Homebuyers: How to Prepare for a Major Household Repair

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By JoAnn Sabas

After the purchase of your new home, you’ll likely experience an adjustment period during which you learn how to alter your budget and lifestyle to accommodate the new expenses in your life, such as mortgage payments and property taxes. One thing you’re probably not counting on, however, is a major household repair.

But even if you purchased a move-in ready house that doesn’t need any immediate repairs, the truth is that a major unexpected expense could surprise you at any time. For instance, a brand new furnace can malfunction just after the warrantee expires. A storm can do structural damage that your insurance company will only partially cover. In truth, there are many expenses waiting for you when you purchase a new home. If you prepare, you’ll be ready when they happen.

Here are three ways your family can be ready for a major household repair when it happens to you.

  • Add repairs into your monthly budget proactively. There are two popular schools of thought for budgeting for home repairs. Some say that you should sock away 1 percent of the cost of your home each year to prepare for maintenance (if your home cost $200,000, put aside $2,000 each year). Others say you should save $1 per square foot each year (so if your home is 1,500 square feet, you should save $1,500). You may not always use the full amount, but that just means you’ll be better prepared the following year.
  • Get at least three quotes on any work you contract. ’re handy around the house, doing your own repairs can come back to haunt you down the road. If you plan to resell your home soon, there’s a good chance you’ll need to verify the work was done to code by a licensed professional. When you do reach out to have work done, be sure to get at least three quotes. This will help you get a truer sense of how much your repairs actually cost, and give you leverage to negotiate the cost of the job.
  • Purchase your own parts. If you let a contractor do the shopping for you, you might end up with a more expensive furnace than your house really needs. When possible, purchase your own parts so your expenses end up going primarily to labor. You can often find better deals for used goods online, wholesale supply stores, or even outlets, where a brand new, fully functioning appliance may be marked down drastically simply because it was returned.

While there are many benefits to owning your own home, the responsibility of maintenance is certainly not one of them. But as long as you prepare for the inevitable, and respond responsibly when something goes wrong, you won’t put yourself, or your family, at risk of having to sacrifice your quality of life.

Three Ways You Can Improve Your Credit Score

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By Paul Mulligan

The importance of having good credit cannot be overstated. Having a good credit score—at least 700 on a scale from 300 to 850—can open up a world of possibilities that might otherwise have been unavailable to you. Good credit can help you get approved for a car loan or mortgage. In some cases, employers and landlords will even use credit scores as part of their background checks. A good credit score may also help you qualify for financing and credit cards with lower interest rates.

In general, you’ll find managing your finances and improving your quality of life easier with a first-rate credit score. On the other hand, the lower your credit score drops, the harder time you’ll have qualifying for low interest rates that will help you cut into your debt.

Fortunately, you can establish a good credit score early on and keep it headed in the right direction by following these three steps.

  • Apply for a secured credit card. Building credit is difficult to do without an existing payment history. One of the quickest ways to establish your ability and willingness to pay off debts in a timely manner is by using a credit card. Yet, first you have to qualify for the card, which is also contingent upon a solid history of loan repayment. In this case, a good solution is to procure a secured credit card. The lender assumes no risk with this alternative, as a sum of money equivalent to the total available balance on the card is held in an account and only released after you’ve established a track record for making regular payments.
  • Pay more than the minimum on your credit card(s). Another way to prove that you’re a low-risk customer is to pay down more than the monthly minimum on any of your existing balances. You don’t need to go overboard; paying 10 extra dollars a month can have an impact.
  • Leave repaid debts on your credit history. There is a difference between good and bad debt. If you’ve paid off a loan, don’t make the mistake of trying to erase the evidence that you had debt from your credit score. The fact that you incurred debt and handled it responsibly will help your score.

To learn more about the importance of credit and what you can do to improve your standing, stop by Milford Bank to speak with one of our financial advisors, or check out our Online Learning Center by clicking here.

When Should You Start Saving for Retirement?

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by Patty Gallagher

Even if you love your job, you’re probably looking forward to the day you punch your last time card and can begin your retirement. But while you may have a 401K and social security coming your way, the bulk of your retirement stash may still fall on you and your ability to save.

