By Paul Mulligan
Buying a home is one of the biggest milestones in your life – right up there with marriage and starting a family. Being a homeowner has several benefits, including possibly lowering your monthly payments compared to renting and earning equity as your home value rises and you pay down your principal. The immediate benefit, of course, is the happiness and security of owning instead of being beholden to a landlord. As a homeowner, you have the ability to do what you like with pets, landscaping, renovations, and anything else that will make your house a home.
But, buying a home is also probably the biggest financial commitment you’ll make. There are many things to think about as you begin the process that can help make the process as enjoyable as it should be.
Here are several tips that can help make your first home purchase a positive experience.
Buy within your means – Many people tend to look at houses they can’t afford or that are too large. Do the math to determine how much you can realistically spend while still allowing you to meet your monthly budget needs, as well as continuing to save for retirement and other future needs – including home maintenance and repairs.
Understand all your costs – In addition to the basic monthly mortgage payments, be aware of all the other costs that may impact your budgeting. That includes property taxes and homeowners insurance, as well as mortgage and hazard insurances, depending on your financing need and location of the home. You should also expect an increase in your utility bills, including heating and HVAC maintenance contracts – especially if they were previously included in your rent payments.
Plan ahead – Don’t rush into a home purchase. Make sure you have all the information, have the financial resources to comfortably support the purchase, and are buying a home you will be happy in for many years. Try to avoid draining all your savings and make sure you still have an emergency fund to fall back on should the need arise. That’s particularly important as a homeowner so you don’t risk losing your house if you’re suddenly unable to make payments for a short period. In fact, it’s even better if you can continue to grow your savings, so you have the resources to make improvements.
Manage your credit – It’s always important to follow good spending and credit habits, but especially when you’re looking to buy your first home. Lenders will pull your credit reports, possibly several times, to make sure you are credit worthy and nothing has changed during the buying process. Make sure you pay your bills on time, and be cautious opening up any new lines of credit before your loan is approved.
The perfect home vs. the right home – It’s rare that you’ll find the absolute perfect home for all your current and future needs. Have a reasonable list of must-have features, and a second list of nice-to-haves. Look for a home that checks off the first set, and maybe some of the second (you can always make improvements to check off more items later). But don’t forget location. Your neighborhood can be as big a factor in your long-term happiness as the house itself. Do your homework and learn about the school system, commuting options and time, crime rates, tax rates, and other geographically dependent variables that may influence your decision.
Start the loan process early – As you start thinking about buying a house, don’t think you have to find the house first. In fact, you may be better off starting the loan process while you’re looking, or even before you start. Good houses can sell quickly, and once you find the house you love, you want to be able to move quickly. Being pre-qualified for a home loan may give you an advantage over other potential buyers, especially if the seller wants to move quickly.
Seek advice – Especially as a first-time buyer, you will have many questions of your own, and many more you don’t even think to ask. Contact one of our mortgage specialists, who can give help you find all of the information you need and help you throughout the process. Also ask about our first-time home buyer program, which offers:
- Refund of $475 application fee upon closing
- Discounted Interest Rates
- Pre-Qualification certificates to help you shop for your home
- Low Down Payment options
Keeping these tips in mind will help you have an enjoyable home buying experience and avoid complications that could arise.
*The Milford Bank is an Equal Housing Lender
by Paul Mulligan, SVP, Retail Lending
When you apply for a loan, lenders have access to a variety of information they use to decide whether to give you a loan and at what terms. The most popular of those resources is your FICO score, a three-digit rating based on information in your credit reports, which helps lenders decide how likely to repay a loan, how much you can borrow, the length of you loan repayment period, and your interest rate.
While FICO scores give lenders a quick and consistent way to determine borrower worthiness, they also make sure you, the borrower, get a fair credit assessment and access to the funds you need. FICO has become the de facto industry standard for lenders.
This month, FICO has updated its scoring system for the first time since 2014, which could impact your scores. The new scoring places more emphasis on trend data in your credit report, looking at your credit utilization and payments over the past two years, as opposed to only current balances. For instance, new data might include whether you tend to pay off balances quickly, carry extended debt, or consolidate loans, as well as your credit management predictability.
The other major change reflects changes in credit reports. Tax liens, insurance-paid medical collections, and judgments are no longer part of credit reports, and healthcare defaults won’t appear on credit reports for at least six months.
At the end of the day, though, the real question is, how will the new scoring impact you?
The new scores will be less forgiving of risky credit behavior. That means, if you regularly run up your credit, don’t pay off balances consistently, carry too many credit cards, or consolidate debt into personal loans in order to free up your credit cards, you may see your score go down.
