agreements

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Life happens and sometimes you need to get out of your lease early. However, if you’ve signed a long-term lease, you may not be able to break your contract without financial or legal repercussions. This is called a sublet, and we’ll share the definition and meaning here.

Subletting is a viable option for those who need to get out of their lease early. Here’s everything you need to know about subletting so you can understand if it’s the right option for you.

What is subletting?

Subletting, also known as subleasing, is when you add one (or more) people to an existing lease. Typically, the subletter, signs a lease agreement with you directly, instead of the landlord.

Simply put, you are still the primary renter and are on the original lease, but have a sublet agreement where someone takes over in your place for a designated amount of time. The subletter will move in, take over rent payments and live in the space until the sublease contract is up.

When to consider subletting

You may be wondering what scenarios make sense to sublet an apartment. Well, here are a few cases where it might.

  • You are going on an extended trip or vacation
  • You need to move temporarily for work, family or personal reasons
  • You have a roommate who moves out and you need to fill his or her place in the existing apartment
  • You are considering moving to a new city and want to test living in that area before making a long-distance move

While each situation is different, the common theme here is that the renter needs to vacate their current apartment for a period of time before the original lease ends without breaking the terms of the lease.

Subletting is a great option if you need short-term coverage of your rental property.

9 things to do before subletting your apartment

Before you post a “wanted” ad and start interviewing potential subletters, you need to do your homework first. The last thing you want is to be in violation of your lease. So, here is everything to consider before you sublet your apartment.

1. Read your existing lease

When you signed your lease, you may not have read all the fine print. The first thing you need to do is to re-read the original lease agreement to see if subletting is allowed. If so, great! You can move on to step two and talk to your landlord. If subletting is not allowed, you need to come up with a plan B if you really must break your lease early.

2. Talk to your landlord

Clear communication is key when subletting an apartment. Before you sign any paperwork, talk to your landlord and tell them the situation. Explain why you need to move and by when, plus talk to them about your subletting plan and make sure you’re following the proper protocol for subletting.

3. Check out local renter laws for a sublet

Another smart thing to do is to read up on your local renter’s laws. Different states have different laws around things like subleasing, rent pricing and maximum rent prices and length of the lease. Make sure you are in compliance with your landlord and local laws.

4. Draft up a sublease agreement

Even if you’re subletting to your family or BFF, you need to make it official and create a sublease agreement. Word-of-mouth agreements will not provide legal coverage should the worst happen. You can work with local lawyers or your landlord or find a template online for a sublease agreement.

In the sublease, you need to include things like the pet policy, smoking policy and any other rules and regulations that must be followed as part of the original lease. You don’t want to be on the hook for a bad subletter causing damage to the apartment.

Make sure your subletter puts pen to paper, understands the terms of the lease and signs the sublease agreement.

5. Determine the financial responsibilities of the subletter

Chances are you aren’t able to pay rent in your existing location and a new location. So, you need to outline the financial responsibilities for the subletter. Let them know how much they owe in rent and how much they can expect to pay in utilities. You may need to change names on the utility accounts or have the subletter pay you directly for the cost of utilities. Make sure the numbers are clearly outlined so there isn’t confusion about who owes what each month.

6. Outline a timeline for the sublease

If you are in a 12-month lease but are subletting for six months, let the subletter know that. You need to walk through the timeline of how long a subletter will sublease from you and when they need to move out or re-sign in their own name.

7. Talk to other stakeholders

If you have roommates, you need to loop them into the subletting discussion. While they likely don’t want to experience a rent increase by having to make up for the difference, they also want a say in who lives with them when you leave. Before you make any subletting arrangements, talk to the relevant stakeholders about your plan to move out.

8. Post an ad and market your rental opening

Once you’ve dotted your “i’s” and crossed your “t’s” with the steps above, it’s time to market your open rental space. You can use places like online housing boards, social media groups or local newspaper ads. Remember that you are still responsible for rental payments until a subletter is officially in place.

9. Plan your move

Last but not least, it’s time to plan your move. Let the relevant people know when you’re leaving and when you’ll be back.

Pros and cons of subletting

Now that we’ve talked about the logistics of subletting, it’s time to talk about some pros and cons.

Benefits of subletting

Here are some of the pros of subletting:

  • You can end your lease early without being in breach of the contract
  • You can maintain your renter reputation without breaking your lease early
  • You can supplement your income by having someone else pay your lease
  • You can tend to the business that required you to move out in the first place while having your current apartment taken care of.

Downsides to subletting

Here are some of the cons of subletting:

  • It may not even be allowed by your property manager or existing lease
  • Your subletter might not be as good of a roommate as you were
  • You need to find a reliable subletter to take over the sublease
  • You still need to maintain communication with your subletter, even when you move out
  • You’ll need to deal with the paperwork of ending your original lease when the time is up

Is subletting right for you?

We can’t make the decision for you, but subletting might be a good option if you need out of your lease without breaching the contract. A sublet, if allowed by your apartment complex and state, is a great way to keep your rental history reputation strong and have viable rental coverage when you move out early.

