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The Art of Mortgage Pre-Approval

Buying a home can feel like a cut-throat process. You may find the craftsman style house of your dreams only to be bumped out of the running by a buyer paying in all cash, or moving super swiftly. But fear not, understanding the home buying process and getting a mortgage pre-approval can put you back in the race and help you secure the house you want.

What is Mortgage Pre-approval?

Mortgage pre-approval is essentially a letter from a lender that states that you qualify for a loan of a certain amount and at a certain interest rate based on an evaluation of your credit and financial history. You’ll need to shop for homes within the price range guaranteed by your pre-approved mortgage. You can find out how much house you can afford with our home affordability calculator.

Armed with a letter of pre-approval you can show sellers that you are a serious homebuyer with the means to purchase a home. In many ways it’s competitive to buying a home in cash. In the eyes of the seller, pre-approval can often push you ahead of other potential buyers who have not yet been approved for a mortgage.

Getting pre-qualified for a mortgage is not the same as pre-approval. It’s actually a relatively simple process in which a lender looks at a few financial details, such as income, assets, and debt, and gives you an estimate of how much of a mortgage they think you can afford.

Taking out a mortgage is a huge step and pre-qualification can help you hunt down reputable lenders and find a loan that potentially works for you. Going through this process can be useful, because it gives you an idea of your buying power, or how much house you can afford.

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It also gives you an idea of what your monthly payment might be and is a chance to shop around to various lenders to see what types of terms and interest rates they offer. Pre-qualification is not a guarantee that you will actually qualify for a mortgage.

Getting pre-approval is a more complicated process. You’ll have to fill out an application with your lender and agree to a credit check in addition to providing information about your income and assets. There are a number of steps you can take to increase your chances of pre-approval or to increase the amount your lender will approve. Consider the following:

Building Your Credit

Think of this as step zero when you apply for any type of loan. Lenders want to see that you have a history of properly managing your debt before offering you credit themselves. You can build credit history by opening and using a credit card and paying your bills on time. Or consider having regular payments , such as your rent, tracked and added to your credit score.

Checking Your Credit

If you’ve already established a credit history, the first thing you’ll want to do before applying for a mortgage is check your credit report and your FICO score. Your credit report is a history of your credit compiled from sources such as banks, credit card companies, collection agencies, and the government.

This information is collected by the three main credit reporting bureaus, Transunion, Equifax and Experian. Your FICO score is one number that represents your credit risk should a lender offer you a loan.
You’ll want to make sure that the information on your credit report is correct.

If you find any mistakes, contact the credit reporting agencies immediately to let them know. You don’t want any incorrect information weighing down your credit score, putting your chances for pre-approval at risk.

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Stay on Top of Your Debt

Your ability to pay your bills on time has a big impact on your credit score. If you can, make sure you make regular payments. And if your budget allows, you can make payments in full. If you have any debts that are dragging on your credit score—for example, debts that are in collection—work on paying them off first, as this can give your score a more immediate boost.

Watch Your Debt-to-income Ratio

Your debt-to-income ratio is your monthly debts divided by your monthly income. If you have $1,000 a month in debt payments and make $5,000 a month, your debt-income ratio is $1,000 divided by $5,000, or 20%.

Lenders may assume that borrowers with a high debt-to-income ratio will have a harder time making their mortgage payments. Keep your debt-to-income ratio in check by avoiding making large purchases before seeking pre-approval for a mortgage. For example, you may want to hold off on buying a new car until you’ve been pre-approved.

Prove Consistent Income

Your lender will want to know that you’ve got enough money coming in each month to cover a potential mortgage payment. So, they’ll likely ask you to prove that you have consistent income for at least two years by taking a look at your income documents (W-2, 1099 etc.).

For some potential borrowers, such as freelancers, this may be a tricky process since you may have income from various sources. Keep all pay stubs, tax returns, and other proof of income and be prepared to show them to your lender.

What Happens if You’re Rejected?

Rejection hurts. But if you aren’t pre-approved, or you aren’t approved for a large enough mortgage to buy the house you want, you also aren’t powerless. First, ask the bank why they made the decision they did. This will give you an idea about what you might need to work on in order to secure the mortgage you want.

SoFi Mortgage.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Source: sofi.com

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The Best Way to Organize Your Closet

How do you store stuff in your closet?

If you’re the type of person who tosses in everything, transforming your closet into a cluttered hole of hidden treasures, you should consider a new approach.

With a little effort and a few organizational accessories, you can figure out the best way to organize your closet. No longer will you lose items in the overstuffed space or spend too much time searching for an item you know is in there.

Transform your closet so it serves you rather than simply holding your clutter. These closet organization tips will help you set your space up for maximum usage.

1. Complete a purge

folding clothesfolding clothes

Before you can organize, get rid of what’s only taking up space. All the items you don’t wear or even want anymore shouldn’t hang around in your closet. Purging may seem simple enough on paper, but sometimes we keep clothes, shoes, purses or ties because they remind us of our younger selves or hold a special memory.