On the other hand, some spending habits that may have previously been viewed negatively may no longer hurt you. For instance, if you run up seasonal balances – such as during the holidays or summer vacations – and then pay them off, your score may not be negatively impacted because those are predictable one-time spikes, not regular habits.
Ultimately, what you need to keep in mind is the basics of good credit haven’t changed. Payment history (35%) and credit usage (30%) are still the two biggest components of your FICO score. If you follow good credit practices – pay your bills on time, keep balances below your credit limits, and don’t apply for too many new lines of credit (or too often) – you should have nothing to worry about. In fact, if you manage your credit well, the new scoring could actually improve your score.
If you’re concerned about your credit rating and want to work to improve your score, the sooner you start following good financial habits and budgeting, the faster you can see positive change. Of course, it’s not always easy, so if you need help or want advice on how to become more responsible with your spending, talk to our specialists. They can provide information on financial best practices, budgeting and saving tips, and improving your credit. On the other hand, if you have managed your credit responsibly, you probably don’t have anything to worry about. Just continue to follow smart banking habits.
By Celeste Lohrenz
Emergencies are, by definition, unexpected and unpredictable. They can also have significant financial ramifications – either due to high costs or loss of revenue or both. By nature, emergencies aren’t easy to deal with and most can’t be avoided, but there are ways to make them more manageable, starting with making sure you have an emergency fund. The question you should ask yourself is, “If I lose my job, if my roof starts leaking, or if my car needs a new transmission, am I financially prepared am I to deal with it?”
Why start an emergency fund?
An emergency savings fund or account could be the difference between being able to manage unexpected expenses and falling into deep debt. If a significant expense comes up, knowing you have the funds to support at least some of it can keep you from having to worry about your monthly fixed expenses without taking out loans or maxing out credit cards.
How much do you need?
How much to save is really a question of several variables, including income, monthly fixed costs, lifestyle and other variable expenses, size of family, and certainly how much can you actually afford to save each month. A common goal is to have 3-6 months’ worth of expenses in an emergency fund, but even as little as $500 can cover many unexpected expenses, like a leaky bathroom pipe or bad brakes on your car.
Start by setting an attainable goal and, once you’ve reached that target, you may find you want to increase the size of your emergency fund, so you can set a second target. When your emergency fund has reached a point with which you’re comfortable, you may have found it easy to live with the reduction in spending. In that case, you can use the same philosophy to start a new account to start saving for a larger planned expense, such as a vacation, wedding, mortgage down payment, college tuition, etc.
How to grow the fund?
There are many ways to find money to add to your savings, from cutting expenses to finding supplemental income sources. One place to start is the change you get when paying with cash. The coins, $1 and even $5 bills can add up quickly if you put it into a jar at home every day, then deposit it each week or month. But, you have to have the willpower to avoid dipping into it for an iced latte or other items.
One of the most effective ways to save, though, is using automatic deposits. We can help you set up automatic monthly transfers into your emergency fund, so you don’t even have to think about it. Saving apps are another very useful tool that help automate your emergency fund growth. The Milford Bank has partnered with Plinqit to help customers not only save, but earn money in the process as they reach their goals.
Where to put the money
The key is to make sure you have access to your emergency fund should you need it, but you don’t want it to be so convenient that it becomes a daily temptation. Interest-earning savings accounts are a good option, because they can be accessed at any time without penalty, but you should keep your emergency fund in a separate account from your regular savings to avoid using it. Your bank’s specialists can help you determine exactly what kind of account is most suitable for your individual needs.
When should you access this account?
The point of an emergency fund is to have it available if unexpected expenses come up that you can’t handle with your monthly budget. if you’re faced with an expense you weren’t expecting, consider whether it’s actually an emergency – something you absolutely can’t avoid doing – and whether you may be able to cover the costs with your monthly budget, even if you have to adjust it slightly. By using automated tools to fund the account, you will be less likely to spend it until an emergency arises – out of sight, out of mind, as they say. But remember, emergencies can happen at any time, so if you do need to dip into your fund to cover an expense, you should start saving again right away to build it up again. You never know when the next emergency is going to happen.
By Paul Mulligan,
Senior Vice President, Consumer Lending
Now that the holidays are a distant memory, everyone has settled back into their “normal” routines, which inevitably includes paying the bills. Hopefully, you didn’t max out all your credit cards, but if you did, that may create strain on your budget, especially if you also have other debts you’re paying off as well, like college loans.