Make sure you follow proper rules and procedures when subletting. If you’ve done that, then it’s time to find your next apartment in your new destination.

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The watchdog for the U.S. Department of Housing and Urban Development (HUD) says an audit discovered that the temporary policy for endorsement of loans with COVID-19 forbearance activity had multiple compliance issues.

The Office of Inspector General for HUD said the department should improve two major areas –  ensuring lenders follow the outlined policy, and improving its records regarding indemnification agreements, according to a report released on Monday.

“We audited the [HUD] temporary policy for endorsement of loans with COVID-19 forbearance activity because an analysis of data in HUD’s systems showed that there may have been loans that did not comply with the policy’s requirements,” the HUD OIG said in its announcement of the report. “The policy was one aspect of HUD’s broader emergency response to COVID-19, which also included an eviction moratorium and loan forbearance for borrowers experiencing financial hardship.”

The audit set out to determine whether HUD’s temporary endorsement policy for COVID-19 forbearances was properly followed by lenders, whether or not HUD monitored and enforced indemnification agreements for loans that were subject to it, and HUD’s reasons for ending the policy during the pandemic, “and its plans to evaluate and use such policies in the future,” the OIG said.

The report said that HUD did not properly ensure compliance with the policy by lenders. It also found that the Department did not ensure that “indemnification agreement data and records related to the policy were complete and accurate,” which the OIG attributes to a lack of necessary updates for its oversight strategy to “specifically cover the policy and reconcile relevant data and records,” the OIG explained.

This led the Federal Housing Administration (FHA)’s insurance fund to be “exposed to greater risk from at least $83 million in loans for which lenders did not follow requirements,” the OIG said. HUD’s ability to monitor and enforce indemnification agreements “could be compromised” until it makes necessary corrections and updates its records, the findings read.

Limited use of the policy ultimately led to its discontinuation, but HUD did not put plans in place to evaluate a potential future need should another recognized disaster require it.

“As a result, HUD did not know whether using a similar policy during future disasters and emergencies or permanently could manage risk to the insurance fund while increasing lender participation,” the OIG said.

To address these identified issues, the OIG made six recommendations. The first is to require lenders to execute five-year indemnification agreements for loans found to be missing required agreements; the second is to “request and analyze data from lenders for loans at risk of noncompliance to identify loans that should have been subject to the policy,” OIG said.

Other recommendations include more adequate recording of indemnification agreements; better review processes regarding indemnification data on applicable loans; updating incorrect or incomplete indemnification agreements; and to provide more consideration on how such a policy could be used in the future.

In a comment response posted in the report, FHA Associate Deputy Assistant Secretary for the Office of Single-Family Housing Julie Shaffer said the audit is missing some key contextual information.

“While we acknowledge opportunities for improvement in the delivery of FHA programs, we believe the draft report does not fully capture the unprecedented nature and complexity of the circumstances that preceded this temporary COVID-19 policy,” Shaffer said.

She goes on to say that pending a review of the loan samples used to conduct the audit, review of the available data shows “consistency with FHA’s performance in facilitating successful outcomes for borrowers during the COVID-19 National Emergency while maintaining the historically strong capital position of the Mutual Mortgage Insurance Fund.”

Still, HUD agreed to propose a management decision in response to the report’s recommendations that will include action plans and target dates.

“We look forward to working with HUD during the audit resolution process,” the OIG said.

Source: housingwire.com

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Debt settlement, which is also referred to as debt negotiation or debt arbitration, is a process whereby a creditor agrees to reduce the total amount of debt owed and in return, the borrower pays the rest in a lump sum. 

This typically involves the creditor waiving interest and fees on the debt. Debt settlement can benefit both parties, as it allows the creditor to recover some of the debt owed, rather than losing it altogether. For the borrower, it provides financial relief and possibly, an alternative to filing for bankruptcy.

How Does Debt Settlement Work?

Debt settlement can be accomplished through a debt settlement company or by the consumer themselves (DIY). Typically, it involves negotiating with credit card issuers to reduce the total amount of debt owed, though it is possible to resolve other types of unsecured debts as well. 

When considering using a debt settlement company, it is important to proceed with caution as there are risks involved. It is crucial to thoroughly research the company before making any agreements.

 Additionally, it is paramount to review your finances and stay up to speed with the timetable for the payment as well as all associated costs and fees. Being well-informed and cautious can help protect you from potential drawbacks in the debt settlement process.

That being said there’s a good and a bad side of debt settlement as discussed below.

Pros of Debt Settlement

Alternative to Filing for Bankruptcy

When considering options for managing overwhelming debt, many borrowers choose between debt settlement and filing for bankruptcy. While it can have a negative impact on a borrower’s financial situation, some experts consider debt settlement to be a better alternative to Chapter 7 or Chapter 13 bankruptcy.

Both debt settlement and bankruptcy will stay on a borrower’s credit report for several years (typically 7 to 10 years). However, bankruptcy can have a more severe impact on a borrower’s creditworthiness, since you may have to fill in whether you have filed for bankruptcy when applying for credit cards, loans, and even jobs. 