As you go through your closet clutter, instead of thinking about how the item makes you feel in general, ask yourself if you still feel great when you wear it. Does it still look good on you? Would you even wear it out today? If the answer is “no” to any of these questions, it’s time to part with it.

Once you’ve separated the stuff in your closet into keep and discard piles, you can donate unwanted items. Closet Factory shares some of the most popular charities for donating clothing, shoes or other common closet accessories:

  • Goodwill and Salvation Army often have easy drop points and take just about anything. You can schedule a pick-up if you have a lot of items, or just go to a drop point at your convenience.
  • Soles4Souls and Indigo Rescue handle specialty items. The first sends donated shoes to people in need while the latter collects unwanted jewelry that’s used to fund animal shelters.
  • If you have a lot of professional-style clothing to donate, consider an organization like Dress for Success or Career Gear.

2. Create a closet system

closet systemcloset system

Whether you need to completely organize your closet or are only focusing on one specific area, there’s an organizational solution to any closet issue, according to Good Housekeeping.

This can mean doing a complete overhaul with the help of a full system like Elfa at The Container Store. Using a system lets you design your own closet, along with the option to install the pieces yourself or have it done for you. Many pieces are also modular and easy to change.

When your closet has good bones, and you just want to make a few additions to its overall design, it might be easier to buy organizational items a la carte.

Shelving

Adding some additional shelving into your closet can create way more storage space. If there’s nothing above your closet rod, a few extra shelves can become a great place to store out-of-season clothing, jackets or even sweaters.

Add a small, folding step-stool to your closet and these items won’t ever be out of reach. Putting a few extra shelves at the bottom of your closet can provide great storage for shoes, handbags and even extra sheets and towels.

Bins

If you don’t like the way it looks to have all your clothing stacked on open shelves, consider bins or crates. You can even create a makeshift dresser by stacking these in just the right way. This becomes great storage for smaller items like sandals, socks or accessories. They’re a great way to keep items organized and give everything in your closet a proper place.

3. Add some organizational accessories

closet organization accessoriescloset organization accessories

Once the closet itself starts to feel organized, it’s time to tackle the extra space. You may think, “What extra space?,” but doors, walls and even the sides of your closet system are all begging for organizational accessories to fit even more into your closet without sacrificing its nice and neat appearance. Some great items to add include:

  • Over-the-door shoe racks to hold shoes or store your jewelry
  • Stick-on hooks for walls and any vertical space. Positioned at varying heights, they’re great for everything from purses to belts.
  • A floor shoe rack for easy access to the sandals, sneakers and boots you wear every day
  • Hanging storage that fits right on the closet rod. With multiple compartments, they help you take advantage of vertical space.

Specialty hangers

Another accessory you might not immediately think of for organization are hangers. These essential closet components not only keep your clothes wrinkle-free, but they can create even more room in your closet. Substituting some of your regular hangers with specialty ones can free up space and keep your closet looking perfectly arranged.

  • Multiple and tiered hangers drop down, allowing you to use the footprint from a single hanger to hang more than one piece of clothing
  • Hangers with clips allow you to combine a top with bottoms on just one hanger
  • Hook hangers let you drape multiple items from a single spot

You can also transform a regular hanger into a specialty space-saver with the help of a few shower curtain rings. Attach them to your hanger and then store things like scarves, belts or hats. You can fit your entire collection on a single hanger rather than having it take up too much space in a stack.

4. Work in some decor

closet decorcloset decor

There’s no reason your organized closet needs to look boring. The best way to organize your closet can include a few personal touches. This can help make the space feel welcoming and purposeful.

If you have room, add a mirror or small framed picture. Use hat boxes, vintage luggage, decorative boxes or decorative metal baskets as storage containers instead of more generic, plastic ones.

Get creative when storing small items, such as jewelry, gloves and sunglasses with cigar boxes, vintage lunch boxes or even a small (clean!) tackle box.

What’s the best way to organize your closet?

The best way to organize your closet is to do whatever makes it easiest for you to get to all your stuff. No matter the size, it’s time to embrace your closet’s potential. When you design a closet space that’s easy to access, it will surprise you how motivated you’ll be about neatly hanging up your clothes. Use these closet organization tips to maximize every inch and love your closet again.

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Source: apartmentguide.com

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5 Mind-Altering Wealth Strategies for Successful Business Owners

I’m an entrepreneur and just so happen to be in the business of providing other entrepreneurs with financial advice. But I don’t typically offer up the usual status quo advice that tells you to do things that aren’t always in alignment with growing your business.

My views originate from my experiences and at times are contrarian to what’s being recommended by the usual tax preparer and other financial advisers, because I am in the trenches running a business just like you. I know what it takes to grow a business, make payroll, deal with IRS notices and manage cash flow.

The truth is that being an entrepreneur can be isolating at times as a result of being wrapped up in the day-to-day of running your business. When you are hyper-focused on your business, it is difficult to also be an expert at managing the profits of the company.  You may be great at making money, but once it’s made, what do you do with it?