The reality is this situation can happen to anyone, at any time. You may run into some unexpected expenses or you simply aren’t budgeting wisely, or you haven’t figured out how to save enough and the next thing you know, you have multiple debtors hitting you with high interest rates every month. It can make it hard to make a dent in your balances and become financially secure.
If you own a home and have built up equity, there is an option that could help get you out of debt faster than paying off all your credit cards each month. You could look into a home equity loan. Especially if you’ve been paying of your mortgage for several years, or your home value has increased significantly, you may actually have an easy time securing a home equity loan.
Using a home equity loan to pay consolidate multiple debts has some advantages. For instance, home equity loans often come with lower interest rates than credit cards, making the interest you’re accruing each month lower. With a home equity loan, you are also only paying a single creditor, making your monthly budgeting a little easier to manage, and a longer repayment period may help you reduce your monthly payment, giving you a little breathing room in your budget. In addition, if you are also using the home equity loan to fund a major home improvement project, the interest may also be tax deductible.
But, you should be aware there are risks with consolidating debt into a home equity loan. Perhaps the biggest is that, if you default on the loan, your home can go into foreclosure. Unlike credit card debt, it’s almost impossible to discharge a home equity loan. In addition, if your home’s value drops, you could end up paying more than it is actually worth at that point.
Perhaps the biggest drawback is loan consolidation doesn’t address the spending habits that got you into a debt problem to begin with. In addition to paying off your loans, you should also get into better spending habits to make the most of your paycheck and avoid getting into even more debt. It’s very easy to start running up credit card balances if you aren’t careful. So, if you are having a hard time putting money into savings, there are several ways you can help yourself become more financially responsible, including using a savings app like Plinqit.
But, if you think a home equity loan could be the right option for you, come speak with one of our financial specialists, who can help you make a smart decision and get your finances back on track.
By Tina Mason,
Customer Solutions Specialist,
Saving is not always easy. Just ask the 58% of Americans who have less than $1,000 saved (73% have less than $5,000 in savings). Financial experts suggest having an emergency fund of 6-12 months of expenses, in addition to saving for retirement, which should be around 15% of your annual income. Of course, that doesn’t factor in saving for additional large expenses, like vacations, college tuition, home improvement projects, among others.
So, when you put it all together, saving close to 20% of your income can help provide a comfortable level of financial security. But, according to another survey, 69% of Americans set aside 10% or less, and only 15% are saving more than 15%.
There are several reasons behind the lack of savings, including expenses being too high, income levels not being high enough, and debt – as well as simply not having gotten to it. It’s very possible that some expenses can be reduced by doing a spending analysis, which would help those with high expenses or lower incomes. But, the simple fact is it’s just not easy to save.
There’s good news, though. We’re living in a tech-driven world, and innovative companies are creating apps and services to solve just about every problem, including fintechs and the saving dilemma.
The Milford Bank has partnered with one of those fintechs, Plinqit, to help customers save. The key is that it’s simple to set up and simple to use. Customers simply set up a Plinqit account, connect it to their checking account, set up to five savings goals and a schedule for depositing small amounts into their Plinqit accounts.
Because we want to help customers succeed, The Milford Bank and Plinqit incentivize users to become more financially literate and to follow through on their savings goals. By watching educational and financial videos through the app, users can earn savings rewards that are added to their Plinqit accounts. Users can also be rewarded for successfully reaching their savings goals – but there are penalties for withdrawing their funds early.
How much users are able to save is completely up to them. Each user has to set reasonable savings goals based on their own budgets and expenses. The Milford Bank and Plinqit are here to help keep those savings goals on track. The app works; Plinqit users have saved more than half-a-million dollars since the app was launched.
If you’re serious about saving money for any reason, The Milford Bank is here to help. Anyone can set up an account on their own and start saving, but if you want advice on your personal finance needs, please visit one of our offices and speak to one of our financial specialists.
It’s no secret that the world has gone digital. So much of everything we do each day happens online with the mobile devices that seem to be attached to our appendages. Mobile and desktop apps and online portals have changed the way we manage our lives, including our finances.
With the Millennial generation now the largest single population group in the workforce, the majority of spenders and financial decision-makers will soon be digital natives. They have grown up in the smartphone era and expect to be able to do just about everything digitally, including banking.
According to a recent report, 69% of Millennials use their laptops or PCs at least once a week to access bank accounts, but 92% do the same thing on their smartphones, and more than half engage in banking activities on their mobile devices more than five times a week.
Interestingly, Gen X is actually ahead of the Millennial generation in terms of laptop banking (82% at least once a week), and not far behind when it comes to smartphones (83% at least once per week and 47% more than five time a week).