With that said, when should you start saving for retirement?

It is never too soon.

Relying solely on a 401K or social security can be a risky bet. Your 401K is tied to the success of the stock market. Even if your 401K performs well for 30 years, a sudden economic downturn could erase your earnings just when you need them.

Social security, too, is growing increasingly uncertain. According to 2015 findings from the Social Security Administration (SSA), the ratio of workers to SSA beneficiaries is currently at a record low of 2.8. (By comparison, when social security was first rolled out, there were 41 workers supporting the program for every social security recipient.) As the baby boomer generation ages that number is anticipated to continue shrinking, raising questions about the long-term viability of the program as it currently exists.

Both of these pillars of retirement planning can be highly unpredictable. That’s why it is so important to begin planning your retirement savings early.

To ensure a long and happy retirement, here are the two easiest and most impactful things you can do:

Change your spending habits: Increasing your savings for retirement isn’t just about earning as much as you can during your working career. Making slight lifestyle adjustments to alter how you spend that money can have just as large an impact. What is that five-dollar specialty Starbucks drink you get every day worth to you? Over the course of a 40-year work history, it would add up to $73,000—more than enough for a down payment to help you move into a relaxing, beachfront condo.

Diversify your investments: While your 401K can be viewed as a risky investment, it is still a safe harbor for your savings as long as you have other types of investments for balance. Certificates of deposit, savings bonds, annuities and IRAs are other financial tools that can provide safekeeping for your savings. Or, if you’re handy enough to take care of your own repairs, real estate can also be a good place for your money. In an economic downturn, gold and silver prices typically do well by comparison, so having a small supply of precious metals might provide an additional safety net.

To learn more about how you can prepare for a prosperous retirement, stop by any office of The Milford Bank and speak with a financial expert.

Join Milford Bank in Honoring Veterans at Second Annual Milford Moves 5K

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by Becky Tudor

At The Milford Bank, we feel that our success is intertwined with the success of our community, which is why we strive to provide, and participate in, events that promote healthy living. That’s why we started the Milford Moves 5K race; it’s also why, this year, we’re taking it to the next level.

Last year’s turnout was spectacular, with more than 250 local residents showing up to race.

This year, Jorge Santiago, Milford Bank’s senior vice president, is hoping for an even greater turnout. In additional to supporting fitness initiatives, Jorge would like to raise as much as $10,000 for local veterans’ groups.

All profits from entry fees and event sponsors will be shared between four Veterans Service Organizations based in Milford: American Legion Post 196, VFW Post 7788, Chapter 15 of the Disabled American Veterans and Chapter 251 of the Vietnam Veterans of America. The primary missions of these groups are dedicated to veterans administration and rehabilitation, as well as mentoring and sponsorship of local youth programs.

Anyone, regardless of fitness level, is welcome to participate. Participants will receive an event T-shirt, a finisher photo free download and a “virtual goodie bag.” There will also be awards for the overall male and female winners, as well as awards in each age category. All participants under the age of 18 will receive participatory recognition.

If you’re not a runner, show your support and sponsor someone. With the help of generous sponsors, including the Police Benevolent Association, Napoli Deli and Milford Produce Market, we can reach our fundraising goal. Business sponsorships start at $250 and include free advertising. Individual sponsors can also chip in by supporting an individual runner.

If you participated in the race last year, you’ll appreciate that the route has been revised. This year’s runners will begin at Gulf Beach, make their way to the town green and then head back to the starting point.

To sign up for this year’s Milford Moves 5K, register online at Milford Bank’s website. Or, participants also have the option to register on June 12, the day of the race, from 6:30-7:30 a.m. The race begins at 8:00 a.m. But if you’re planning on waiting until the day of the event, be sure to leave extra time to take do some stretches before the race starts!

 

 

Buying a Condominium? Carefully Assess the Related Association Fees First

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by JoAnn Sabas

Are you like many customers of The Milford Bank who are looking to downsize from a large single-family home or start small with a first home? Then perhaps a condominium is right up your alley. If so, you may be becoming familiar with homeowner’s association agreements, which list mandatory fees for maintenance, capital improvements and other items for these housing units. These documents can be quite complex and detailed to ensure a uniform appearance among the many members’ homes.