Thinking differently about your company and how you will use it to build wealth is the key to true financial success.

In this article, I’ll outline five ways you can shift your mindset about money to transform how you define and operate your business and approach your financial decisions. It will help you identify what you really want to achieve: A Self-Managing Company®, a term coined by  Dan Sullivan of Strategic Coach.  

Mind Shift No. 1: Understand that Retirement Savings Plans Don’t ‘Lower’ Your Tax Bill

As a business owner, you are probably time-starved and used to making fast decisions. And you may be tempted to make fast decisions at tax time, especially when your tax preparer suggests that tax-deferred investments are the answer to lower your tax bill and save some money for retirement.  Easy enough, right?

This is what I like to call a half-truth. It’s true that you’ll get the deduction for that year’s taxes. But the other half of the story uncovers the problem with the use of SEP IRAs, 401(k)s and other tax-deferred options to “lower” your tax bill. The reality is that you are taking money from your business where you have some level of control and redirecting those dollars into the stock market where you have absolutely no control.  The money is tied up until you are 59½ years old and face potentially higher tax liabilities than you previously owed with no access to your cash if it is needed for growing or sustaining your business.

When you own a business, the half-truths you hear from many finance professionals and the mainstream media can at times negatively impact your ability to grow your business and protect your interests.  I have found there are other, more productive ways to build wealth outside of your business, beyond the base-level concepts of investing or putting money in an IRA or 401(k).

Mind Shift No. 2: View Your Company Not as Your Job, but as a Tool for Building Your Wealth

If you run a healthy business, you have a long-term strategy. You know what the end-goal is. You think about the business as a whole, rather than focusing on simply the day-to-day tasks.

We’ve all heard the old adage: Work on your business, not in your business. That’s because if you’re working in your business all the time, you’ve only created a job for yourself.  The goal is to build systems and develop people to slowly work yourself out of the role you have and allow the business to run on its own.  The sooner you shift your mindset to this way of thinking, the sooner you can begin to experience the results.

First, carve out the time in your day to think about your business. Many business owners I talk to don’t do this, because they are buried in the work. Take time to talk to your future self about what you want your life to look like in the future.  What would your future self say to you about the decisions and choices you are making?  It helps to outline your thinking time, keep a journal of your discoveries, meditate to de-stress, and use the time to reflect on what you are trying to accomplish in the business.

Next, think about your business as a piece of your financial plan. How much time and capital are you investing into the business, and what are you getting out of it?  What is your ROI?  I’ve found that a business can offer the biggest opportunity to build wealth, and in many cases — depending on your results — it can offer more than what you might get from investing in the market.

Finally, think with the end in mind. At the end of the day, what are you trying to get out of your company? To build wealth through your business, you must identify what will build its value.

Building value revolves around creating a self-managing company, one that runs without you and has a strategy to sustain itself into the future. This allows you to sell it for maximum value, or even create a passive income stream without actually having to work in the business.

Shifting your mindset is important, because you probably didn’t start your business that way. Many business owners don’t, and that’s OK while you’re getting things up and running. But it’s important to remember that what got you started will not get you to the next level and will not build the wealth needed to successfully exit the business.

Mind Shift No. 3: Master Your Cash Flow

I tend to bust a lot of myths when it comes to financial matters, and one of them has to do with cash flow. This is especially important to understand as an entrepreneur. Your cash flow is not there to simply pay your bills. Yes, you must pay your bills of course, but there is more to it than simply making payroll.

Cash flow is a tool to help you build wealth and the value of your company.  Healthy cash flow allows for you to control your money, and there are strategies you can explore to help you maximize it.

I recently spoke with a partner of a business who was earning a W-2 salary of $400,000 per year. In working with his CPA, we were able to rework his partnership agreement, removing him as an employee and adding him as a consultant of his own LLC.  While this simple strategy reduced his tax liability by $20,000, implementing this strategy was about more than just lowering taxes.  This was about cash flow – everything is always about cash flow.  By making this little tweak, he increased his cash flow by $1,666 per month.

I’m not a CPA and don’t provide tax advice, but I ask a lot of questions and propose many scenarios for the tax professionals to consider – scenarios that can increase cash flow for business owners. Increasing and optimizing your cash flow should be a top priority for your business.

Mind Shift No. 4: Be Your Own Bank

Companies with cash are able to do many things without having to rely on a bank or other source of funding. In essence, they can be their own bank. Think about it. When you have cash, you can use it to work on your wealth-building strategy. You could buy a company, invest in equipment, hire more people (maybe even a replacement for yourself who can run the company while you collect passive income), buy property, or take advantage of any other opportunity that may come your way.

But there is another way you can be your own bank. Maybe you’ve heard of the concept of “BUILD Banking™,” a cash flow strategy using a specially designed life insurance contract. It’s a strategy that I use personally and with many of my clients who want to have greater control of their cash flow. It frees them from dependence on banks for capital infusions and avoids government red tape when they need to access their money.

For more information about BUILD Banking™, visit www.buildbanking.com.

