7 Tips for Improving Your Credit Score

An important step to finding a home, whether you’re renting or buying, is ensuring that you have a good credit history. Peoples State Bank suggests the following tips to improve your credit score.

1. Request a copy of your credit score report – and make sure it is correct. 

Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for other loans – such as a mortgage. Everyone is entitled to receive a free copy of his or her credit report annually from each of the three credit reporting agencies, but you must go through the Federal Trade Commission’s website at www.annualcreditreport.com, or call 1-877-322-8228. Note that you may have to pay for the numerical credit score itself.

2. Set up automatic bill pay. 

Payment history makes up 32 percent of your VantageScore credit score and 35 percent of your FICO credit score. The longer you pay your bills on time, the better your score. Avoid missed payments by setting as many of your bills to automatic pay as possible. 

3. Build credit through renting. 

VantageScore’s scoring model, created by the three major credit bureaus, will now weigh rent and utility payment records. This will allow it to score as many as 35 million people who previously couldn’t get a credit score.

4. Keep balances low on credit cards and ‘revolving credit.’ 

Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your scores by limiting your charges to 30 percent or less of a card's limit.

5. Apply for and open new credit accounts only as needed. 

Keep this in mind the next time a retailer offers you 10 percent off if you open an account. However, if you need a new line of credit, don’t jump at the first appealing offer; compare rates and fees offered through mail solicitation, on the Internet or at your local bank.

6. Don’t close old, paid off accounts. 

According to FICO, closing accounts can never help your score and can in fact damage it.

7. Talk to credit counselors if you’re in trouble. 

Using legitimate, non-profit credit counseling can help you manage your debt and won’t hurt your credit score. For more information on debt management, contact the National Foundation for Consumer Credit (www.nfcc.org).
For more information, visit aba.com/consumers.

10 Tips to Green Your Home and Save Money

Whether you’re a renter or a homeowner, chances are you care about protecting the environment – and saving money. Here are some tips to help you do both.


Location, location, location efficiency. Carefully consider the location of your home. If you’re close to work, shopping and entertainment, you may not need a car. Without a car you would save money on gas, car insurance and maintenance, not to mention reduce pollution. If you’re thinking about moving further out, try to find something near public transportation and shopping.


Light up the house, not the electric bill. Replacing incandescent light bulbs with more energy efficient compact florescent light (CFL) bulbs will save you about $6 a year in electricity costs per bulb and more than $40 over its lifetime. According to ENERGY STAR, if every American home replaced just one light bulb, we would save enough energy to prevent 9 billion pounds of greenhouse gas emissions per year. Remember to recycle used CFL bulbs. Go to www.epa.gov/bulbrecycling for recycling locations.


Some like it hot, hot, hot…or cold, cold, cold. Closely monitor your thermostat. Adjusting it just a few degrees while you’re out can save energy and money. You can make it easier by installing a programmable thermostat. Use fans and close the blinds during the warm months and let the sun in for natural warmth in the winter. Also, change your filter every three months.


How low can you go? One way to save water is by using low-flow toilets. The most cost-effective way to do this is to simply take a 1 liter plastic bottle, fill it with water and place it inside the tank. This will reduce your water use per flush. Another way to save water is placing an aerator on all of your faucets.


Make it mean-green-clean. Cleaning supplies can be expensive and are made with toxic chemicals. You can save money and the environment by making your own cleaning supplies. All you need are some basic household ingredients like vinegar, lemon juice, baking soda and borax to clean everything from windows to tile. Look online for recipes and suggestions.


Reduce, Reuse, Recycle! Sticking to this mantra can help you save money around the house. Use a rag instead of paper towels. Buy products in bulk, concentrate or refillable containers to reduce packaging waste. Look for products made from recycled content. And don’t forget to recycle!


Win-dos for your windows. There are a number of ways you can make your windows more energy efficient without replacing them. For better insulation from the weather you can caulk exterior joints, put shrink wrap on them or hang blackout curtains.


Fan the green flames. To keep your refrigerator running efficiently, keep the fan clean. The motor won’t have to work as hard if the fan is clear of debris.


Decorate green. Houseplants are like living air-filters. English Ivy, rubber trees, peace lilies and red-edged dracaena can help clean the air and look pretty too.