What this means is that you should look beyond the price tag on your condo when determining whether or not you can afford the overall costs. Remember, some of the association fees may not be expenses you would necessarily incur as the owner of a single-family home. So, to avoid unforeseen costs that could put your financial stability at risk, let’s take a look at both typical inclusions and things to be wary of in these agreements.

To begin, standard homeowners association agreements generally charge maintenance fees for property aspects that are communal, such as landscapes, elevators, swimming pools, clubhouses, parking garages, fitness rooms, sidewalks, security gates, roofing and building exteriors. Depending on the neighborhood, the cost of living and the quality of the residences, these fees can range anywhere from $50 a year to several thousand dollars each month. Highly valued properties or locales excluded, you could generally expect something in the $200 to $400 range. In addition, a homeowner’s association may levy one-time fees, commonly referred to as “special assessments,” on members to cover major expenses, like the repair of a roof or a new HVAC system.

Conversely, here are some potential costs that could sour the deal for you:

  • Pre-existing conditions. Review your association’s rules before diving into the purchase of your condominium. You may find that you’ll be held responsible for a prior owner’s failure to maintain the unit. To avoid a nasty surprise upon moving in, confirm that your property is already in line with all association building, maintenance and appearance guidelines. After all, you don’t want to get started on the wrong foot with your residence’s governing body. Buying into an undisclosed problem will likely cause tension with board members or neighbors from the get-go. Also consider your own personal attitude when it comes to adhering to regulations about the type of flowers you can plant or colors you can paint. Some homeowners place great store on such freedoms; if this is you, be sure to read the fine print.
  • Fee assessment and funding. Does the association have catastrophe insurance, or will you be expected to pay out of pocket for damages caused by a flood, hurricane or tornado? How does the association determine fee increases in general? Can you obtain minutes from previous meetings? Is a record of dues and fees kept and maintained, and is it accessible? What do the association’s financial reserves look like? Consider that 70 percent of association-governed communities are underfunded, with most only being 52 percent funded. These are all questions to have answered before, not after, signing on the dotted line.
  • Amenities. You are going to be on the hook for amenities such as clubhouses, tennis courts and pools whether or not you use them.

The Milford Bank is in the business of ensuring the future financial health of our clients. Never hesitate to consult one of our financial professionals before making a home-buying decision.

The Milford Bank is an Equal Housing Lender.

Three Ways to Bring Up Your Credit Score

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by Trish Townsend

Credit scores are a necessary part of making big financial decisions these days. Whether it’s buying a car, getting a mortgage, or even applying for some jobs, a high score shows you’re a responsible individual. If you’ve made some mistakes with your credit in the past, all is not lost. Here are three tips to help increase your score:

  1. Make payments on time. Don’t skip payments or send them in late. The best way to build or rebuild credit is to make on-time payments with your regular bills month after month. Make sure you pay one-time fees on time as well, such as for a doctor’s appointment, library overdue fee, or membership dues. These kinds of charges don’t normally appear on your credit report, but they will if you are late paying them and they end up going to a collection agency.
  2. Make consistent payments. Sending huge amounts to a creditor, then pulling back and barely making minimum payments or skipping a payment may hint at underlying financial issues and could suggest that you are not responsible with your money or your credit. Likewise, suddenly taking out cash advances or applying for short-term loans may set off alarm bells and lower your credit score. Set a monthly payment amount for debts you owe or credit cards, and pay that amount month in, month out over time. Concentrate on paying off one debt at a time if you have several by making one robust payment and paying the minimum on others, rather than throwing varying amounts of money at different accounts month to month. Once you pay off one, focus on consistently paying down the next. Never skip payments. Consistency and perseverance can pay off in the form of a higher credit rating.
  3. Keep credit card balances manageable. That high spending limit can be extremely tempting, especially if money is tight and you’re yearning after a big-ticket item, want to buy gifts or a few extras, or are planning a vacation. Resist the urge to just “charge it.” A good rule of thumb is to never let your credit card spending exceed 30 percent of your available balance. Remember, if your balance soars above that, it could take many years to pay off if you’re making minimum payments—and you’ll repay it many times over due to interest charges. Carrying too much credit card debt can also further damages your credit. Keeping your debt level low helps to show you are a responsible and trustworthy borrower.