Relief from Overwhelming Debt

If you are struggling with overwhelming debt, finding a solution that allows you to settle for less than what you owe can be a great relief. Debt settlement can be a relatively quick option compared to other debt management options such as debt consolidation, credit counselling programs, or bankruptcy.

Debt Won’t be Sent to a Debt Collection Agency

When debt is sent to a collection agency, it can result in unending calls and letters, which can be stressful and overwhelming for borrowers. By settling the debt directly with the creditor, borrowers can avoid the need to deal with debt collection agencies and the associated stress. 

It is important to note that, if it has already been sent to a collection agency, debt settlement may not be an option.

Cons of Debt Settlement

Debt Settlement fees

While the Debt Settlement Consumer Protection Act prohibits the debt settlement providers  from charging most other fees, you may incur charges in the form of enrollment fees, monthly maintenance fees, and fees based on the amount of debt settled.

The fees can be relatively high and may counteract some of the benefits of debt settlement. With the additional costs, it is possible to end up paying more than you owed to begin with.

The Creditor is not Obligated to agree to Debt Settlement

Creditors may choose to reject the offer and continue to pursue the full amount of the debt. Additionally, debt settlement companies may not be able to negotiate a settlement for all of a borrower’s debts, which means that some debts may remain outstanding.

Tax Implications

When a borrower settles a debt for less than the full amount owed, the creditor is required to report the forgiven debt to the IRS as income. The borrower may be required to pay taxes on the forgiven debt depending on how much it is.

Impact on your Credit Report

When a borrower settles a debt for less than the full amount owed, the creditor may report the settlement to credit bureaus as ‘paid-settled’ which negates the original agreement of paying in full. This information will then appear on the borrower’s credit report for up to seven years and may put off potential borrowers.

The Takeaway

Debt settlement is one of the channels you can use to manage your debt. While it can be a good option if you are struggling financially, it is advisable to examine every aspect of the process to ensure that the benefits outweigh the risks.

Source: creditabsolute.com

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Has your credit suffered a hit or two? Before you start thinking rentals, read this.

What mortgage lenders are looking for 

You know all about credit scores and that, across the three big credit reporting agencies, scores can really fluctuate. Mortgage brokers and lenders will look at your credit score, toss out the lowest and the highest and typically make decisions based on the score that’s smack in the middle.

But credit scores aren’t the only thing a mortgage lender considers. Other factors affecting loan qualification include:

  • Your income
  • Debt-to-income ratio 
  • How long it’s been since you missed a payment
  • How long you’ve been in your job 
  • Ratio of income and projected home payment

In other words, it’s a numbers game that goes way beyond your credit score.

And, if you’re buying with a partner, consider whether or not it’s best to have them on the loan.

If your co-buyer’s credit is crappy and yours is good, you may want to consider removing the co-buyer from the transaction. Realize, however, that the co-buyer’s salary won’t be factored in as income this way. Of course, the co-buyer is still welcome to live in the house with you.

Cleaning up your credit ASAP

Truthfully, there’s no way to change your credit score overnight. Cleaning up your credit, if it’s not too terrible, can take a few weeks at minimum. If it’s dreadful, expect to spend a few months (even up to a year) playing everything straight in order to get that number to inch a little higher. Fortunately, to purchase a home, you may not need to do either.

If your score is above 680, odds are good you’ll have no problem. If you’re looking at an FHA loan, 580 should do it (tip: you may get approved with a lower credit score for an FHA loan if you can put more than 3.5% down on your home). For comparison, the lowest possible credit score hovers around 300. FYI, if your score is in the 300s or 400s, you have work to do. Now is not the time to buy a home.

A lender will likely ask you to explain away all the dings on your credit report–for example, why you were late on a payment to your cable TV company (“I took the check to the post office but forgot to drop it in the mail and found it two months later, after disputing the past-due balance. It was paid in full on January 31.”), or why you failed to make a full payment to your car payment a few years back (“I had a large medical bill that I had to pay so I worked with my car loan company to move my February payment to the end of my loan instead.”) As long as you have a legitimate reason that shows why you paid late and that you didn’t walk away from the debt, this may be sufficient to clear up problems in order to obtain the mortgage. These don’t, however, change your credit score.

To really attack your credit score and give it a lift, start by getting a free credit report (yes, these are totally free and should not cost you anything–do NOT pay). You will not receive your credit score in these reports but you will see detailed information about what’s on your credit report. If you spot errors, work with the credit reporting agency directly to clear these up. This usually entails offering proof of some sort that you did pay the bill or that the debt is not yours. Once your dispute or proof is submitted, it usually takes 1-3 months for the score to be affected.

So what home buying options do you have when your credit is in the toilet? 

Talk to Homie Loans about your situation and whether any of these options can help get you into a home loan and building equity. 

Take on a co-signer/co-buyer: A parent may be willing to share the risk associated with your loan. The co-signer’s credit score will boost the likelihood you’ll obtain the loan, but if you default, the loan is on both of your shoulders.

Put more money into your down payment: When reviewing mortgage-worthiness, your lender will look at how much the home will cost relative to your income and other factors. If you put more money down on the home, your mortgage payment will be lower and can help offset a lower credit score. The same thing holds true for a lower-priced home.

