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Recently we hosted a webinar on the topic of Building Wealth In Your 20’s & 30’s. In the third and final section of the webinar we covered building equity, tax savings and some very important closing thoughts.

For more resources and tips on how to build wealth, please contact us.

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Recently we hosted a webinar on the topic of Building Wealth In Your 20’s & 30’s. In the second section of the webinar we covered saving for retirement, the importance of life insurance and the different types of investments.

For more resources and tips on how to build wealth, please do not hesitate to contact us.

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Recently we hosted a webinar on the topic of Building Wealth In Your 20’s & 30’s. In the first section of the webinar we covered the importance of creating a budget for yourself and family, establishing personal finance goals and how to figure out, and improve on your credit.

For more resources and tips on how to build wealth, please do not hesitate to contact us. 

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Work Your Financial Muscles To Better Credit

Financial habits and credit go hand in hand. Since your debt accounts for 30% of your credit score, it is safe to assume when your finances are in order, your credit should be as well (there are a few exceptions). This does not happen overnight. Similar to working out, you cannot eat a salad and go to the gym for 1 day and expect to lose 50 pounds. True success and results come with routine, discipline and sacrifice. Feel the burn!!

Set a budget – This is your foundation. Setting a budget will provide a guide for what expenses you have and how much income you have available to work with.
Monitor your spending – Mint.com is a free service that when connected to your acounts, tracks your spending and helps you set goals. CreditKarma.com is also great to automate monitoring your credit. They send you a message when there is activity or your score is updated. Numbers and facts are hard to deny. We can say that we are good with money but if you track your spending and see that you don’t save and eat out regularly and you have poor credit… something has to change.  Additionally, this can help you capture any kind of fraudulent charges if your info is ever at risk. 

Manage your debt – Pay off higher interest debts – Paying off higher interest accounts first will pay off in the long run. This will get you out of the rat race faster when it comes to minimizing debts, especially in credit cards.
Be proactive, don’t procrastinate – Avoid additional expenses and unnecessary late fees! Take advantage of any auto pay options to ensure payments are made on time. I simplified the process which helped me get focused very quickly… Do I want to give away my hard earned money? Interest payments are simply you giving your money away with no benefit to you. I am not cheap but I do not like giving away money if it is not for a good cause, my money going to a bank is not a good cause.

Eliminate bad spending habits – A little can go a long way. Bad spending habits will only set you back from your bigger goals. The monthly shoe subscription, coffee, eating out can add up to thousands yearly that you could be saving towards your financial goals. Spending less than you earn and sticking to your budget will allow you to have extra funds. Start setting these savings aside for your major purchases or for a cushion to fall on in case of emergencies. I save in a separate account that I do not have a card for, so in order for me to access the money, I need to transfer between banks which takes 3 days. This kills the urge to drain my savings. 

Stop impulse expenses – Rely on the bare necessities. I’m not going to lie, it’s very hard to pas up sales that are thrown at you, especially in the coming months but if you don’t need it….walk away. 

Invest in your future – I will put the disclaimer that I am a real estate professional so my investment advice is a little biased, moreso because I know that it works. If you do not own a home, consider purchasing a multi-family as opposed to a single or condo. You will have assistance with the mortgage and hopefully be cashflowing (passive income) from the rents you collect. This allows you to invest in other things and also brings a little more peace of mind. 

Feel free to connect with us on FACEBOOK or visit Urban Money Matters for FREE financial literacy seminars to help work those financial muscles.

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Avoid These Financial Sins When Applying For a Mortgage

If you are planning to buy a home soon, make sure that you are aware of all the factors that can affect your ability to qualify for a mortgage approval. Many people think it is as easy as walking into a bank and saying ” I want to buy a home.” Banks are in the business of lending and making money… they need to ensure you are financially responsible and able to repay possibly the most money you have borrowed to date. To allow for a higher probability for an approval and the best terms, follow these 10 home buying commandments.

Thou shalt not change jobs, become self-employed, or quit your job.

Changing jobs resets the clock. You need 2 years of full time employment or employment within the same field to be a god candidate for a mortgage. Any sudden changes raises a red flag. 