If you are concerned about your credit rating or struggling to get out of debt or control spending, help is available. Speak to a Milford Bank representative for more advice about how to improve your credit score and manage your overall finances.

 

What Will Rate Hikes Mean for Your Family?

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by Paul Mulligan

Back in December of 2008, the Federal Reserve instituted a zero interest rate policy in an effort to curtail the effects of what is now commonly called the Great Recession. For the past seven years, borrowers have been able to take advantage of these lower interest rates. But with the economy now improving, the Fed is beginning to raise interest rates once again. This policy change can have a very real impact on American families, including your own.

Here are some of the primary ways that a higher interest rate may affect your family, along with ways to offset the negative and accentuate the positive:

More expensive mortgages: If your family is looking at either purchasing or refinancing a home, now is the time to act. A fixed-rate mortgage will enable you to lock in today’s comparatively low interest for the term of your mortgage. A variable-rate mortgage, on the other hand, is tied to the Fed’s raising and lowering of interest rates, so it will become more expensive if rates go up. New buyers should, therefore, consider taking advantage of a fixed-rate loan. If you own a home, you should consider refinancing for one of two reasons: either you currently have a variable-rate mortgage or your fixed-rate mortgage was set at a high interest rate prior to the zero interest rate policy being enacted. This may be the last chance to capitalize on the Fed’s policies before rates increase. Speak with your banking institution to see if you can benefit.

Higher annual percentage rate (APR) on credit cards: When the Federal Reserve cut interest rates in 2008, fixed-rate credit cards basically disappeared from the market. If your card was issued and your rate fixed prior to 2008, you will not be affected if rates go up. But a large number of credit card owners whose lending rates are variable—and tied to interest rates—may experience an immediate rate increase, including on any existing balances. For credit card holders, the best thing you can do is plan ahead. When working up your monthly budget, be sure to set aside an extra amount relative to the outstanding balance on your credit card. If you’re using a new credit card, try not to overextend yourself before you know what a rate hike will mean for your finances.

Higher returns for savings accounts: There is some good news for consumers when it comes to higher interest rates. Those with money stashed away in savings accounts will see increased returns. In the age of the zero interest rate policy, savings accounts accrued minimal interest. With a rate hike, savings accounts will become more viable savings vehicles again. If you have been able to put money aside in a savings account, keep it there. If you don’t have a savings account, now might be a good time to open one.

While even the brightest financial minds can’t always predict what the Fed will do with interest rates, you can prepare for the ups and downs by reviewing your finances in these three areas. To learn more about how to safeguard your financial interests with a Fed hike looming, call or stop by any office of The Milford Bank.

Just in time for fall clean up – gather your unwanted items!

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by Lynn Viesti Berube

The Milford Bank will host a Green Fair at its Main Office Campus on the Milford Green located at 33 Broad Street in Milford. The event will be held on Saturday, November 14th from 10:00 am until 4:00 pm.

Two trucks will be on hand that day. One will accept unwanted office supplies such as outdated computer equipment and office furniture. AFA Electronic Recyclers of Branford, CT will responsibly dispose of all items they collect.

The other truck will securely shred unwanted documents on site. The vendor providing this service is Infoshred of East Windsor, CT. (There is a limit of three medium sized moving boxes.)

These services will be provided at no charge to customers of The Milford Bank. Others are asked to make a donation of $5 per box. Funds collected will be donated to a local charity to fund a green initiative in 2016.

The Literacy Center of Milford will be collecting children’s books at the event and the First United Church Youth Group will collect deposit bottles and cans.

There will also be children’s crafts, information about home energy efficiency, tips for reducing paper consumption, arts and crafts vendors and more! Admission will be free.

Susan Shields, Milford Bank President & CEO says of the event, “The Milford Bank continues to support the residents of Milford and Stratford through community involvement, donations to many local charitable organizations, special events and financial education. The Bank is proud to partner with this year’s vendors. The goal of providing these services to members of our community is to assist with the responsible disposal of unneeded documentation and outdated electronics while educating the public on easy energy conservation.”