This strategy enables business owners to grow assets tax-free and have access to those funds whenever they’re needed. In essence, you’re accessing cash when it is needed while having uninterrupted compounding growth for your future.

Mind Shift No. 5: Understand Your Legal Exposures and Protect Yourself

You likely have some form, or forms, of insurance in place for your business. And you may believe that these policies have you covered. Well, they may, and they may not. The coverage you need goes far beyond liability, even extending into punitive damages.

It’s important to work with an insurance professional who specializes in business coverage to ensure that you have the right type of policies and the proper level of protection for your specific business.

There are also certain types of insurance policies (including the BUILD Banking strategy I’ve described above) that can serve a strategic purpose for your business. It’s common, and valuable, for business owners to have a life insurance contract as part of their succession plan, acting as a funding mechanism for the beneficiary to purchase the deceased owner’s share of the business.

Again, you will want to have a collaborating team of insurance professionals who have expertise in their vertical and who understand your business, your goals and what you are trying to accomplish. It’s also a good idea to include your CPA, attorney and financial planner in on those discussions.

These five financial planning tips and mindset shifts will help you use your business as a tool to start building wealth (or build greater wealth). They may be things you’ve never thought about, or things you’ve considered but haven’t been able to implement.  Putting these ideas to work can get you on the path to true business success.

Results may vary. Any descriptions involving life insurance policies and their use as an alternative form of financing or risk management techniques are provided for illustration purposes only, will not apply in all situations, may not be fully indicative of any present or future investments, and may be changed at the discretion of the insurance carrier, General Partner and/or Manager and are not intended to reflect guarantees on securities performance. Benefits and guarantees are based on the claims paying ability of the insurance company.
The terms BUILD Banking™, private banking alternatives or specially designed life insurance contracts (SDLIC) are not meant to insinuate that the issuer is creating a real bank for its clients or communicating that life insurance companies are the same as traditional banking institutions.
This material is educational in nature and should not be deemed as a solicitation of any specific product or service. BUILD Banking™ is offered by Skrobonja Insurance Services LLC only and is not offered by Kalos Capital Inc. nor Kalos Management.
BUILD Banking™ is a DBA of Skrobonja Insurance Services LLC.  Skrobonja Insurance Services LLC does not provide tax or legal advice. The opinions and views expressed here are for informational purposes only. Please consult with your tax and/or legal adviser for such guidance.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Founder & President, Skrobonja Financial Group LLC

Brian Skrobonja is an author, blogger, podcaster and speaker. He is the founder of St. Louis Missouri-based wealth management firm Skrobonja Financial Group LLC. His goal is to help his audience discover the root of their beliefs about money and challenge them to think differently to reach their goals. Brian is the author of three books, the Common Sense podcast and blog. In 2017 and 2019 Brian received the award for Best Wealth Manager and in 2018 the Future 50 St. Louis Small Business.

Source: kiplinger.com

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The Ultimate College Senior Checklist

Earning a college degree is no easy feat. Think countless late-night cram sessions, tedious loan applications, heavy textbooks to haul around. For some college seniors, June cannot come fast enough, and it’s understandable why senioritis kicks in. That said, there’s still a lot of important work to do before crossing that graduation stage.

From jumping through the logistical hoops of making it to graduation day to launching a job search and addressing student loan payments, there are a lot of important pre-graduation to-do’s that may require prompt attention.

Here’s a comprehensive checklist that will help college seniors be prepared to graduate and enter the working world.

Dotting I’s and Crossing T’s

Ideally, before senior year begins (or sooner for those planning to graduate early), students should meet with their guidance counselor to make sure they have all of their ducks in a row in order to graduate. Switching majors, studying abroad, or misunderstanding degree requirements can lead to confusion about which classes must be taken to graduate.

Before setting a class schedule for the year, it can’t hurt to double-check with a college counselor that all requirements are being met. Some schools even have a certain amount of community service or chapel hours required in order to graduate, so again, it’s smart to confirm that everything is moving along as it should be.

Preparing for the graduation ceremony needs to be done in advance. Colleges and universities often require students to apply to graduate and register their planned attendance at the ceremony well ahead of the actual day.

To streamline the process, many schools have grad fairs where students can pick up their commencement tickets; buy a cap and gown, class rings and commencement announcements; and ask questions about the logistics of graduation day.

Transcripts can come in handy when applying for jobs and graduate school programs, so picking up a few copies while still on campus can save time down the road. And don’t forget to turn in those library books! No one will want to trek back to campus after graduation to pay late fees.

Getting a Jumpstart on a Job Search

It’s no secret that college graduates flood the job market each June, so getting ahead of the pack can make job searching a little easier. Applying for jobs earlier in the spring can lessen the competition and give seniors confidence that they have a job lined up when they graduate.

If launching a full-blown job search during school isn’t possible, college seniors can at least take steps toward preparing for the job search.

Stop by the career center and see what resources it can provide. Schools have a career center for a reason! Most are ready to help students prepare their resumes and perfect their cover letters, and they typically have job postings from companies looking to hire recent graduates.