Work with a mortgage broker, not directly with a lender: Whether your credit score is amazing, iffy or somewhere in between, working with a mortgage broker gives you access to more competitive options than mortgage lenders can provide. Mortgage brokers shop around to get the best overall costs/fees/interest scenario or their client’s budget. They’re not linked to a single financial institution, which can only offer that lender’s loan programs. Mortgage brokers frequently have access to wholesale mortgage rates and add their own “commissions” by inching up the interest rates slightly. Homies can tap into low costs and lower-rate loans through Homie Loans, which also accesses wholesale mortgage rates without the higher costs. To your wallet, the difference between Homie Loans and other brokers is frequently the lowest possible interest rate. As a bonus, Homie Loans also currently pays the price of the appraisal for all homes purchased through Homie.com. All in all, you may see both a a short-term reward and a long-term benefit amounting to considerable cash over the life of your loan with Homie Loans.

Extend your mortgage term: Aim for 30 years, the typical length of a first-time mortgage in the U.S., instead of a 15- or 20-year loan. Your payments will be lower, which can help you qualify for a loan more easily. Talk to your mortgage broker for more details.

Consider unique loan programs: Few of the truly odd or unique loans exist today (some of these probably helped usher in the mortgage crises), but checking with a mortgage broker before you start looking at homes can help you determine if you’re eligible for other programs like a VA loan that doesn’t factor in credit scores, a USDA/rural loan that requires no money down, or another unique home loan program.

Rent-to-own and owner financing: While you’ll still need to qualify, rent-to-own and owner-financing agreements can be great options for wanna-be homebuyers who can’t obtain a loan. Unfortunately they’re very hard to come by and you won’t be able to go through a mortgage broker or lender for either one. Your best bet is to luck into one of these, usually because you’re buying from family a close friend.

Should you sign a lease or buy a home if your credit is bad?
It’s true that poor credit can affect where you live, regardless of whether you’re renting a home or buying one. Before you decide to rent again, check with a Homie Loans mortgage broker to see if you qualify for a home loan. If the answer is “yes” (and stats say it’s likely–a 2015 report indicated the average credit score in Utah was 677; nationwide, Millennials had a score of 625; older generations had higher scores), go month-to-month on your lease. Then start the process by getting pre-approved for a loan and start shopping for the home you really want to live in. Get pre-qualified. 

Homie Loans is a Equal Housing Lender, NMLS# 1016597

Source: homie.com

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The D.C. area is infamous for its commuting and traffic gridlock. To avoid a stressful daily commute, you should choose an apartment that’s close to your workplace and has good access to public transportation. Weekday rush hour traffic is heaviest in D.C. between 6:30 to 9:30 a.m. and 3:00 to 7:00 p.m. Estimated driving times are unpredictable, as a minor accident can back up the highways for miles in either direction. Here are some tips for commuting in the D.C. area.

Driving  

While all of the highways surrounding D.C. get congested during the morning and evening rush hours, driving is usually the most convenient option when traveling within the suburbs.

  • Check traffic alerts. Use a GPS to map the best route and stay flexible, taking detours and finding new ways to get around heavy traffic.
  • If you don’t mind the extra cost, use the HOT lanes in Virginia. These lanes use your EZ pass transponder to charge a toll and allow you to drive in the faster lanes.
  • Form a carpool. By sharing the ride, you will save money on fuel and car maintenance. Carpooling can also reduce time spent on the road, because you can use HOV lanes which usually move faster than the other lanes.
  • If you live in Virginia, you can use slugging, an organized system where commuters stop to pick up other passengers.

Subway and Bus

The Metrorail subway system includes six lines and serves 91 stations in D.C., Maryland and Northern Virginia. Metrobus operates 1,500 buses. Both transit systems connect to bus lines in the suburbs. The Yellow/Blue lines connect with Reagan National Airport and the Silver line is under construction and will eventually provide service to Dulles International Airport. The DC Circulator is a local bus system with 5 routes around the most popular areas of the city.

  • Purchase and register a SmarTrip card. You may add value to the card from the convenience of your computer by visiting www.wmata.com/fares/smartrip. Metro will also replace the cared if it is lost or stolen for a $5 fee and you won’t lose the value on the card. The same card can be used to pay for Metrobus fare.
  • If you have a flexible work schedule, avoid traveling at the most crowded times, Monday through Friday, 7:45 to 8:45 a.m. and 4:45 to 5:45 p.m.
  • Don’t transfer lines if you can walk the distance between stations. Many stations are near each other and within an easy walk.
Photo Courtesy of RJ Schmidt/Creative Commons

Commuter Rail

There are two major commuter rail systems serving the D.C. area: Maryland Area Regional Commuter (MARC) and Virginia Railway Express (VRE). Both systems operate Monday through Friday and have cross honor agreements with Amtrak to offer reduced fares for commuters.

  • Operational times are limited. Be sure to know the schedules and plan accordingly.