Thou shalt not buy a car, truck, or van.

Do not incur any additional debt when you plan to purchase a home. This not only affects your debt-to-income ratio, it also affects your credit score. You essentially just borrowed against your home loan. BAD IDEA

Thou shalt not use credit cards excessively.

I think this is a no brainer but again, do not incur any additonal debt. It shows that you are not responsible financially.

Thou shalt not miss payments.

Your credit score is made up of history of payments. If you show lenders you cannot repay your current debt… do you think they are more or less likely to approve you to take on more debt?

Thou shalt not spend money you have set aside for down payment and closing costs.

Purchasing a home is expensive, let’s be honest. Do not spend ANY money until you have keys to yout new place. There are usually surprise costs so be prepared. 

Thou shalt not buy furniture.

Again, NO SHOPPING until you are the legal owner of the property.

Thou shalt not originate any inquires into your credit.

Do not apply for any other credit, loans etc until AFTER you own your home. Inquiries raise red flags.

Thou shalt not make large deposits without checking with your loan officer.

EVERY DOLLAR needs to be accounted for. Do not make deposits or large withdrawals from your account without checking with your loan officer. They can advise on what to do, how to “source” your money etc. This goes back to money laundering, they need to ensure it is your money and not someone using you to “clean” their money.

Thou shalt not change bank accounts.

DO NOT CHANGE ANYTHING that affects your finances in any way until you take ownership of the home. 

Thou shalt not co-sign a loan for anyone.

DO NOT and i repeat DO NOT co-sign for anyone for anything. I have 2 kids and I already let them know… I will not be co-signing for student loans, car loans, nothing. If they laps on payment, it affects your credit score. Their debt also becomes your debt and impacts your debt-to-income ratio.

 

I hope these commandments help you as you start thinking of purchasing a home. Check back on our site for more information on how to make yourself the best candidate for a mortgage approval. 

Email us your questions and we will create a blog post on them to assist others searching for the same information. CONTACT@MANDRELLCO.COM

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Today we sat down and talked with Anastasia Tacewicz from GMH Mortgage Services on a couple different topics. One such topic had to do with different strategies one can implement to improve their current credit score or simply establish credit without much of a history. If you have done any sort of credit research, you know that there is a ton of different information out there regarding this topic. It almost seems like everyone has a different perspective on how to best handle your credit so it’s great to hear one from a mortgage professional.



Need more info about mortgages or about getting pre approved? Contact us at 617-297-8641

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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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Start Building Credit While You Are Young

Breaking-Down-Your-Credit-Score-mortgage-infographic

At The Mandrell Company, we are firm believers in educating our clients so they make wise financial decisions. These decisions go beyond purchasing a home but truly building a foundation on how to grow wealth. We found this infographic (source: MGIC Connects) and wanted to share this statistic that over 74% of college students do not know their credit score. Again, this is something that is not taught in school but we should all review our credit report at least Bi-Annually. Credit Karma is a free service, and although it does not provide your FICO score, it can be a great tool to monitor your credit so you have an idea of where you stand. 

Credit impacts your purchasing power and unknown to many, it can also affect your hiring status for a new job. You may be wondering why… well… some careers that require you to work with money or others’ finances want to ensure you are also financially responsible. Their goal is to limit their liability so it makes sense to hire a candidate with a strong history of being financially responsible.

Are you a Greater Boston college student interested in building credit and truly paving the way for when you enter the real world? The world of “adulting” with rental applications, car loan application and mortgages, can be stressful but we would love to point you in the right direction to increase your chance of success.

Please contact me to schedule FREE seminars on your campus. 

I look forward to speaking with you!

