5 Important Questions When Choosing Your First Home

a cul-de-sac of suburban homes

In recognition of American Housing Month, American Federal Bank and the American Bankers Association are highlighting five questions first-time buyers should consider before purchasing a home.

Owning a home is a great investment, but before jumping into the market it is extremely important for consumers to consider the costs involved and budget accordingly to ensure they’re able to meet all of their financial obligations. American Federal encourages consumers to consider these questions before beginning their housing quest:

How much money do you have saved up?

Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.

How much debt do you have?

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

What is your credit score?

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

Have you factored in all the costs?

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

How long will you stay?

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

We’re Here to Help!

If you’re interested in learning more about buying your first home, or any other mortgage products, contact your American Federal Banker.

Tanner Kratochvil Joins American Federal Bank in Grand Forks

Tanner Kratochvil of Grand Forks, North Dakota has been named Associate Banker at the Grand Forks Sales Office of American Federal Bank.

TANNER KRATOCHVILTanner holds a Bachelor’s of Science in Business Administration Degree from the University of North Dakota. He’s originally from Grand Forks. He has several years’ experience in the banking industry, and spent several years as an associate with American Federal.

Tanner can be reached in our Grand Forks office. Please feel free to contact him with questions about your banking needs.

Tips for a Smooth Tax Season

Tax season is here. Although few of us are typically excited about it, one thing that always makes it run more smoothly is being properly prepared. A little organization can save you (and your tax preparer) a lot of headache down the road.

Jackie Marquardt
Jackie Marquardt

The first thing you need to do is make sure that you have your necessary documents in order. Some of the things to gather depending on your specific situation:

  • W2 forms from all employers
  • If you’re self-employed: 1099 forms, records of income and records of expenses
  • Documentation of retirement Income or unemployment income, if applicable
  • Mortgage statements and property tax bills
  • College tuition and/or student loan statements
  • Childcare expenses
  • Receipts for charitable donations
  • Medical and dental bills

Your preparer also may ask for a current photo ID. Likewise, if you’re expecting a refund, it will be good to have your bank account and routing numbers handy. (Keep them safe, of course!)

You also may want to have some specific questions in mind for your preparer. Depending on your situation, these could include:

  • What can I do to improve my tax situation?
  • Are there any changes I should make in the upcoming year? (Contributing more to healthcare or retirement accounts, increasing charitable donations, etc.)
  • How will extra income (such as money from a side hustle) affect my taxes?

You’re paying for their expertise, so don’t be afraid to ask! Also, always remember that you can always count on your American Federal Banker for any questions you have regarding your finances. We’re here to help you succeed!

If you’re in the Fergus Falls area, please feel free to contact me directly:

Bank: 218.739.3377
Direct: 218-998-4590
Email: [email protected]

Jackie Marquardt
Personal Banker

 

 

 

American Federal – Safe and Sound

Recent news and activity around the world have caused many people to contact us with concerns about the markets, deposits, and the overall stability of things.

We would like to take a moment to reassure our customers:

  • American Federal is well-capitalized and well-positioned to weather potential economic events. Founded in 1891, we are a are long-established institution dedicated to the communities we serve.
  • Our performance is rated superior by national financial services rating organizations. We have a long history of stability, steady growth, and strong returns. Our success has come through solid business practices, acquisitions, and strategic growth.
  • Your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. No consumer has lost a single penny in the history of this insurance fund. You don’t have the same level of protection when your money is outside the banking system.
  • Your banker can advise you on how you can maximize FDIC coverage on your deposits.

Should you have any further questions, please reach out to your local American Federal Banker, who would be happy to answer your questions.

The Importance of a ‘Saving Mindset’ for Young People

For many people, building savings is something they have yet to master. This can be especially true for individuals who have just entered the workforce or have just gotten started in their career. Often times, with an influx of new money, people find themselves spending more. However, getting into good savings habits early can have many benefits for you in the long run.

‘Paying Yourself First’A Saving Mindset

As a new employee, you may have limited experience in your spending and saving habits. You’ll likely have student loans, rent and other bills or debts to tackle. This is why establishing a savings baseline is a great way to get into the right mindset. Determine a percentage of your income that you’ll automatically put away each month. A good goal is 10-15%, however any amount you choose is a good start! Set it up as an auto-deposit into a dedicated account – a practice commonly called ‘paying yourself first.’ You likely won’t miss the money, and your future self will thank you!

Growing Your Emergency Fund

Medical emergencies, a down economy, unexpected auto repairs… these are just a handful of financial issues that can come at you out of nowhere. Having savings built up is one of the best ways to protect yourself. Many financial experts suggest saving three to six months of your salary, but naturally you can adjust as you see fit. Having the funds on hand can make sure you’re prepared for unexpected expenses and can also keep you from having to make decisions that will hurt you in the long run, such as having to use a high-interest credit card to cover an unexpected expense.