Commuting by Bike

D.C. is a bike-friendly city with more than 40 miles of bike lanes and Capital Bikeshare, the largest bike sharing program in the nation. There are approximately 440 stations and 3,700 bikes throughout Washington, DC; Arlington, VA; Alexandria, VA; Montgomery County, MD; and Fairfax, VA.

  • Sign up for a membership and use the bikes for an environmental-friendly commute.

SEE ALSO:  Insider Tips if you’re Moving to D.C.

SEE ALSO:  12 great cities for cycling

Commuter Connections is a great resource for learning about ridesharing and other commuting programs around the capital region. For more information, visit www.commuterconnections.org

Find a D.C. apartment HERE


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Source: mint.intuit.com

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A company may be run by a large group of people with the responsibilities spread out evenly between different departments.

Other companies rely heavily on one or two people.

If one of these highly important people were to pass away, these companies would have difficulties keeping the company in business.

Otherwise stated: They would be screwed!

You would think that most businesses are prepared if something happened to one of its key personnel.

A survey by AMA (America Management Association) says otherwise finding the following:

Only 14% of those surveyed said that their companies were well-prepared for the loss of a key person.

It’s these type of businesses that would benefit from key man life insurance.


What Is Key Man Life Insurance?

The concept of losing a close friend and colleague can be very difficult for business partners to imagine, but they must do so if their plan is to continue operating the business after the death of an important partner.

The key man insurance policy is a life insurance policy that business partners can purchase against the possibility of losing a key partner. If these particular people mean life or death for the company, they are exactly the people who need key man insurance.

Owners of small businesses may have life insurance policies that name their spouses or other family members as beneficiaries. These policies take care of the business partners’ personal expenses, such as the mortgage on the house and other debts.

Business partners often purchase disability insurance and make this available to their employees as well.

The disability insurance pays the expenses in the event that people experience an injury or are diagnosed with an illness that makes it impossible for them to work and earn their salaries.

However, key man insurance covers a completely different area. With the death of a key person, the key man insurance policy covers the company. If you’re one of those essential people in the company, or you’re the owner of the business, then you know how detrimental the death of a key person can be. You’ve been in hours of hard work and sweat into helping your company succeed.

Key man life insurance will protect that from crumbling down if there were anything tragic to happen.

Key man insurance would not be beneficial to every business, but the owners will want to learn more about this insurance coverage to discern whether or not their companies fall under the category of those that would benefit from purchasing a key man insurance policy.

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Does The Company Have One Or Two People Who Are Highly Important?

The owner of the company would certainly fall under this category. The founders of a business may also qualify as key people. If the loss of some employees would cause the organization to experience difficulties in running the business, this company may want to have key man insurance on these employees.

Every company is different, some companies have a whole team of people that they rely on, and if anything tragic were to happen to them, the business would struggle. Other companies have one key person at the top that is essential to the whole operation.

Because every company is different, there is no one-plan-fits-all policy that you can buy.

You will need to look at your organization and decide which kind of coverage is going to work best for you.

Regardless of the setup of your business, it’s vital that your key people have the insurance coverage in place to protect against anything that would happen if they were to pass away.

How Does Key Man Insurance Work?

Key man insurance is a life insurance policy that works much like regular life insurance.

The business will purchase the policy and will also be named as the beneficiary.

This requires that the partners pay premiums that keep the policy active. If one of the key people in the company passes away while the policy is active, the business receives the pre-determined lump sum of money.

This amount may be $100,000, but it could also be as much as several million. The amount that an organization receives will depend on how much the company can afford to pay in premiums. For example, purchasing a policy for a $5,000,000 payment will require that the partners pay more to keep the policy active than if they chose a $100,000 payment.

The partners will not necessarily benefit from a policy that offers them $500,000. The amount of the death benefits will depend on how much money will be required to replace the key person who has died. If the partners in the company believe that $100,000 would suffice, purchasing a policy for this amount is a legitimate choice to make. The partners can also keep their premiums lower if they purchase a term policy that tends to be less expensive than whole life insurance through one the best life insurance companies we have to work with.

What Can the Company Do with the Death Benefits?

What is done with the money will be up to the remaining business partners, but it will be used for the benefit of the business. For example, the business partners can pay any debts that are remaining, or they may offer an amount to their shareholders. Some business partners keep a portion for the business and offer the other to the deceased partner’s spouse.

Who Actually Owns the Policy?

Most key man life insurance policies will have some sort of cash value build-up either a whole life policy for universal life.  Here’s the biggest misunderstanding I see:  The individual does NOT own the policy.  The company does and is also the beneficiary.

The company may get a tax deduction in paying for the key man life insurance policies’ premiums, but they can only do so if they add the premiums paid to the individuals taxable income.  This might not sound as attractive if your the individual, but most companies will offer the cash value build up as an added retirement benefit.

I had one client that worked for an old company that had bought a $400,000 cash value life insurance policy on him. He had retired from the company and they let him take the policy with him. The cash value was only around $20,000 which he ended up leaving in the policy to pay for the premiums until it expired.

Are you a business that is need of key man life insurance?  Give my office a call and we can give you a free review to see where you might need some coverage.