Denisha

Denisha@MandrellCo.com  |   617-982-3337

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How Bad Credit Is Costing You $100’s of Thousands

This chart blew my mind when I first came across it. Everyone talks about the importance of having good credit but to be able to see it charted out makes you really take a hard look at your financial picture. (See Chart Below)

“The Cost of Bad Credit” simply shows why a good credit score is crucial to your wallet even when talking about the difference of 100 points. Think about this. If you have a 620 credit score and take out a 20,000 car loan at a 9% rate of interest, you are essentially paying $2300 more (over a typical 5 year loan period) than the individual with a 720+ score. That’s number isn’t that crazy but what this chart doesn’t consider is how many vehicles a person will own during their life span. Most Americans keep their vehicles for 5-6 years before looking for something new.  If you start driving at the age of 16 and continue buying cars until you reach the age of 80 (and drive until 86), you may end up owning 12 vehicles during your life time. If you were at a loss of $2300 for each of those 12 purchases, your bad credit will have cost you a total of $27,600!!

Quick Summary:

For having fair credit (a 620 score) you pay $2300 more in interest for the same car purchase as someone with a 720+.

$2300 * 12 vehicles purchases during your life = $27,600 you paid more than the person with good credit. If you really want to get geeky about it, you can assume that the person with good credit reinvested their $27,600 in savings over the years and created an even wider wealth gap!

If losing 27,600 isn’t enough to make you straighten out your credit, than consider that I ran these numbers with a 620 score.  Think about the wealth gap being created for the person with a score of 580 or below. And if you want to buy a home at some point you could be talking about 100’s of thousands of dollars you’re losing by not keeping your credit top notch.

If you’d like to learn more about improving your credit score and other personal finance topics, consider taking a FREE wealth building course offered through Roxbury Community College. You can view schedules and RSVP at http://www.UrbanMoneyMatters.com

 

Why Bad Credit Cost You Thousands

 

 

 

 

 

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Building Credit For Home Ownership

Due to the consistent rise in Hyde Park home values and subsequent rental costs, many people are starting to look more seriously at home ownership before they are priced out of their community. Understanding how credit plays a role in your ability to purchase a home is critical. If you do not have credit, then understanding how to build credit with a credit card can really be life changing. It’s an easy way to change your financial future.

You ideally want a card that reports to all 3 credit bureaus and you want to PAY IN FULL each month. If you are unable to do so, do not carry a balance greater than 10% of your card’s limit. The best way to accomplish this is live within your means: DO NOT BUY MORE THAN YOU CAN AFFORD. IF YOU CANNOT PAY OFF THE DEBT IN FULL, YOU CANNOT AFFORD THE PURCHASE! Paying off the card automatically each month is easy, with automated payment options and flexibility in selecting your due date, you should be able to pay in full each month or carry a minimal balance. You are not jumping through silly hoops trying to ‘hack’ the FICO system simply charge what you can pay for and go about your life.

Example: I charge my groceries to my credit card and when I get home, I pay off the bill. This allows my behavior to be reported to the credit bureaus (they hold the key to your financial future if you operate in the realm of credit). You want all 3 bureaus looking at your good credit habits (experian, transunion and equifax). By showing them your good habits, you will increase your credit score in a hurry.

There are 5 factors that go into a FICO score. The biggest 2 are payment history (35%) and amounts owed (30%). As you can see, it’s more important to pay on time than it is to owe a lot of money. Never take out debt to raise your credit score. That’s not a wise choice. That’s like spending money in hopes you can save money by getting a lower interest rate. Does. Not. Make. Sense. Go for the 35% and pay off your card each month. Being in good standing with your debt is the largest factor in your credit score.

At The Mandrell Company, we try to teach strong financial habits to increase home ownership in communities across Greater Boston. We specialize in teaching clients how to build wealth through real estate, and to get started, you need a good track record of strong financial decisions. To attend one of our free seminars, please register at Urban Money Matters or contact us directly at contact@mandrellco.com.

