ago at this time, the 15-year FRM averaged 3.06 percent. 
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.93 percent this week with an average 0.5 point, up from last week when it averaged 2.92 percent. A year ago, the 5-year ARM averaged 2.97 percent.

Considering getting Pre-Approved? Need recommendations on lenders? Send us an email and we can forward some suggestions. Contact@mandrellco.com

Source: Freddie Mac
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Debt Buster Tip: Attacking your Credit Card

Never assume that you can’t improve the terms of your credit card payments. Many people are unaware of the power they possess inside of them! Our job is to tell you…you can do it… we have…we’ve suggested it to others…they have and they’ve seen results. Here are 2 tips to help you start chipping away at your credit card debt. 

Get Your Interest as Low as Possible

If you have a solid track record of paying on time and your card is not close to the limit, renegotiate the interest rates on your cards. Tell the companies that you’ve been a valued customer for X years and you have never missed a payment. You would like to see if they can give you a better interest rate on your card for being a valued member.

I promise you it works! It may not work overtime, but I’ve done it and other clients have done it and it works. The trick is not to bother them. Call once every 6-12 months to request a better interest rate.  Usually they decrease your interest rate by 1/2-1 percent. Although this amount does not sound like a lot…you are starting the process of saving more money.

Side tip: If you are given a decrease, calculate your payments based on the higher interest rates and pay that amount… you will be lowering your balance and climbing up the ladder toward financial freedom.

Pay off Debt from Highest Interest Rate to Lowest

There are different strategies to paying down debt. Some need small victories to motivate them to larger victories. This would be, for example, paying off the credit card with the smallest balance first. Once this card is paid off, you feel accomplished and energized to move on to the next. While I like this method, and use it depending on my mood, I think the best strategy is to pay the highest interest card first.   This is the mathematically correct way of doing things. You may end up spending thousands of more dollars in interest because while you paid off your $1000 card at 10% interest, you still have a $5,000 card with a 15% interest accruing over time. Interest is pretty much you giving away your hard earned money. Go with the mathematically correct way! Do not go with your emotions. Paying off small debts may feel nice but it’s a superficial feeling. Superficial feelings get people in trouble. Trust math. It has no emotions.

Financial Freedom requires determination and strategy. Pick which works best for your discipline level and for your wallet.

Our goal is to help our clients, improve their credit worthiness in preparation for a home purchase. For more information, please contact us and schedule your free no obligation consultation.

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Landlord Tip: Security Deposits

Many landlords are hesitant to collect a security deposit (SD) from tenants because they fear it is too much money for someone to pay. While I completely understand the sentiment and extending a helping hand….security deposits are designed to help you (the landlord) in the event your tenant damages the property. 

The following covers some major points of security deposits as they pertain to landlords.

How much can you ask for?

You must strike a balance, requiring a deposit that sufficiently insures against potential damage but that does not overburden your new tenants. In the state of Massachusetts, the maximum amount you can request is equal to one month’s rent. 

You must charge the same security deposit rate for all tenants so as not to trigger a discrimination issue. For example, you cannot charge your first floor tenant a $500 SD because you felt sorry for him and your 2nd floor tenant $1000 for a SD because you knew they could afford it. If unit 2 found out and decided to sue you, it would be their legal right to do so and win because you did in fact discriminate. 

How should funds be held?

Security deposits remain the legal property of the tenant until a triggering event, such as damage to the unit, occurs. Security Deposts are to be held in an interest bearing account (also called an escrow account) at your local bank. You will need a W9 for the tenant so that any interest earned on the account can be reported to the government (Yes, you can be taxed on interest). If you fail to comply and your tenant pursues it, you will be forced to pay 5 times the amount. I say…follow the law and avoid the headache. 

When can you keep the deposit?

Your lease agreement should clearly spell out which situations would warrant retaining the tenant’s security deposit; otherwise, the tenant may have a strong case against you for wrongful withholding of tenant funds. Some legitimate reasons for withholding some or all of the SD may include the following:

  • Failure to pay rent
  • Damage to the property
  • Damages exceeding normal wear and tear
  • Unpaid utilities
  • Removal of abandoned property
  • Cleaning costs

In nearly all states, you must provide an itemized list in writing detailing the costs of the expenses. If the tenant disputes the list, he or she may initiate a lawsuit in housing court, which would require you to prove that damage occurred and that repair costs were congruent with the amount withheld.

How soon should you return the deposit?

You must return unused security deposit funds within 30 days of the tenant moving out, keeping in mind that these funds legally belong to the tenant unless a triggering event has occurred. 

Being a landlord is like running a business, you need to be organized and set up systems to ensure success. For free Landlord-Tenant forms, feel free to contact us and we will gladly email them to you.

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Via our FREE Financial Literacy seminars and our partners, we educate members of the community on strategies to improving their credit score in preparation for the biggest purchase one can make…. buying a home!

One question we get asked a lot is whether they should pay off their collections. You have the option to pay off your collection or settle the debt for a lesser amount with the lender but there is one step before handing over your debit card. In order to truly impact your credit score, the creditor needs to REMOVE or DELETE the collection from your credit report. If you pay in full or settle, the negative activity still remains on your credit report. You need to request IN WRITING that your creditor delete the collection from your report. Do not issue a pay in full or settlement amount until you receive a response IN WRITING that they have agreed to or rejected your request. 

After 7 years, the collection item is no longer visible but if you are planning to purchase a home or a car within 6 years… it may be worth it to have those negative items removed from your record. 

I strongly recommend people monitor their credit report monthly. CreditKarma is FREE and sends you alerts when there are changes to your report. Although it does not utilize the FICO score which is utilized by the credit bureaus, it helps you MONITOR your financial report card so to speak. You want to know if you are on track or what items to address because they are setting you back.

 

For more strategies to help you get on track to purchase a home in 1-2 years, please contact us for a free no obligation consultation.

Schedule Your FREE Consultation

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