A list of accepted items can be obtained on the AFA Recycling website: www.afaelectronicrecyclers.com. Have a piece of electronics to recycle that is not on the list? Please contact AFA Recycling directly at (203) 421-4187.

The Milford Bank is Member FDIC.

Three Things You Need to Know About Your Credit Score

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by Trish Townsend

If you have aspirations of one day owning a home, leasing a car or paying for college (either for you or your children) then you know the road to obtaining these goals leads directly through your credit score. Your credit score is the numerical evaluation of your lending history, and it is often the determining factor when lenders accept or deny your loan request. With a good credit score the sky is the limit; however, a poor score can make a task as simple as applying for a credit card become nearly impossible.

Considering how important a credit score is to an individual’s future, it’s surprising to discover that nearly 60 percent of adults haven’t checked their score within the last year. In the spirit of educating our account holders, here are three things you may not know about your credit score:

• Payment history: The largest chunk of your credit score—35 percent in fact—is based on your payment history. This should not be confused with your history of repaying loans, but rather it includes bill payments of any kind. That means if you still have that library book from high school in the back of your closet that’s rung up unimaginable late fees, it is possible that it could end up on your credit score and negatively affect it. Likewise, medical bills, parking tickets and even a late cable bill can be factored in to your credit score.

• Free reports: Your credit report—detailing your credit score and how it was calculated—can be freely obtained three times a year; one each from the three major credit-reporting agencies: Equifax, Experian and TransUnion. While you can contact the credit-reporting agencies individually, they can more easily be obtained through annualcreditreport.com, the only website explicitly directed by Federal law to provide credit reports. Knowing your score is the first step to improving it, and it’s a great way to monitor against identity theft.

• Constant change: Your credit score is alive, and it’s changing almost every single day. Many people are unaware of how a change in their credit score actually occurs, so having this knowledge will be helpful when seeking loans. As a best practice, check your credit score by using one of your free reports as soon to applying for a loan as possible. Doing so will allow you to address any glaring inaccuracies, as well as will offer you a better picture of how much money you’ll be allowed to borrow.

Your credit score can be your best friend or your biggest foe, but you’ll never know until you find out more.

How to Improve Your Credit Score

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by JoAnn Sabas

A good credit score is what each of us aspires to. After all, a credit score is one of the important determining factors when it comes to borrowing money for a home.

Mortgage lenders look at your credit score as one of the essential elements when determining whether or not to approve your mortgage application. A higher score reflects a strong credit history.

So how can you give your credit a boost to improve your chances of getting the lowest possible mortgage rate? Let’s take a look:
• Begin by getting your credit score: You have to know where you stand in order to improve. Get started by running your credit reports. By law, you’re allowed one free credit report from each of the three major credit reporting bureaus every 12 months. The reports will explain how your score was determined. For instance, your FICO score—which many lenders use to assess an applicant’s credit risk—is calculated using both positive and negative information in your report. That information is broken down into five main categories: payment history, amounts owed, length of credit history, new credit, and types of credit used.

• Fix errors on your credit report: This is a crucial step that can dramatically improve your score. If you find errors on any of your reports, dispute them immediately with the appropriate bureau. The first step is to inform the responsible credit bureau of the inaccurate information. Next, do the same with the creditor or information provider, and explain why you’re disputing the item.

• Pay down your debts and pay bills on time: Keeping your loan balances low can have a positive impact on your FICO score because your “amounts owed” category accounts for around 30 percent of your FICO score. If you can swing it, paying down your credit card debt balances to 30 percent of your total limit is an easy way to give your score a bump. Also, late payments and collections leave major blemishes on your credit report; paying your bills on time and avoiding late payment is the only way to keep a positive payment history. In addition to bankruptcy, foreclosure and judgments, collections and habitual late payments are the worst things to see on a credit report.

Undeniably, it’s important to go into the mortgage process with the best potential credit position. Just make sure to give yourself ample time to find and correct credit report errors. What’s more, doing this clean-up in advance will also speed up the mortgage process.

If you have questions about how to read your credit report, whether you might be eligible for a mortgage or any financial products or services, please contact us. We’re here to help!