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Credit affects all major financial decisions that involve someone lending you money/credit. It should be no surprise that your credit score will also affect your mortgage rate. Your credit scores affect the kinds of mortgages you can be approved for, how much you can borrow, the mortgage rates you’ll pay and even how much you’ll pay for private mortgage insurance (PMI). It’s not impossible to buy a home with damaged credit; it’s just much more expensive.
Credit scores are instrumental in applying and being approved for a mortgage. When it comes to FHA financing at least, you will be required to have a credit score of at least 580 in order to be eligible for a loan. The higher your credit score is beyond that, the better the terms will be. With a 580 credit score you also qualify for the low 3.5% down. If your credit score is below 580, you can still qualify for an FHA loan but you will need a 10% down payment. The drawback to a 580 is that your interest rate will not be at the national average, it will most likely be slightly higher. Consult your mortgage lender for more information. (We work with several lenders who work hard to get you the best rate, to be connected to one of them, please click here)
This is why it’s so important to understand your credit score in the months before you apply for a mortgage. If you do have impaired credit history, you’ll want to work to improve your credit scores before you even apply. And if you already have good credit, you’ll want to keep it as high as possible by avoiding taking on other new debt.
We host seminars throughout the year regarding improving credit and have affiliations with credit repair companies.
For more information, feel free to contact us.

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What Credit Score Do I Need To Purchase A Home?

Are you thinking it’s time to purchase a home but not sure you’re credit score meets minimum requirements? In a video interview, Chris Graves of Sierra Pacific Mortgage, talks about credit scores and exactly what’s needed to make sure your mortgage application gets approved. If you have any additional questions, or would like to get yourself pre-approved for a mortgage, complete the form below and your information will be sent directly to Chris’s inbox.

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Purchase A $350,000 Home With An FHA Loan & Down Payment Of Only $12,250

Have you considered buying a home but can’t afford a 20% down payment on the mortgage? You’re not alone! Many home buyers (especially in New England) cannot afford to shell out $40,000 – $80,000 just to get into your average Boston home. Fortunately there’s another option. FHA (Federal Housing Administration) loans are extremely popular mortgage programs because of their lower down payment requirements and less stringent lending guidelines. With this mortgage program, home buyers can obtain a home mortgage with as little as 3.5% of of the purchase price. For your average Massachusetts home (approximately $350,000) that roughly $12,250…a much more affordable and achievable number.  FHA borrowers can use their own savings to make the down payment, but other allowed sources of cash include a gift from a family member or a grant from the government. Another benefit to the FHA program is that is allows individuals with less than perfect credit to obtain a loan. Borrowers need a credit score of just 580 or higher to meet requirements.

Note: An FHA loan may also used to purchase a 2-4 four family home. Many individuals purchase their 1st investments property with FHA or similar “owner occupied” home loan. FHA does require that an individual move into the property for a specific period of time but does not require the borrower to remain in the property for the life of the loan. Talk to your local real estate agent and mortgage broker about whether or not this program is good tool for your purchasing needs.

The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as an appraisal, credit report or title expenses. Because the FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs — even on the same FHA loan.

The FHA has a special loan product for borrowers who need extra cash to make repairs to their homes. The chief advantage of this type of loan, called a 203(k), is that the loan amount is based not on the current appraised value of the home but on the projected value after the repairs are completed. A so-called “streamlined” 203(k) allows the borrower to finance up to $35,000 in nonstructural repairs, such as painting and replacing cabinets or fixtures.

For more information about FHA loans to get yourself pre-approved for a mortgage, please give us a call at 617-297-8641. We can connect you with one of our local mortgage specialist and get you on your way to home ownership.

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NACA is a home loan program that allows for 100% financing (or zero down payment) from the borrower. NACA stands for The Neighborhood Assistance Corporation of America and they’re primary goal is “invest in working people”.

This incredible NACA mortgage allows NACA Members to purchase their homes with:

  • no down payment,
  • no closing costs,
  • no fees,
  • no requirement for perfect credit,
  • and at a below-market interest rate.

NACA is a non-profit, community advocacy and homeownership organization whose primary focus is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership.

For more information about the NACA program and to be connected with a local loan officer, contact Jessica Thomas at 617-297-8641.

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Are you looking to buy a home in the near future? Has less then perfect credit stopped you from buying a home in the past? Home ownership is a huge part of the American dream and no one should be denied access. Here are 6 steps to improving your credit so you too, can achieve the American dream.