When you’re looking to get a key man life insurance plan, there are dozens of different factors that you have to consider to ensure that you’re getting the best plan to fit your company’s needs. It can be a long and difficult process, but if you’re one of the main components in a small business, you know the importance of getting insurance protection and not paying more for that coverage than you have to.

Obviously, the most important factors are how much it’s going to cost your organization to replace you if anything tragic were to happen. Each business is different and every person’s responsibilities inside of that organization are going to vary.

For example, if you manage all of the finances of your business, you’ll need to hire another person to handle those or outsource the finances. Depending on how long you need to outsource the job, you could need thousands and thousands of dollars of life insurance.

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You’ve worked hard to make your small business flourish. It’s your lifeblood. If you started the organization yourself, you want to be able to protect that business, regardless of what happens to you. The best way to ensure that your employees and business partners have the security that they need is to have a key man life insurance policy that will give the resources that they need, if anything tragic were to happen to you.

Additionally, your family probably relies on the business and the income that comes from it. If something were to happen to you, not only would your business suffer, but your family would struggle as well.

Also worth noting, smart co-owners will set up buy-sell agreements and fund them with life insurance

Getting Better Key Man Life Insurance Rates

Just like any other type of life insurance policy, there are several things that you can do to ensure that you’re getting the best price for your coverage. You should always compare the rates from dozens of companies before you choose the one that works best for you. You compare the prices of TVs, why wouldn’t you do the same for a key man insurance plan?

Every insurance company is different, and all of them are going to have different medical underwriting requires and guidelines for how they determine their premiums amounts, which means that you could get drastically different rates from two separate companies. The best place to start your search is with the insurance company that you already hold policies with. Just about every insurance company gives discounts for having more than one policy. Getting a bundled discount is a great way to save a couple of extra dollars on your key man insurance policy, and could save you money on your other plans as well.

When you apply for a key man life insurance policy, just about every insurance company is going to require a medical exam. The results of the medical exam are going to play a major role in how much you’re going to pay every month for the policy. It’s important that you or the person being insured is in excellent health. One of the best ways to get lower rates for your key man policy is to cut out the tobacco.

If the person that is getting the plan is a smoker, then you’re going to be paying much higher rates. Anyone that uses tobacco is going to have a higher chance of heart attack and cancer, which means the insurance company is taking a great risk. They are going to offset all of that risk by charging you twice as much for that insurance coverage.

Don’t wait any longer to get the key man life insurance policy that your business and family deserve. You can’t predict the future, which means that you never know what’s going to happen tomorrow.

Source: goodfinancialcents.com

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Breaking a lease won’t hurt your credit if all debts are paid. However, if you leave debts unpaid, breaking your lease early can cause your credit to take a hit.

Breaking a lease is relatively common and can happen for a number of reasons. Oftentimes, a new job can require you to move midway through a lease. Other times, personal issues arise that can force you to cut your lease short.

As a result, it’s rather common for tenants to leave leases early, and it doesn’t make you a bad or unreliable tenant if you must. However, landlords will still expect full payment for the entire lease term, even if you’re moving out months in advance.

If you do have to your break your lease, it’s crucial you’re not indebted to your landlord. When tenants owe landlords money, landlords will sometimes hire collection agencies to collect debts, introducing a whole new set of problems—one of which can be a hit to your credit score.

Maintaining a good credit score is important for a number of reasons. A good credit score can:

  • Give you more housing options
  • Help you qualify for low-interest credit cards
  • Save on insurance
  • Make you a stronger job candidate

Your credit score follows you around wherever you go. Therefore, when your score goes down, it can be a tremendous setback—and can take you years to reconcile.

As a result, protecting your credit is one of the most important things you can do—and breaking a lease shouldn’t have to jeopardize it . Keep reading as we explain how breaking a lease early can affect your credit and ways you can break a lease while protecting your credit.

Does breaking a lease early affect your credit?

Breaking a lease doesn’t directly show up on your credit report, but the consequences of breaking a lease, if you’re indebted to your landlord, can have compounding effects that sometimes result in a knock to your credit.

If you leave debts unpaid after breaking your lease, your landlord will likely use a collection agency to reclaim your debts. Your landlord probably won’t report the debt to a credit bureau, but the collection agency likely will.

If this happens, your credit will suffer, which can greatly affect you down the road.

Ways breaking your lease can hurt your credit

Like we said, breaking your lease doesn’t directly affect your credit, but the fallout often can. If you break a lease and don’t pay outstanding debts, your landlord may handle it in a couple different ways. A few possibilities include:

  • Your landlord may involve a collection agency: As we mentioned earlier, a landlord will sometimes bring in a debt collector if you don’t pay your remaining rent. If this occurs. the collection agency will likely report you to a credit bureau.
  • You may have trouble renting again: If your credit takes a hit, it will likely affect your ability to rent in the future. A 620 or higher is the usual score needed to rent an apartment. Most landlords run credit checks prior to renting to a tenant.

How to break a lease and protect your credit

The lesson here is that it’s best to proceed with caution when breaking your lease. Use our tips below to ensure you leave your lease with peace of mind.