The Milford Bank has always prided ourselves on the personal service we deliver and the community and human connections we are able to create. While on the surface it would appear that national banking brands would have an advantage with digital banking, we are happy to be provided the opportunity to build on our relationships we have had with our customers by offering a variety of digital products and services that can be correctly tailored to our customers’ needs and wants. Some of the advantages of this digital shift are:
Expanded customer base – Digital banking allows us to expand our customer bases. Because most people don’t need to visit branches very frequently, offering digital banking products can showcase our brand to new customers. Customers are comfortable doing most of their banking using digital tools, and are within a reasonable distance from a branch to be able to go when they need to.
Quality customer experience – The Milford Bank prides itself on delivering superior customer service. While it may seem digital banking could detract from that experience, it’s actually quite the opposite. Because customers expect to be able to do their banking online, giving them the tools to do it is part of a great experience.
Improved customer engagement – Digital tools create opportunities for increased engagement between The Milford Bank and its customers. That means that we now have more ways to let our customers know about the tools that are available for their banking needs – especially new ones, like partnering with P2P payment networks, and to emphasize the flexibility the combination of local and digital banking offers.
Perpetual availability – One of the great benefits of digital banking is its 24/7/365 availability. While offices are closed for holidays, the Internet stays open for business, which means you can access your accounts, pay bills, and send money to your kids in college any time at all – from anywhere.
The bottom line is banking is going digital, and it is important for The Milford Bank to give our customers a diverse variety of tools to choose how they want to bank. As banking competition has moved online, The Milford Bank cherishes the opportunity to blend the personalized experience a customer gets when they visit one of our offices with the ease and convenience of our digital product offerings. Customers like feeling that they matter and it is important for us to provide quality products and services regardless of whether it is in person or online.
By David Wall,
Chief Information Officer
‘Tis the season… for joy and celebration and spending time with family and friends. It’s a time of year most people look forward to for many reasons, not the least of which is the traditions attached to the holiday period which, for many, includes travel. If you’re one of millions of people driving to visit your relatives this holiday season, there are plenty of things to deal with, from packing to wrapping presents, scheduling and, of course fighting holiday traffic.
This year, though, there’s something else to worry about. If you’re driving during the holidays, you’re going to eventually end up at a gas station, where you may be putting your payment cards at risk more than usual. Card skimmers have been around for a long time, but they can often be recognized by smart consumers and reported.
But, cyber criminals are getting more advanced and Visa has warned consumers of a new, growing risk at the pumps. A sophisticated hacking group has exploited vulnerabilities in gas station point-of-sale networks that allow them to install malware to intercept payment data from magnetic strip readers without any physical skimmer needed.
The problem is these attacks are undetectable to customers – until their accounts are used for fraudulent purchases or personal information is used in other ways, like opening new accounts. But, they are not entirely powerless. Because chip transactions have not been compromised through these breaches, customers should look for gas stations that have updated their technology and are using PIN or chip readers. Of course, good old cash is also a safe alternative.
Gas stations are facing an October 2020 deadline for installing chip readers at pumps, but until then, customers should be aware of the risk of using stripe readers.
This is yet another example of the continued threats to consumers’ financial and personal information, with new breaches reported almost daily that can cause significant hardship – or, at the very least, inconvenience – to victims. If you’ve suspect any of your financial information has been exposed in any way, please contact The Milford Bank right away so we can assist in resolving the issues. We also recommend subscribing to our Security E-Newsletter which offers informative articles and keeps you abreast of the latest threats.
Fraud and identity theft are the last thing anyone wants to have to deal with, least of all during the holidays. Staying informed and knowing how to reduce your exposure to risk can go a long way in keeping your accounts and data safe, and making sure you can enjoy the season.
By Lynn Viesti Berube
One of the unique features about today’s app-centric society is there’s an app or just about everything, it seems. It’s great to be able to download apps and take care of so many things on your mobile devices. On the other hand, because these apps tend to be fairly targeted – most try to solve a single problem – they don’t always offer quite the level of flexibility or functionality users might want.
Take mobile payment apps, for instance, like Zelle or Venmo, which are becoming increasingly popular. They are designed to make exchanging funds between individuals easier using digital technology. But, they are not necessarily intended for all transactions. Both companies have been clear that their intended use is for payments between friends or other people who know and trust one another. For things like paying a share of a dinner bill, sending an entry fee for a fantasy sports league, or getting in on a group birthday gift, apps like these make transactions fast and simple. These are cases where one individual outlays funds for an activity, and others need to pay their share.