1. Pay down your credit cards to below 40%.

Ideally 30% but let’s start small and work our way up. It can be overwhelming if you have 5 credit cards that are all near their limit. Here are a couple strategies you could employ.  A. Pay off/down the highest interest card first. The money you save on interest payments will go toward paying off your next card on the list. B. Pay off/down the credit card with the smallest limit. Paying off something quickly gives you motivation to move on to the next. You feel motivated after paying down a $500 credit card in 2 months compared to paying $500 off a $5,000 credit card because you still see a high balance.

2. Slow down on opening new accounts

Each new account places an inquiry on your credit report, which decreases your credit score. When creditors see these inquiries, it decreases your chances of being approved. Also, new credit means less credit history, which is frowned upon. Side note: Choose cards with rewards so you earn while you spend.

3. Add someone’s credit history to your profile

If you have a family member that has good credit and good credit history, consider asking them to add you to their oldest credit card and preferably the one with the best credit history attached to it. While you will not adopt their credit score, you will obtain their history, so if they have owned the card for 10 years, you now have that 10-year history on your credit report. We DO NOT recommend you having access to their credit however. No matter how good your intentions, you never want to jeopardize someone’s credit for your own gain. They can give you their history without giving you access to their credit.

4. Get a secured line of credit

If you were unable to add someone’s credit history to your profile, your next best option is to open a secured line of credit. Essentially, you would put money on a card (like a debit card) and whatever amount you deposit, becomes your new credit limit. For example, you deposit $500 on your secured credit card, you now have a $500 credit limit on your card. If you decide to increase it to $1000, you pay the $1000 upfront and you can borrow against it up to $1000. The benefit is that if you decide to close the account, your money is refunded. Also, secured credit cards report to the credit bureaus unlike a debit card or some other services out there. Do your research and ask questions. See which card is best suited for your needs. The most important thing is to make sure they report to all 3 credit bureaus to help you establish credit.

5. Diversify your credit profile

You do not want all your credit to be of the same type. The goal is to have a diverse portfolio such as credit cards, car loan, mortgage, etc. Creditors want to see that you are responsible over a variety of credit types.

6. Get your credit limit increased with current lenders

I do this every year. If you have a great track record of always paying on time, you can ask your credit card company to increase your limit. Most allow you to do this on the website and it is instant. This serves 2 purposes: A. It increases your credit iimit and the % of credit owed. For example $400 on a $500 limit is 80% utilization, however, $400 on a $1000 limit is only 40% utilization. Do you see how this can improve your credit score without you doing anything more than making a phone call? This is not something you do monthly but rather on a yearly basis because some companies will pull your credit to make the decision which could hurt you in the short term but will be beneficial in the long. B. It gives you greater access to funds. Wouldn’t it be nice to know that you have an extra $1000 of available credit in case of emergencies?

Would you like to learn more about how to improve your credit? Sign up for FREE course – “How To Achieve An 800+ Credit Score & Never Be Denied For Anything“. You can find details on this course with the following link. http://www.meetup.com/Urban-Money-Matters/

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When it comes to buying a home, having bad credit is not the end of the world. Whether you have suffered from a bankruptcy, foreclosure or some type of financial hardship that resulted in late or missed payments, there are lenders who specialize in financing for those with less-than-perfect credit. You will likely have to produce a larger down payment and/or pay higher interest rates than someone who has good credit, but the important thing to know is that buying a home is an option for you.

Even if you have bad credit, it’s important to check your credit report from each of the three major credit reporting agencies – TransUnion, Equifax and Experian – before applying for a loan.  If anything is inaccurate, file a dispute with the reporting agency and request a correction.  You can request a free copy of your credit report every 12 months.

In addition to correcting any inaccuracies on your credit report, it’s important that you know what can help or hurt your chances of obtaining a loan.  You can start improving your credit by avoiding the temptation to apply for new credit right before submitting a mortgage application. Multiple inquiries will cause your FICO score to drop, and lenders will rely on this information when deciding whether or not to issue your loan and how to calculate your interest rates. 

If you have any questions or want more information about how to obtain or improve your credit score, please give me a call at 617-297-8641, and I would be happy to work with you. 

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