Review the lease contract

Knowing your rights as a tenant is the first matter to address when breaking a lease—and the lease contract is the place to start. Sometimes, the contract will give you an easy out, like paying a small fee or allowing subletting. However, it’s pivotal you review the intricacies of the contract before beginning the process of breaking the lease, so as to be aware of your rights as a tenant.

Be transparent with your landlord

Having a one-on-one conversation with your landlord is a must if you plan on breaking your lease. If you’re transparent with your landlord about why you’re breaking the lease, they’ll most likely work with you to reach a solution that benefits everyone. 

Keeping your landlord in the loop is a great way to create a line of communication and ensure they don’t take any negative action against you.

Look for a subletter

Subletting isn’t allowed in all lease contracts, but if it is, it can give you peace of mind in breaking your lease. Subletting, by definition, means finding someone else to take over the remainder of your lease. If you elect to sublet, it’s essential to check with your landlord first to ensure them you’re subletting to a reliable tenant.

Since your name will remain on the lease, you’ll ultimately be responsible for any issues with the subletter. As a result, it’s important to screen whoever is taking over the remainder of the lease. 

Pay outstanding rent up-front

If you’re able, paying your outstanding rent balance at the time you break the lease is typically a foolproof way to ensure the landlord doesn’t take any negative action against you.

While there may be more intricacies within the lease agreement when it comes to breaking the lease, settling outstanding debts eliminates the possibility of the landlord bringing a collection agency into the picture. And in almost all cases, disputes over breaking a lease boil down to outstanding debts.

Situations when you can break a lease without repercussions

There are certain situations where tenants are protected by law when breaking a lease; therefore, it’s essential to know when you can break a lease without repercussions. The examples below vary from state to state and can require that some specific notifications are made to the owner of the property before exercising your right to break the lease. It is important to know your responsibilities under your state law before breaking your lease.

  • The unit is uninhabitable/doesn’t comply with housing codes: If you believe that your residency isn’t complying with health codes, look into state laws to confirm your suspicion. States have certain health codes that rental units have to adhere to. If your rental isn’t complying, you can terminate your lease without repercussion.
  • Tenant rights were violated: While some tenant rights differ from state to state, federal rights like anti-discrimination laws, privacy laws and the right to a habitable home protect tenants on the national level.
  • You’re active military: Tenants who are active duty military can break a lease without repercussions. The Servicemember’s Civil Relief Act allows military members to break leases due to their service.
  • Breach of quiet enjoyment was violated: The Covenant of Quiet Enjoyment guarantees that the tenant will get a peaceful environment. This is implied in lease agreements and, if violated, allows you to break a lease without repercussion.
  • The lease has a termination clause: Some leases include a termination clause that just involves paying a small fee. Make sure you review the lease contract before telling your landlord that you’re breaking the lease to see if a termination clause is included.

Frequently asked questions

Navigating the legalities of a lease contract can be difficult for tenants. As a result, other questions often arise when breaking a lease. Some common questions tend to be:

How long does a broken lease stay on your credit report?

The broken lease itself will not appear on your credit report, but any unpaid rent or other fees can stay on your credit report for up to seven years.

Does paying rent build credit?

Paying rent won’t build credit unless you report your payments to a credit bureau each month. In order to do this, you’ll need to sign up for a subscription service that reports rent payments for you. Your landlord will also need to sign up for the subscription in order to receive the payments through the service.

Keep in mind that it may be unlikely that your landlord will want to participate in this system, since they likely have their own system for collecting rent payments.

Rent-to-own, which involves renting a home with the intent to purchase it at the end of the lease contract, does not directly affect your credit either. Unlike mortgage payments, rent-to-own payments are not reported to credit bureaus.

Can you get debts from breaking a lease removed from your credit report?

In general, no. Unless the debt is truly inaccurate, it’ll remain on your report for seven years.

However, if you pay the debt after the judgment is already added to your credit report, you can work with the creditor to have the debt marked as “paid” instead of “open” on your report. This can improve creditworthiness and give you a better chance of receiving loans and renting in the future.

Leave your lease with peace of mind

When you break a lease, it’s best to leave no shadow of a doubt that your credit will be protected. Whether this means having a candid conversation with your landlord, paying your outstanding rent amount or finding a subletter, there are best practices you can put into action to avoid having to fix poor credit down the road.

Finding ways to fix your credit can be difficult, and often requires the help of a professional. Lexington Law’s credit repair services could help you get back on track. Get a free credit assessment today.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Reviewed By

Nature Lewis

Associate Attorney

Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.

Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!

Source: lexingtonlaw.com

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Last Updated on March 29, 2023 by Mark Ferguson

In real estate, an escrow disbursement is a process of dispensing the amount held in escrow to pay for homeowners insurance, property taxes, and other property expenses. Lenders usually require borrowers to put money on an escrow account during or after the closing of a property purchase or when property expenses are due.

When the time comes to pay property expenses, escrow disbursement is done. This is strictly carried out by a third party known as an escrow agent.

The role of escrow agents

Escrow agents are the ones entrusted and held responsible for the disbursement of the money placed in an escrow account for specific reasons. They aren’t permitted to use a certain escrow money to pay for purposes other than the one it is intended for.