Some career centers may offer mock interviews so students can hone those skills, or they may provide support when issues arise during a job search. Popping by between classes to see what services are offered will only take a few minutes.

At the very least, college seniors can poke around online job boards and research local companies to see what opportunities are out there.

Making Connections

As a student, it may feel like having a professional network is unattainable, but many build one while in school without realizing it. One easy way to get a head start on a job search, without doing too much work during a hectic final year of school, is to focus on building relationships and requesting references.

Professors, employers, and intern supervisors can all provide references that can strengthen a job search. Finding that first job out of college can be tricky, when resumes are on the shorter side, so a handful of strong references can make all the difference.

While requesting references, college seniors should tell their connections what career path they’re hoping to pursue. One never knows where the next opportunity might come from.

Paying Back Student Loans

Preparing to navigate life after college can be overwhelming, especially when it comes to finances. No one wants to think about student loan payments, but it can be helpful to start making repayment plans before graduation day.

Try beginning the planning process by simply looking up the current balance for each student loan held, including both federal and private loans. Then note when the grace period ends for each loan and when the lender expects payment. It’s important to plan to make loan payments on time each month, as that can boost a credit score.

Lenders usually provide repayment information during the grace period, including repayment options. Many federal student loans qualify for a minimum of one income-driven or income-based repayment plan.

Federal student loans may qualify for a variety of repayment plans, such as the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plans, Revised Pay As You Earn Repayment Plan, Income-Based Repayment Plan, Income-Contingent Repayment Plan, and Income-Sensitive Repayment Plan. It is important to carefully research each payment plan before choosing one.

For private student loan repayment, it is best to speak directly with the loan originator about repayment options. Many private student loans require payments while the borrower is still in school, but some offer deferred repayment. After the grace period, the borrower will have to make principal and interest payments. Some lenders offer repayment programs with budget flexibility.

Whether students or their parents chose to take out federal or private student loans (or both), reviewing all possible repayment plan options can provide choices. And who doesn’t like choices?

One Loan, One Monthly Payment

Some graduates may want to consider refinancing or consolidating their student debt.

Borrowers who have federal student loans may qualify for a Direct Consolidation Loan after they graduate, leave school, or drop below half-time enrollment.

Consolidating multiple federal loans into one allows borrowers to make just one loan payment each month. In some cases, the repayment schedule may be extended, resulting in lower payments, after consolidating (but increasing the period of time to repay loans usually means making more payments and paying more total interest).

Refinancing allows the borrower to convert multiple loans—federal and/or private—into one new private loan with a new interest rate, repayment term, and monthly payment. The goal is a lower interest rate. (It’s worth noting that refinancing a federal loan into a private loan can lead to losing benefits only available through federal lenders, such as public service forgiveness and economic hardship programs.)

Refinancing can be a good solution for working graduates who have high-interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans.

If that sounds like a good fit, SoFi offers student loan refinancing with zero origination fees or prepayment penalties. Getting prequalified online is quick and easy.

Learn more about SoFi Student Loan Refinancing options and benefits.


SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

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What Is a Mortgagee? Hint: It’s Not a Typo

Are You a Mortgagee or Mortgagor?

It’s mortgage Q&A time! Today’s question: “What is a mortgagee?”

No, it’s not a typo. I didn’t leave an extra “e” on the word mortgage by mistake, though it may appear that way.

Despite its striking appearance, it’s actually a completely different word, somehow, simply with the mere addition of the letter E.

Don’t ask me how or why, I don’t claim to be an expert in word origins.

Seems like a good way to confuse a lot of people though, and it has probably been successful in that department for years now.

You can blame the British English language for that, or maybe American English.

Anyway, let’s stop beating up on the English language and define the darn thing, shall we.

A “mortgagee” is the entity that originates (makes) and sometimes holds the mortgage, otherwise known as the bank or the mortgage lender.

They lend money so individuals like you and I can purchase real estate without draining our bank accounts.

It could also be your loan servicer, the entity that sends you a mortgage bill each month, and perhaps an escrow analysis each year if your loan has impounds.

The mortgagee extends financing to the “mortgagor,” who is the homeowner or borrower in the transaction.

So if you’re reading this and you aren’t a bank, you are the mortgagor. It’s as simple as that.

Another way to remember this rather confusing word jumble; Who is the mortgagee? Not me!!

Mortgagor Rhymes with Borrower, Kind Of

mortgagor

  • Here’s a handy way to remember the word mortgagor
  • It kind of rhymes with the word borrower…
  • Or even the word homeowner, which is also accurate if you hold a mortgage on your property

I was trying to think of a good association so homeowners can remember which one they are, instead of having to look it up every time they come across the word.

I believe I came up with a semi-decent, not great one. Mortgagor rhymes with borrower, kind of. Right? Not really, but they look and end similar, no?

Anyway, the real property (real estate) acts as collateral for the mortgage, and the mortgagee obtains a security interest in exchange for providing financing (a home loan) to the mortgagor.

