The Bank of Mom and Dad: When to Shut It Down

by Sara Seeger 5. February 2015

Locked Bank

No formal application, no interest, and no credit history check- sounds like a pretty sweet deal, right? In most cases, this describes the Bank of Mom and Dad. Too often, parents are left in a financial dilemma by giving out zero interest loans to their children, or in some cases, just giving out free money.

As parents, you want to give your children the world and help them through all stages of life. Ultimately, there comes a time when the support you give your kids needs to shift from financial to emotional support. This begs the question, when do you shut down the “Bank of Mom and Dad?”

Communicate Clearly

Children returning home after college or continuing to live at home through college is very common. However, parents should first have a discussion with each other about the feasibility of this, and then have a chat with their child. Communication has to be clear and expectations laid out, to ensure your child is clear on how much financial support will be provided and for what time frame.

Charge Rent...Or Insist on Contributions

Charing rent is beneficial in covering the increased cost of having your child live back at home. It's also a good way to teach your child about budgeting in order to prepare them to be self-sufficient in the real world. If parents don’t need the extra cash financially, another option would be to keep all of that “rent” money in an account and hand it over once your child moves out to help them get their independent life started.

If rent isn’t practicable for your child to afford, insist on other contributions to the house, such as covering some extra groceries or utility bills. If your child is struggling to find employment, assert that they need to help with chores around the house, such as cooking meals, doing laundry, cleaning, etc.

Your Retirement Fund is Yours

People nearing retirement shouldn’t feel obliged to take from their own savings or retirement fund for their adult child. Although this may seem harsh, there comes a point where parents shouldn’t hinder their own retirement plans to help their children.

Education is Key

Instead of just providing for your child while they are home, consider teaching them some important financial lessons. Some important lessons any dependent young adult needs to learn are how to save, how to set a budget, how to build or rebuild their credit score, how to avoid debt, and why it is important to plan early for retirement.

Most importantly, remember there is no “one size fits all” solution. Every family has their own financial and emotional circumstances that come first. The main point for parents is to do what you can to help your child become financially independent, without harming your ability to retire.

If you found this article useful, be sure to check out these related articles:

How to Build Good Credit: 5 Steps for College Grads

What Should You Do with Your Graduation Money?

Down Payment Saving Tips for the Newbie Home Buyer

How to Build Good Credit: 5 Steps for College Grads

by Renee' Anderson 3. February 2015

Good Credit, Bad Credit

Congratulations on making it through college! Now it’s time to get yourself together. Once you have a full-time job lined up, you should focus your attention on your financial future. Sounds grown up, huh?! It’s really not that complicated. Building good credit is an important part of your finances. Here are five steps to take towards your goal:

1) Become an authorized user on your parents’ credit card account.

This doesn’t mean your parents have to hand over their credit card and let you go crazy, buy a new iPhone6 and go on a shopping spree. What I would suggest is getting permission to simply use the card for expenses they typically pay for. This way you can take the credit card and fill the family grocery order while building good credit for yourself and pleasing your parents by lending a helping hand. It’s a win, win!

2) Apply for your own credit card.

Just one. Not 10, ONE. You will want to establish credit worthiness by using it to purchase small items that you typically would pay for with cash. Put the cash aside so when the bill arrives, you can pay it off in full each month. Oh, and while we’re on the subject…don’t forget to PAY IT OFF IN FULL each month!

3) Pay bills on time.

This applies to credit card bills along with any other bills you have. Perhaps you have student loans? A cell phone bill? Paying them on time makes a big difference.

4) Apply for a car loan.

Now that you’ve graduated and hopefully have a full-time job, you’re probably ready to buy your own brand new (or used) car. Go for it, and get the loan in your name. Doing this, and paying it on time, will help your credit. It’s good to have a variety of different account types to diversify your credit.

5) Pay attention!

You need to keep track of your finances including your credit card statements and the activity on the account. Make sure there are no mistakes, i.e. a charge that is not yours. There are times where mix ups occur, and you could be charged or penalized for something you didn’t do. If that happens, call your credit card company to straighten things out right away.

Follow these steps and you can take credit for building your own good credit. See what I did there? You know that was funny. Or cheesy, okay.

If you found this article useful, be sure to check out these related articles:

Is It Good Debt or Bad Debt?

Establishing Credit for Beginners

5 Actions That Help Your Credit Score

Howard County Settlement Down Payment Loan Program

by Charlie Maykrantz 29. January 2015

Home Buying Assistance

Would you like to buy a home in Howard County, but need funds for down-payment and closing costs? 1st Mariner Bank participates in a program that is offered by Howard County Housing, the Settlement Down Payment Loan Program (SDLP). All loans are deferred and are due upon sale of home, refinance, or default. There are four different loan types that are made available to eligible applicants. They are:

1) The Home Starter Loan

2) The Home Steader Loan

3) The Dream Maker Loan

4) The Revitalization Loan

Information about all of these programs can be found here.

All borrowers must meet the income guidelines as set forth by the program parameters for each type. The maximum purchase price is $429,620. Borrowers must be a first-time homebuyer unless an exception is allowed per the loan type guidelines. All borrowers must have a minimum of $1,000 to apply towards the settlement/down-payment costs plus one month PITI (principle, interest, taxes, insurance) mortgage payment. Buyers must be approved for a fixed-rate mortgage and lack sufficient funds to pay for the total settlement down-payment costs. The loan amount will range from a minimum of $15,000 to a maximum of $40,000 with an interest rate of 2% below the primary loan rate.

There is also the Moderate Income Housing Unit (MIHU) Program that is offered by Howard County Housing. The MIHU Program is an inclusionary zoning program that requires developers of new housing in specific zoning districts to sell a portion of the dwelling units to households of moderate income. Prices range from $182,000 to $277,000. Any person who meets the household income can apply for a MIHU transaction.

For more information on these programs or any of our other products at 1st Mariner Bank please feel free to contact Charlie Maykrantz at cmaykrantz@1stmarinerbank.com or 410-735-2068.

The above programs are subject to change at any time and this does not constitute a guarantee on the part of 1st Mariner Bank as an obligation to offer these programs without the approval of the program administrator. All applicants must be qualified to purchase and participate in these programs per underwriting guidelines of both 1st Mariner and the program administrator.

If you found this article useful, be sure to check out these related articles:

Baltimore County Settlement Expense Loan Program (SELP)

Anne Arudnel County Mortgage Assistance Program (MAP)

Baltimore City Homebuying Incentives



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