For instance, an escrow account made by the buyer for the mortgage payment cannot be disbursed to pay for the homeowner’s insurance or the property tax and vice versa. Although these agents don’t earn any interest from the escrow fund, they can charge fees for their services.

Written Instructions

Although not all escrows are done with a written agreement, all escrow agents must be keen when it comes to the written disbursement instructions. All escrow disbursements must be done based on the exact date and manner they should be given as specified by the owner of the escrow account. Breaking the agreement can be a ground for a lawsuit.

The laws on escrows and disbursements are different from state to state. So written agreements must conform to the existing laws of the state.

You can find more definitions for real estate terms in our real estate glossary.

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Source: investfourmore.com

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What Is a Credit Report and Why Does it Matter? – MintLife Blog

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financial wellness. Your credit report includes your revolving accounts — such as credit cards and home equity lines of credit — as well as non-revolving accounts like school and car loans. Credit reports also note any missed payments, the length of your credit history, and your utilization rate on each account. On the whole, the report acts as a central location for measuring your current credit health in detail.

This vital collection of data gathered by a credit bureau helps calculate your credit score and inform potential lenders, landlords, and even employers about your financial wellness, habits, and routines. Your credit report is also a place to keep yourself on track. View your borrowing habits at a glance, make adjustments to possibly raise your credit score, or even catch fraudulent activity. Overall, understanding your credit report is a crucial step in gaining financial confidence.

What Information Is Included in a Credit Report?

You may still be wondering: what is a credit report exactly and how much data does it include? Credit bureaus collect a range of information, from basic, personal data to detailed borrowing history in order to paint a picture of your credit habits. Identification details clarify who you are, where you’ve lived, and a bit about your life. They will list your full name and any alternately used names, your birthday, current and former addresses, social security numbers, and your phone number.

The meat of the credit report includes your account history including the types of credit accounts, how long they’ve been open, and their credit limits. Each month, your balance will rise or fall on your report based on payments or charges. This in turn affects the utilization rate on each card as well. Each account will also note your payment history, noting any late payments for up to around seven years. Your credit report will also include the number of recent hard inquiries, which usually occur when you apply for a new credit card or loan.

Certain public records and legal details — such as lawsuits — may also be listed on your report. It also lists if you’ve filed for bankruptcy, received a tax lien or had a bill sent to a collection agency. Though specifics vary, the majority of these details are wiped from your report after seven years, so there are often ways to improve your credit standing over time.

How Does Information Get on Your Credit Report?

A credit bureau, also known as a credit reporting agency, gathers this information in one place so you don’t have to. Though there are hundreds throughout the world, the three main U.S. reporting agencies are TransUnion, Equifax, and Experian. They receive information via lending companies, courts, and local government to build your credit record. Every month, an assortment of data transfers from these locations to the credit bureau database.

If you open a new credit card, make a purchase on your store card, or pay down a balance, this data is sent to update your report. The agency organizes the data and displays information on your credit report in a clear layout for you or a potential lender to view. This constantly updating system means that your credit score may fluctuate at times. It also allows you to take immediate action on any troublesome accounts or in the case of identity theft.

Why Is It Important to Get a Credit Report?

Credit reports are an excellent tool for guiding large financial decisions. Say you’re looking to purchase a home in the next five years. Your report allows you to fully assess how to raise your score and which credit accounts most strongly affect your overall financial balance. Your report is also a glimpse into why your credit score has remained low or stagnant. It could be helpful to request a report before applying for a new credit card or transitioning to a new phase in life like graduate school.

Checking your credit report at least once a year, even if you are not planning any large financial changes, is often suggested for several reasons. Credit reports allow you to catch any discrepancies either in how your data was reported or if someone attempted to open an account under your name.

Where can you get a free credit report? Free credit report programs, like Turbo, can give you a glimpse into your score and history. If you’re looking to improve your credit score, these tools may be useful for frequent tracking and do not count against your credit as a hard inquiry.

How Does Your Credit Report Impact You?

Potential lenders and employers may check your credit report for the same reason you check in on yourself. Your credit report may signal that you can be trusted to make timely payments and prioritize your financial health. Employers have been known to check credit reports in order to confirm you’re able to stick to contracts and agreements.

Credit reports are most commonly used to determine approval for loans, credit limits, and interest rates. If you have some troubling details on your account, lenders may protect themselves by offering higher interest or lower credit limits until you’ve proven a strong history of payments. On a higher level, credit reports affect your mortgage interest rate or simply your likelihood of being approved for the mortgage in the first place.

In some cases, your credit report could also affect your insurance rates and other monthly bills. Some utility companies and cell phone companies determine offers and down payments based on your credit score. Overall, the healthier your credit report, the more chances you’ll have to practice good borrowing habits with a range of accounts.

A credit report is a detailed tracking tool of your borrowing and repayment history. The greater you understand your credit report, the more it can act as a tool for financial growth. Feeling confident about borrowing and managing debt comes over time, and your credit report is there to help track your progress along the way.

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