If the mortgagor doesn’t make their mortgage payments as agreed, the mortgagee has the right to take possession of the property in question, typically through a process we’ve all at least heard of called foreclosure.

Assuming that happens, the property can eventually be sold by the mortgage lender to a third party to pay off any attached liens, or mortgages.

So if you’re still not sure, you are probably the mortgagor, also known as the homeowner with a mortgage. And your lender is the mortgagee. Yippee!

What makes this particular issue even more confusing is that it’s the other way around when it comes to related words like renters and landlords.

Yep, for some reason a landlord is known as a “lessor,” whereas the renter/tenant is known as the “lessee.” In other words, it’s the exact opposite for renters than it is for homeowners.

But I suppose it makes sense that both landlord and mortgage borrower are property owners.

What About a Mortgagee Clause?

mortgagee clause

  • An important document you may come across when dealing with homeowners insurance
  • Stipulates who the lender (mortgagee) is in the event there is damage to the subject property
  • Protects the lender’s interest if/when an insurance claim is filed
  • Since they are often the majority owner of the property

You may have also heard the term “mortgagee clause” when going through the home loan process.

It refers to a document that protects the lender’s interest in the property in the event of any damage or loss.

It contains important information about the mortgagee/lender, including name, address, etc. so the homeowners insurance company knows exactly who has ownership in the event of a claim.

Remember, while you are technically the homeowner, the bank probably still has quite a bit of exposure to your property if you put down a small down payment.

For example, if you come in with just a 3% down payment, and the bank grants you a mortgage for 97% of the home’s value, they are a lot more exposed than you are.

This is why hazard insurance is required when you take out a mortgage, to protect the lender if something bad happens to the property.

Conversely, if you buy a home with cash, as opposed to taking advantage of the low mortgage rates on offer, it’s your choice to insure it or not.

But more than likely, you’ll want insurance coverage on your property regardless.

In summary:

Mortgagee: Bank or mortgage lender
Mortgagor: Borrower/homeowner (probably you!)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

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Micro Wedding Is Sign of the Times

Micro weddings have become ultrachic in the time of coronavirus. These smaller weddings allow you and your future spouse to exchange your vows, enter into a legal relationship and get access to each other’s health insurance all while living through these socially-distanced times.

What Are Micro Weddings?

A micro wedding is generally a wedding with less than 50 guests. In the before times, micro weddings were often a cost-cutting measure as the most effective way to cut your budget is to cut your guest list.

When you cut your guest list, you’re cutting down on the amount of space you’ll need at the venue. Simultaneously, you’re cutting down on the costs of food, alcohol and favors.

During the time of Coronavirus, micro weddings are helpful to your health as well as your wallet. You may even want or be required to cut your guest list further than the normal standard of 50 guests.

Planning a Micro Wedding

When you’re planning a micro wedding the first thing you’ll want to start with is your guest list. You may only want your closest friends and family there for your big day. Or, in this time of pandemic, you may only want it to be the two of you and the officiant. In some states, you can even eliminate the officiant via a self-uniting marriage.

Whether you have a handful of guests or just the couple at your micro wedding, venues and vendors across the wedding industry have many ways to help you share your big day while saving money.

Get Creative with the Venue

Because you have a smaller guest list, your venue doesn’t need to be nearly as large. Your favorite art gallery might be renting out space, or you might be able to book a private room at your favorite restaurant. If a venue had a minimum guest count prior to 2020, those minimums have likely been reduced or eliminated altogether.

If you are absolutely set on having a larger wedding despite the pandemic, you could book your local park or another outdoor venue to make the event safer. Be sure to remind your guests that they still need to wear masks and observe the 6-foot rule even though the event will be taking place outside.

Newly weds get married as hot air balloons are released all around them on top of a mountain.
Getty Images

Destination Weddings

You may have a bit of pent up wanderlust, dreaming of a destination wedding. Destination weddings are usually micro weddings. Because you or your guests will have to pay for extra expenses like hotel rooms and travel costs, the number of people who can attend usually becomes inherently smaller.

There are certainly some Caribbean destinations that are allowing Americans to visit during the pandemic, and some of the resorts are offering great deals. But despite more and more Americans getting vaccinated, many people are still avoiding air travel. Be prepared for some guests to decline your invitation if air travel is involved.

Instead of air travel, you can either commit to a long road trip through locales where the infection rate is low, or pick a venue within convenient driving distance. Traveling in your car with other members of your bubble is a far safer way to get from point A to point B.

Remember that even if you’re fully vaccinated, there is still potential for you to spread the virus to your guests, your hosts and anyone else you may come into contact with. The more the virus spreads, the more likely it is to harm the unvaccinated, even if those unvaccinated people aren’t in your immediate circle.

Allowing the virus to spread like this also provides it with increased opportunities to mutate into vaccine-resistant variants, which could force us all into lockdown again until boosters for new strains are available.

Invest in Quality Videography

Maybe you never dreamt of having a micro wedding. You might even be upset that you can’t have a huge party with your family and friends.