Vampire energy is sucking you dry. On or off, anything plugged into the wall sucks energy. Vampire power costs U.S. consumers more than $3 billion a year, according to the U.S. Energy Information Administration. Unplug your electronics and appliances when they’re not in use.

For more green home solutions, visit: epa.gov/greenhomes

Reverse Mortgages 101: Tips, Terminology and More

The vast majority of older Americans want to remain in their homes as they grow older, also known as aging in place. There are a number of costs to consider when aging in place including home modifications, transportation and in-home medical care.  

One way to pay for these costs and stay in your home is a reverse mortgage. If you’re considering a reverse mortgage, we encourages you to understand what it is and weigh the pros and cons.

Terminology: What You Need to Know

Reverse Mortgage – A reverse mortgage is a type of loan that allows you to borrow against the equity in your home. You must be at least 62 years-old to qualify. 

Home Equity – This is the value of your home minus debt against it. 

Homeowner – With a reverse mortgage, you are still a homeowner and still responsible for paying property taxes, insurance and upkeep. 

Repayment – When the loan is over, you or your heirs must repay cash received from the loan plus interest. The reverse mortgage loan becomes due when the borrower dies, sells the home or moves out of the home. The lender may also require repayment if you fail to pay your property taxes, fail to keep your home insured or fail maintain your home. Be sure to read the terms of the agreement closely before signing.

Fees – Just like with any other mortgage product, there will be fees to close the loan. Lenders may allow you to pay the fees using your reverse mortgage. They are added on to the balance of your loan and must be repaid with interest when the loan is due. 

Total Annual Loan Cost – Because different reverse mortgage products can vary, it can be difficult to compare prices and choose the best one for you. Ask your lender for the Total Annual Loan Cost, a single annual average rate, to help compare various reverse mortgage products.

Co-Borrower – If you live with a spouse or partner, it is highly recommended to apply for the reverse mortgage together as co-borrowers. Anyone living in the home who is not a co-borrower will be required to pay the loan or move out when you move or die.

Payout Options – The way you take cash from your reverse mortgage can vary. You can opt for a line of credit to take cash only when you need it, a monthly payout, or a single lump sum.

Tips: Key Considerations and Red Flags

· Shop around. Be sure to check with multiple lenders. You can use sites like www.reversemortage.org, sponsored by the National Reverse Mortgage Lenders Association, to find lenders in your area. 

· Understand your options. Be sure to evaluate all the options you have including applying for a home equity line of credit or home equity loan. Also consider selling your home. 

· Be cautious. If someone is selling you something and suggests you use a reverse mortgage to pay for it, consult a trusted advisor before signing anything.

· Nothing is free. If anyone suggests that a reverse mortgage is free money, don’t believe it. Fees are built into the loan, which must be paid back with interest when it becomes due.

· Know your rights. After closing the loan on a reverse mortgage you have three business days to reconsider your decision. If you choose to rescind the loan, you must do so in writing. 

· Consider borrowing jointly. If the reverse mortgage is in one person’s name and that person dies or leaves the home, the loan will become due. If there are two people living in the home – make sure you’re both on the loan or able to repay the loan – otherwise, you may end up losing the property.

· Consider your age. Be cautious if a lender is suggesting you do this at an early age. Your debt will begin to grow and equity will decrease as soon as you take out the reverse mortgage. The longer you have the loan, the more it will cost.

· Only take what you need. Carefully consider your payout options. Keep in mind that if you take the full amount of the loan in one lump sum, you will be charged full interest on the largest possible loan amount.

Tools: Additional Resources

National Reverse Mortgage Lenders Association
www.reversemortage.org

AARP
http://www.aarp.org/money/credit-loans-debt/reverse_mortgages/

Consumer Financial Protection Bureau
http://www.consumerfinance.gov/askcfpb/224/what-is-a-reverse-mortgage.html

Federal Trade Commission
http://www.consumer.ftc.gov/articles/0192-reverse-mortgages

U.S. Department of Housing and Urban Development  

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome

Housing 101: Terms to Know Before Buying or Renting

Whether you’re preparing to rent or buy, we encourages you to be familiar with the following housing terms:

Before Buying:

APR: Short for annual percentage rate. APR is how much your loan will cost over the course of a year. This figure is almost always higher than the interest rate, because it takes into account the interest charged as well as fees or additional costs associated with the loan. Since all lenders use the same formula, it can be a more effective way of comparing mortgages rather than just the interest rate.