Learning to Budget

One of the best benefits of saving early is it forces you to budget. Budgets can be a little intimidating, but at the end of the day, the key to financial success is making and keeping to a budget. Knowing what you have coming in and where your money is going is critical to being in control of your finances. There are plenty of tools on how to create and draft your budget, but speaking with an American Federal Banker about your needs and your goals is also a great place to start.

You’ll Thank Yourself…

One thing is certain: setting up good savings habits will set you up for success in the future, and you will thank yourself down the road. Contact your American Federal Banker with any questions you have on savings, opening accounts, auto-deposit options, and other tools that can help you set yourself up for success!

American Federal Employees Earn ‘Sales Star’ Recognition

Eighteen American Federal Bankers and employees have earned ‘Sales Star’ recognition from American Federal Bank for outstanding sales and sales referral performance in 2021.

A “Sales Star” is the highest honor of recognition an employee can earn at American Federal. American Federal’s 2021 Sales Stars are:

  • Betty Amundson, Associate, East Grand Forks
  • Bill Anderson, Market President, Crookston
  • Paul Craigmile, Market President, Hallock
  • Dan Erdman, Associate Banker, Crookston
  • Brian Frisk, Ag/Business Banker, Crookston
  • Chris Grettum, Personal Banker, Downtown Fargo
  • Brooke Hassel, Associate Banker, Crookston
  • Amber Hilt, Loan Originations Analyst, Fargo Home Office
  • Jason Jaeger, Business Banker, Fargo Downtown
  • Michael Kjelshus, Ag/Business Banker, Grand Forks
  • Joanne Loeslie, Associate, Grand Forks
  • Dustin Morris, Ag/Business Banker, Fergus Falls
  • Becky Myhra, Senior Associate, Wahpeton
  • Dan Paulson, Market President, Fosston
  • Ryan Paulson, Ag/Business Banker, Fosston
  • Alison Perez, Personal Banker, Grand Forks
  • Clayton Quade, Ag/Business Banker, Fosston
  • Jon Swenson, Ag/Business Banker, Hallock

In recognition of their achievement, American Federal “Sales Star” employees and their families were invited to attend a weekend Sales Star Retreat, training seminar and awards banquet in their honor at the Arrowwood Resort and Conference Center in Alexandria, MN.

 

FBI Warns of QR Code Tampering Scams

The FBI recently issued an announcement regarding the use of malicious Quick Response (QR) codes by cybercriminals to redirect victims to malicious sites that steal login and financial information.

A QR code is a square barcode that a smartphone camera can scan and read. They are used to perform a variety of functions, such as opening a website, prompting the download of an app, or even directing payment to an intended recipient. Businesses use QR codes legitimately to provide convenient contactless access and have used them more frequently during the COVID-19 pandemic. However according to the FBI, “Cybercriminals are taking advantage of this technology by directing QR code scans to malicious sites to steal victim data, embedding malware to gain access to the victim’s device, and redirecting payment for cybercriminal use.”

Typically, cybercriminals will tamper with QR codes, either digital or physical, to replace legitimate codes with malicious codes. A victim then scans what they think is a legitimate code, but the tampered code directs victims to a malicious site, which may prompt them to enter login credentials or financial information. Access to the victim’s information gives the cybercriminal the ability to potentially steal funds through the victim’s accounts.

They warn that malicious QR codes may also contain embedded malware, which can allow a criminal to gain access to the victim’s device or steal the victim’s location, as well as personal and financial information.

While QR codes are not inherently bad, it is important to practice caution when entering financial information or providing payment through a site reached via a QR code. Once transferred, law enforcement cannot guarantee the recovery of lost funds.

Tips from the FBI to protect yourself…

  • Once you scan a QR code, check the URL to make sure it is the intended site and looks authentic. A malicious domain name may be similar to the intended URL but with typos or a misplaced letter.
  • Practice caution when entering login, personal, or financial information from a site navigated to from a QR code.
  • If scanning a physical QR code, ensure the code has not been tampered with, such as with a sticker placed on top of the original code.
  • Do not download an app from a QR code. Use your phone’s app store for a safer download.
  • If you receive an email stating a payment failed from a company you recently made a purchase with and the company states you can only complete the payment through a QR code, call the company to verify. Locate the company’s phone number through a trusted site rather than a number provided in the email.
  • Do not download a QR code scanner app. This increases your risk of downloading malware onto your device. Most phones have a built-in scanner through the camera app.
  • If you receive a QR code that you believe to be from someone you know, reach out to them through a known number or address to verify that the code is from them.
  • Avoid making payments through a site navigated to from a QR code. Instead, manually enter a known and trusted URL to complete the payment.