One way to help soften the blow of having a micro wedding during the pandemic is to share your big day with quality videography. You can either livestream your ceremony or hire a videographer to document the celebration.

Because business has been slower and videography has new importance during the pandemic, some venues and videographers are offering discounts on these services.

Curbside Tastings

The mere fact that you’re feeding less people at your micro wedding means you can spend less on your wedding cake and any catering your micro wedding may require.

During the pandemic, some bakeries, restaurants and caterers are offering curbside tastings to ensure everyone’s safety.

Drive-By Wedding Visits

Maybe in normal times, your sister would have been your matron of honor, but she has a disabled child who is high-risk. Even though you are both vaccinated, her child is not. She can’t risk exposing herself to even asymptomatic cases of the virus as she could unknowingly pass them on to her child.

You still want her to be a part of your big day. If she lives within driving distance, you could schedule a drive-by visit prior to the micro wedding ceremony. Either she and hers could drive by your place, where you’d be on display in your gown or tux, or you could drive by her place, stepping just outside the car to show her how good you look while keeping a masked distance of well over six feet.

It’s not the same. It’s still incredibly sad that she can’t be there, and you might even want to consider postponing your wedding until she can attend. But if the show must go on, these drive-by visits can still provide you both with a special memory from your special day.

Include Remote Readings

If you’re having a Zoom micro wedding, even those who cannot attend can participate in your ceremony. In the case of your sister, she may perform a reading or conduct a prayer through the screen. You can customize your ceremony any way you see fit, using your creativity and the power of the internet to make your micro wedding all that much bigger.

Micro Wedding Ideas for a Smaller Guest List

When planning a micro wedding, you may find that you have a bit of a budget surplus because of these cut costs. Both the budget surplus and the fact that you’ll have far fewer guests at your wedding allow you to get creative and a little more personal with the finer details of micro wedding planning.

Hand sanitizer and face masks are set out for guests to use during a wedding reception.
Getty Images

Wedding Favors

The following are a few favor ideas you might consider for your micro wedding, depending on your budget and your wedding’s theme. The dollar signs are meant to show you the relative expense but the exact dollar amount of each is based on your own budget.

  • Masks. ($-$$) Masks can be custom-printed with names and wedding date, nodding to the extraordinary times we’re all living in while giving your guests a functional gift they’ll be able to use in their day-to-day lives. You may even want to make these favors available to guests upon arrival rather than at the end of the celebration. That way if anyone forgot to bring their mask, they’ll literally be covered.
  • Hand sanitizer. ($) You can find plenty of beautiful yet affordable options for custom-printed hand sanitizer right now. Instead of the “Germ-X” label, your label will include your names, the wedding date and perhaps some adorable quote about love. This is another good favor to make available to your guests upon arrival.
  • Fauci-approved smooches. ($) Want to DIY your micro wedding favors? One cute idea is to get a glass jar, fill it with Hershey Kisses, and affix a label that reads “Social Distance Kisses.”
  • Flip flops. ($-$$) If you plan on driving to the beach for your destination wedding, flip flops can make a great wedding favor. If guests forget about the sand and wear fancy shoes to your celebration, they’ll appreciate the option to switch to beach-friendly attire upon arrival. Because your guest count is small, you can ask each guest for their shoe size beforehand so everyone is accurately accounted for. You can also go the extra mile and order custom flip flops with your names and wedding date printed on them.
  • Custom luggage tags. ($$$) This option is a little more expensive, but if you find yourself with extra padding in your wedding budget you may decide they’re worth it. Luggage tags can serve as a token of hope that life will go back to normal soon and we won’t have to stress as heavily should we have to get on a plane and traipse through the airport.

Guest Book

Similarly, because micro weddings have so few people in attendance, you can use creative ideas for a non-traditional guest book. Your guest book can then be integrated in your day-to-day married life.

Here are some ideas that can be customized to any micro wedding budget:

  • Picture frame. ($-$$$) When you get your wedding pictures back from the photographer, there’s likely to be one photo that just blows you away. Before the wedding, purchase a frame where you can display that much-anticipated picture. Buy a frame with a removable mat. Then, you can have your guests sign the mat in lieu of a guestbook on your wedding day. Their well-wishes can be displayed in your home alongside your favorite wedding photo.
  • Ornaments. ($-$$$) Have you ever known someone who has a tradition of picking up a Christmas ornament on every vacation? Their tree then reminds them of all the journeys they’ve enjoyed. You can do a similar thing for your wedding day — especially if you have a small guest list. Instead of a guestbook, provide ornaments and paint pens coordinated with your wedding colors. Each guest will sign one. Every year, you can display your wedding-day memories on your tree, remembering those who were there with you.
  • Tiles or stepping stones. ($-$$$) Are you and your soon-to-be spouse remodeling? Or doing some landscaping work? If so, you can integrate your wedding day into your design plans. For instance, if you’re doing interior repairs and plan to lay tile, you can put out some tiles at your micro wedding in lieu of a guest book. Each guest would then sign one, and you could integrate your guest book into your home. If you’re doing outside work, you could have each guest sign a wet stepping stone, even adding their handprint if they want to. You can then integrate these stepping stones into your garden.