Closing costs/settlement fees: The costs, in addition to the price of the property, that buyers and sellers are charged to complete a real estate transaction. Costs include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges.

Escrow: An account held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. Escrow accounts are usually required by lenders to cover property taxes and mortgage insurance. After an initial deposit, borrowers pay into the escrow monthly – usually as part of the mortgage payment.

Good Faith Estimate (GFE): An accurate estimate of fees associated with a loan provided to the customer by a mortgage lender or broker. A GFE is required by law under the Real Estate Settlement Procedures Act (RESPA). The estimate must be provided within 3 business days of applying for a loan.

Mortgage broker: An individual or company who connects borrowers and lenders for the purpose of facilitating a mortgage loan. Unlike a mortgage lender, a broker does not make the loan or service the mortgage. A mortgage broker may represent various lenders or may offer loans from one single source.

Points: Borrowers can pay a lender points to reduce the interest rate on the loan, resulting in a lower monthly payment. The cost of one point is equal to 1 percent of the loan amount. Depending on the borrower, each point lowers your interest rate by one-eighth to one one-quarter of a percent.

Before Renting:

Lease: A  legal document detailing the terms under which the lessee (the renter) agrees to rent property from the lessor (the property owner). A lease guarantees use of an asset and guarantees regular payments from the lessee for a specified number of months or years.

Notice to vacate: Notification from the landlord to the tenant ordering the tenant to vacate the property. In most cases, the notification is given because the tenant either broke one of the terms of the lease or is not following through with payment of rent. The tenant is typically given 30 days to vacate the premises. Similarly, a notice to intend to vacate may be required under the lease for the tenant to notify the landlord before vacating the property.

Rental application: Filled out by a prospective tenant, which typically authorizes the landlord to conduct a credit check to determine the suitably of the individual. Often, there can be a non-refundable fee associated with the rental application.

Security deposit: Funds, in addition to rent, that a landlord requires a tenant to pay to be kept separately in a fund for use should the tenant cause damage to the premises or otherwise violate terms of the lease.

Tips for First-Time Home Buyers

Throughout most of Wisconsin, the housing market is still strong.  The summer months are active, interest rates are low, real estate prices are competitive.
Is now the time for you to take the plunge into home-ownership? If so, here are four tips for first-time home buyers. They will help smooth your transition from renter to owner.

#1: Prep work is important.

Get your finances in order before you even start looking at listings. There is some fierce competition out there.  Being pre-approved for financing gives YOU the edge.
To start, review your credit score and clear up any errors you find. Second, go to your bank and get pre-approved for the largest mortgage loan you can. Loan pre-approval is a free service at most banks. Pre-approval boosts your credibility. It shows you are serious about buying and you have the ability to pay for it. Want a faster process of applying for your mortgage? Get preapproved. Getting the loan from the same bank that pre-approved you for credit will also speed up the process.

#2: Don't budge on your budget.

Buying a house might be the largest purchase you ever make. Making and sticking to an accurate, realistic budget is essential.
First, look at the amount of cash you have in your checking and/or savings account. Determine how much of that you'll use as a down payment (leave some as an emergency fund!).
Next, learn how much the houses you're looking at will cost. Factor in all expenses. Include closing costs, principal and interest mortgage payments, taxes, insurance, utilities, commuting, etc.

#3: Build a trustworthy team.

Assembling a team that you trust in the next key to success. The real estate process is complex.  Having experts on your side who look out for your best interests will give you peace of mind. Find a real estate agent and a mortgage lender you get along with and trust to give you good advice. Often, if you find one, they'll recommend the other. Professionals in these fields work with one another quite often.

#4: Don't sign until you've read

Closing on a house can be an emotional, nerve-wracking process. But, it is critical that you take the time to understand the document you're signing your name to. Read everything. If you don't understand something, ask your lender or real estate agent to explain it. Buyers have many different options for mortgages. From the standard fixed-rate 30-year loan to a 10 or 15-year variable rate, and other more complex options. No matter what your financial situation is, ask as many questions as you need to understand what you're committing to.