If you believe you have been a victim of stolen funds from a tampered QR code, report the fraud to your local FBI field office at www.fbi.gov/contact-us/field-offices. The FBI also encourages victims to report fraudulent or suspicious activities to the FBI Internet Crime Complaint Center at www.ic3.gov.

Talking With Your Banker Before Going Vehicle Shopping Has Its Advantages

young woman holding keys to a new financed car

It’s the time of year when many people start getting the itch to purchase a new vehicle.

With that decision comes a number of challenges and choices.  New or used? What year? What color? What model?

Another question that inevitably comes up is ‘How do I pay for it?’ For most of us, a vehicle purchase typically involves financing of some sort. Dealerships will more than likely encourage you to finance through them. The car buying process can be very drawn out and stressful, and while it may seem like a convenience that the dealership can offer you financing ‘on the spot’, going with it may not always be to your advantage.

Monthly Payment Mirage

One big disadvantage of using dealer financing is that dealers will often focus on what your monthly payment will be rather than the cost of the vehicle. Yes, stretching the loan out a few more years will decrease the monthly payment, but it will also result in you paying more interest over the life of the loan. It may not be the best solution for your situation, and you may wind up spending more on the vehicle than you’d originally planned.

You See What They Choose to Show You

When you’re sitting at the desk of a salesperson, the dealership will likely present you with several financing options that they will work into the deal. This puts you at a few disadvantages. The first – you don’t know if you were approved for more loans than they are choosing to show you. Yes, the dealership wants you to get a loan to buy a car from them, but they also make money on the financing side. There’s a chance that they are only showing you the loans that are most profitable for them. You could be qualified for better terms than what they are showing you.

‘Mystery Lender’

When financing through a dealer, you’ll be presented with a number of loans from different companies. Some from places you may have heard of, others that could be completely new to you. Either way, there’s a good chance you won’t have any first-hand experience working with them. What will their customer service be like? What support options do they offer? Will you be just another number to them?

Go With What You Know

One way you can eliminate some of the stress of vehicle shopping is to talk with your American Federal Banker before you go. This offers a few advantages over dealership financing. Your Banker can take the time to discuss your options with you and help you decide which terms best fit your situation. Likewise, if you have any future questions about your loan, you know you’ll be dealing with people you know personally who you can call directly – not some giant call center.

If you’re in the market for purchasing a vehicle, give your American Federal Banker a call and ask about getting pre-approved.

Shop Safe Online This Holiday Season

Couple Christmas Shopping OnineDue to supply chain disruptions, you’ve probably heard that it might be harder to find the gifts you’re looking for this holiday season. That might lead many people to look for items in online marketplaces or on sites you find through your social media accounts, online ads, or by searching online. If you’re heading online to shop, here are some things you can do to avoid a scam or negative experience:

  • Be sure to check and know the site’s rules about refunds and returns. What happens if you experience a problem? Do you get a refund, store credit, etc.? Know their refund policy before making a purchase.
  • Make sure they let you pay with a safe payment method such as credit cards, which have legal protections. If someone tells you to pay with a wire transfer, gift cards, or cryptocurrency, stop and find another seller.
  • If you’re buying from a marketplace site (such as eBay, Etsy, etc.), don’t buy from anyone who wants you to pay outside the marketplace’s payment system. By paying outside the system, you’ll lose any protection the site offers and run the risk of not getting the item or a refund.
  • Learn about other people’s experiences with the seller or site before making a purchase. Read reviews, and also search for the site’s name with words like “complaint” or “scam.”
  • Be sure you can verify the actual dimensions and specifications of the item you’re ordering. Look for pictures of the actual item and read the description of its condition. 
  • If something does go wrong, try to work out problems with the seller. If that doesn’t work, report them to the marketplace. If you paid by credit or debit card, file a dispute with your credit or debit card company. You can also report fraud, scams, or bad business practices to the FTC at ReportFraud.ftc.gov.

Be sure to protect yourself and your money so you have a positive shopping experience this holiday season!

Watch Out for Online Dating Scams

All around the world, people of varying ages are going online with hopes of finding romance and companionship. Nearly 30% of adults in the United States have used an online dating service of some sort. While these sites and apps can work well for bringing people together, the downside is that there are scammers online looking to take advantage of people looking for love.

If you or someone you care about is using online dating sites or apps, make sure you’re aware of the potential signs of a scam:

Online Dating Scams Graphic