Stationary

Things are a lot more hopeful right now with somewhat improved vaccine distribution, but there are still so many unknowns. As you plan your micro wedding during uncertain times, you might want to familiarize yourself with some Corona-era additions to the wedding stationary world:

  • Change-the-date announcements. Change-the-date cards are now incredibly common for wedding postponements. Just like wedding invitations, these cards range from cute and witty all the way to incredibly formal. You can look for a template that matches the tone of your wedding day.
  • Virtual wedding invitations. Maybe you’re doing your part by giving the virus as few opportunities to mutate as possible. That’s why you’re doing a Zoom micro wedding with just the two of you plus your officiant. Paper invitations to your wedding are still a beautiful touch, but the most convenient way to invite your guests to livestream the event is through a virtual invitation. With virtual invitations, your guests will have access to a clickable link where they can participate in your ceremony live.
  • Elopement announcements. Whether you elope or simply choose not to announce to anyone but your micro wedding guests that you’re getting married, after-the-fact wedding announcements are a good way to include family and friends. Prior to the pandemic, these were commonly used for elopements, so you can find plenty of templates online even if they predate 2020. But you can also find pandemic-specific announcements whether you eloped or did, indeed, plan and have a few guests. Ideally, this announcement will contain a link to a wedding website where friends and family can view either pictures or video of your celebration after the fact.

It can be hard to break it to family or friends that they are either not invited or are uninvited to your wedding. But you are not the only one going through this situation. The silver lining is that because so many couples have faced the same circumstances, there are plenty of templates online and professionals who have worded the same sentiment for numerous clients. You don’t have to stress about the wording on your own.

Brynne Conroy is a contributor to The Penny Hoarder. She blogs at Femme Frugality.

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Source: thepennyhoarder.com

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How to Negotiate Lower Rent With a Potential Landlord

It starts with determining your leverage.

By Alex Starace for MyFirstApartment.com

When you’re looking for an apartment, you might be under the impression that the list price is the only price. In some cases, that’s true. But if you’re a bit savvier, you could end up negotiating your way into a great deal. Before you approach the landlord, however, make sure you’ve done your homework.

Determine your leverage     

Are you in a tight or loose rental market? In tight markets — where there are more renters than available apartments — it’s unlikely a potential landlord will negotiate. Why? If three or four other people are willing to pay list price for the apartment, a landlord has little motivation to lower the price for you.

A good way to determine whether you’re in a tight rental market is to browse apartment listings for a few days. How many open units are in each building? How quickly do listings disappear? The longer the listings are on the market and the more listings per building, the looser the market. Another way to tell: Have you had any apartment showings canceled because the place was suddenly rented? If not, this again points to a looser market.

In loose markets, landlords will be anxious to rent their place, even at a rate lower than list price. After all, an empty unit is a money-sink for landlords. If you’re offering to fill the vacancy, the landlord might be happy to lower the price, especially if the choice is between renting to you or letting the apartment sit on the market a month longer.

Can you demonstrate that you are a responsible person? Even in a tight market you can have personal leverage. Landlords want security and predictability. In the long run, these things save a landlord a lot of money. If you can demonstrate that you have these qualities — the primary attributes landlords look for are a steady job and good credit — you may get a landlord to knock a bit off your rent or to make other concessions.

Can you show commitment to staying? If you’re planning on staying in the apartment for two or three years or longer, that’s a big benefit in a landlord’s eyes. When a landlord has to rent an apartment to a new tenant every year, he or she loses a lot in transaction costs (repainting, brokers fees, professional cleaning fees), as well as in the simple effort of finding a new tenant. So if you’re planning on staying a while, highlight this when discussing what makes you a great potential renter.

Negotiate from strength

After you have determined where your points of leverage are, it’s time to make your move. When approaching the landlord, the key is to be confident and calm. Avoid hyper-aggressiveness or a mouse-like timidity. A good way to strike the right balance and show confidence is to know your stuff. Know what an average apartment rents for in the neighborhood. Compare the amenities in the apartment to those available in nearby complexes. Have in mind a price you think is fair for your potential place, and have reasons why — whether it’s because the kitchen is too small, or it doesn’t provide parking, or it’s simply too expense relative to comparable places in the neighborhood. And emphasize your points of leverage — that you’ll be a responsible, long-term tenant.

When negotiating, ask for an even lower price than you’re hoping to pay. Do this for two reasons: First, you might end up getting it. Second, if the landlord is at all interested in bargaining, you’ll likely need to meet halfway between your initial offer and the list price. If you give a low (but not unreasonable) initial offer, meeting somewhere in the middle will be a win for you, and both you and the landlord will feel like you’ve made a good deal.

In the end, successful negotiating is all about knowing the market, doing research about the specific apartment in your sights and negotiating calmly and rationally. If you do all this, you have a good chance of paying lower monthly rent. Good luck!

 Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com