First-Time Homebuyers: 5 Tips to Save for the House of Your Dreams

According to a 2015 BMO Harris report, 52 percent of Americans plan to purchase a home in the next five years.  Saving for a down payment, typically between 5 to 20 percent of the home’s value, is one of the biggest if not the biggest challenge for those wishful homebuyers. “A down payment is often the largest single payment a consumer makes in their lifetime and saving for it isn’t easy,” said Corey Carlisle, executive director of the ABA Foundation. “However, with a few changes, consumers can put themselves on track to make their homeownership dream a reality.”

We are highlighting five tips to help consumers cut back on their spending and start putting money into savings for the down payment on their first home.

• Develop a budget & timeline. Start by deciding how much you will need for a down payment. Then, create a budget and determine how much you can realistically save – that will help you measure when you’ll be ready to become a homeowner. 
• Open a dedicated savings account. Set up a savings account exclusively for your down payment and make a monthly contribution automatically from your check.  By keeping this money separate, you’ll be less likely to pull from the account when you’re tight on cash. If you receive a tax refund or bonus, consider putting a portion into this account.
• Check your major monthly expenses. It’s a good idea to check current rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your current contracts.
• Keep an eye on your spending. Online banking can assist with keeping an eye on your spending. Keep track of where your disposable income is mostly going. Pinpoint areas where you could cut back on spending such as eating out, vacation, etc. and instead put that money into the dedicated savings account.
• Do your research. Many states, counties and local governments have programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.

6 Items for Your New Home’s To-Do List

Now that you’re settling in to your new home, there are some important things you need to consider. We recommend the following:

1. Create a budget.

The key to a good budget is including as much information as you can, so that you can adequately prepare and plan. It's important to keep accurate records of your spending so you can spot places to save money and know how much you can reasonably spend. The American Bankers Association’s budgeting worksheet (also available in Spanish) will help you document and categorize your expenses.

2. Protect your property.

Whether you’re a homeowner or a renter, you need insurance to protect your belongings. Check with your local insurance agent, you might be able to get a discount if you have things like dead bolt locks, an alarm system, or smoke detectors, or if you already have a policy with that company, like car insurance. Also, find out if you’re in a flood zone. If you’re concerned about flooding, you will need to purchase a separate flood insurance policy. Learn more at floodsmart.gov.

3. Protect your safety.

Make sure all of the locks on your doors and windows work properly. If it makes you more comfortable, look into having an alarm system installed. Also, check your fire and carbon monoxide alarms once a month to be sure they’re working. If you have a dryer, clean the lint from the entire system, from the dryer to the exterior vent cap. Lint is extremely flammable and poses a fire risk.

4. Take your tax deductions.

Be sure you know all the tax deductions associated with your move and new home. If you use a portion of your home for business purposes or moved for a new job, you may be able to take deductions. Homeowners can deduct mortgage interest, property taxes and loans for home improvements.

5. Make your house – or apartment – your home.

Decorating your space will make it more comfortable and personal. If you’re a tenant, check with your landlord before making major changes like painting the walls or changing the appliances. Renters should take photos of the rental space before moving in to document the existing condition and insist on a final walk-through with the landlord. If you own your home, be smart about where you invest your money on improvements to ensure you’re building equity in your home. For example, updates in the kitchen and bathroom usually provide the best return on investment.

6. Save up for a rainy day.

Although life may be sunny now, it’s a good idea to create a rainy day fund. The fund should have at least three to six months of living expenses in case you or someone in your household loses a job or becomes ill and unable to work.

For more information, visit aba.com/consumers.

5 Important Questions When Choosing Your First Home

 Moving into your own place can be exciting but frightening at the same time. Consider the following questions when choosing your own home:

How much do you have saved up?

Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are usually 5 to 20% percent of the price of the home. Security deposits on rentals are about one month of rent or more if you have a pet. But don't drain all your savings, keep an emergency fund. Three to six months of living expenses to cover unexpected costs is recommended.

How much debt do you have?

Consider all of your current and expected financial obligations (car payment and insurance, credit card debt, student loans, etc.) Will you be able to make all the payments in addition to the cost of your new home? Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43 percent.

What is your credit score?

A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for the rental you want or a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving into a new home and take steps to raise your score. Learn more about your credit score here.

 Have you factored in all the costs? 

Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. If you are planning to buy a home, factor in real estate taxes, mortgage insurance and possibly a home owner association fee. Renters should consider the cost of rental insurance.

How long will you stay?

Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think about how long you want to stay in your new home.

For more information, visit aba.com/consumers