But, as with any digital transactions, there are risks that users should be aware of. Here are a few simple tips to keep your apps, accounts, and money safe while letting you enjoy the convenience of P2P payment apps.
Intended uses – Use the apps as they are intended. If an online retailer asks you to pay using a p2P app, you should be suspicious. Reputable online retailers should offer payment methods that don’t require immediate P2P transfers, such as credit cards, PayPal, and other means. If you’re paying for services, such as a snowplow service in the winter, using a P2P app, you may be using local residents not set up to receive credit card payments, and sending a check each time it snows can be a nuisance, so a P2P app might be the best option. At the very least, make sure you know who you’re paying, use only reputable providers, and make sure you’ve received the service before paying. Consider sending a check the first few times to make sure the relationship works out.
Identity – It’s easy to make a mistake when typing an email, phone, number or username. Double check whatever identifier you’re using to send money to someone. Once the money has been sent, it’s hard – often impossible – to get it back, so taking the extra time to get it right can reduce potential headaches.
Send a test – If you’re not certain you are sending to the right person, send a small amount as a test and confirm they received it before sending the full amount.
Security – Follow the same security principles as you would for any other application or website. Use the highest level of security they offer, including using a PIN or fingerprint ID for transactions. If the application offers two-factor authentication, be sure to use it. While this adds an additional step when using the app, it also adds an additional layer of protection that help keep you account secure, even if your credentials are compromised.
Deposits – Some apps place funds you’ve received into a mobile wallet until you manually transfer them into your bank account. This can sometimes take several days to process, so once you have approved the transfer, check to verify that it actually went through.
Fees – Some P2P payment platforms charge fees for certain kinds of transactions. Make sure you know what your app’s policies and fees are so you won’t be surprised and can account for fees when sending or receiving money.
Settings – Always check your app’s privacy and sharing settings. They may have default settings that make information available to others that want kept private.
Kids – Many parents want to give their children access to P2P payment apps to make it easier for them to participate in various activities. You probably don’t want to give them full access to your credit card or bank accounts, so take the trip to your local bank to see what options they might be able to offer, such as a prepaid debit card to link to your child’s app. If they are part of one of the payment platform networks, they likely are well versed on the best ways to let your kids use them. Of course, before anything, make sure your child’s device has security protocols enabled, and talk to them about potential security risks and how to avoid them.
By Celeste Lohrenz
As it has been with nearly every industry, digital technology is changing the way people bank. Online tools and mobile apps are making it easier for people to manage their finances, giving them modern options to replace traditional options. P2P (Peer To Peer) payment apps, for instance, have become highly popular as a means of exchanging funds between individuals.
While check payments are still very popular – even with Millennials, new P2P payment users are nearly evenly split between those younger than and older than 45.
It’s really about having options. If there one thing a digital economy has proven it is that people want convenience. They want to be able to transact using whatever methods are most convenient for them at the time. That may mean going to a local bank office to understand the differences between home equity loans and HELOCs. It may mean putting a check in the mail for a monthly car payment. It may mean going to an ATM to take out cash for dinner. It may mean putting a new TV on a store credit account because of a no-interest offer. Increasingly, though, it also means using P2P apps to settle with friends, relatives, colleagues, or others.
For instance, Zelle – a mobile payment platform whose parent company is actually owned by seven major banks – delivered $49 billion through 196 million transactions in Q3 2019 alone, a year-over-year increase of 58% in transaction value and 73% in transaction volume. The Milford Bank is happy to now offer Zelle to our customers as a further option to your banking experience.
There are many reasons P2P payment apps such as Zelle are growing, but convenience is at the top of the list. Zelle offers a simple alternative to get money to other users quickly – if both parties are signed up with Zelle for instance, funds may be available within minutes. Zelle is available on both Android and iOS platforms, making it easy to transfer money to split a dinner tab or utility bill, regardless of what mobile devices your friends use.
But, perhaps the biggest benefit Zelle offers is trust. The biggest reason consumers avoid mobile payment apps is lack of trust. In addition to being operated by a consortium of the biggest banks in the country, Zelle partners with other financial institutions so those banks can make Zelle transactions available through their own mobile apps and online resources – as opposed to having to use a third-party app. Sending or requesting money is as simple as logging into The Milford Bank’s mobile app or online account and choosing the person to send funds to using your mobile contact list or entering their phone number or email address.
Along with The Milford Bank, more than 600 financial institutions have signed up to be part of the Zelle Network, with more than 250 already online and processing transactions. In all, more users representing more than 5,500 banks have successfully completed Zelle transactions.