Learning Center

October 1, 2020

Adapting Your Budget to a Time of Crisis

There are many circumstances that can lead to financial insecurity. The loss of a job, a sudden illness or an unexpected debt can stretch a family’s budget to the breaking point. When you enter a period of personal financial crisis, it can be extremely stressful. One of the ways to take control is to establish priorities and make certain you pay for what you truly need before anything else.

Paying for priorities

When you are financially healthy, you can indulge in relaxed spending habits. Some people are not used to keeping a strict budget and tend to spend money whenever it feels right. When you are easily covering your needs, you can spend money on things that are optional.

During a period of financial insecurity, it is time to reevaluate that strategy. Most people need to deny some of their optional expenses in order to pay for the things they need such as housing, food, medical costs and clothing. If spending habits do not change, a temporary period of financial strain can lead to a much longer period of digging out of debt.

How do you decide what is essential?

A good deal of spending is habitual. In fact, many people pay for services by allowing them to automatically withdraw money from their funds. As you look at your monthly expenses, there are several questions you can ask yourself in deciding where to make cuts.

  • Can you survive without it? If your quality of life will greatly suffer without the expense, it is probably a necessity that you should pay for. You definitely want to make your mortgage or rent payments on time. You can find options to replace your favorite streaming service for a couple of months.
  • Is it necessary to make a living? Obtaining income is critical during a personal budget crisis. If you are able to increase your income by participating in the gig economy, it may mean maintaining a well-functioning vehicle for driving services or a high-speed internet connection for online work. The need for the income necessitates the expense.
  • Is there a less expensive way to achieve the same result? Many people spend a fair amount of money each week going out to eat. While prepared food is more convenient, it costs more than the food you can buy at the grocery store. During a financial struggle, going to a restaurant may have to be reserved for special occasions.

How can you prepare for the unexpected?

Financial challenges are much less stressful if you have done some preparation. During times when you are not struggling, it is a good idea to set some money aside in an emergency fund. If you have gathered the resources to go for a few months without a salary, you can focus on getting better or finding your next job without worrying about this month’s rent. By developing clear priorities before and during a financial crisis, you can weather the storm and come out all right on the other side.

October 2, 2020

What is the FDIC, and Why Should You Care?

As an independent agency of the federal government, the Federal Deposit Insurance Corporation (FDIC) has an important task. It works to keep the national financial system stable. The need for this body was made clear in the wake of the Great Depression.

A Response to Financial Disaster

Congress created the FDIC as part of the Banking Act of 1933. One of the effects of the Depression was the failure of many local banks. As bank customers lost confidence in financial institutions, they started to withdraw their funds. What started as a trickle of customers would turn into a waterfall of requests for immediate cash. Banks could not meet the demand and defaulted on customers’ deposits. Because the deposits were not insured, many people lost their savings. The federal government put the FDIC in place to prevent this from happening again.

Protecting Your Deposits

Since the creation of the FDIC, no depositor has lost insured funds. Currently, the FDIC insures up to $250,000 per covered account category. If you have $250,000 in a checking account and $250,000 in an IRA, the FDIC will cover both accounts. If your bank ever fails, this organization will make certain that you are not left high and dry.

It is important to note that this organization does not protect every type of account a bank may offer. While the agency covers basic checking and savings products, it does not cover stocks, bonds, or mutual funds.

Holding Banks Accountable

Banks that are insured by the FDIC are also subject to oversight by the agency. Since the purpose of the organization is to promote stability, it periodically examines the practices of financial institutions to make certain that they are operating safely. The FDIC also examines whether banks are following consumer protection rules established by the government.

Dealing With Bank Failures

When a bank failed during the Great Depression, its assets disappeared. Depositors lost their money, and creditors could not get back their investments. Banks still fail today. However, with the FDIC maintaining a stable financial system, most consumers are not harmed by the closure.

When an insured bank becomes insolvent, the FDIC steps in to make certain that accounts transfer to another institution. The new bank will notify consumers that their funds are in a new institution, but they will not lose their money. In the meantime, the FDIC distributes the assets of the failed bank to its creditors.

Working Hard in the Background

The FDIC is an institution that most consumers will not think about until there is a crisis. If you want the protection that this agency provides, make certain that your financial institution clearly states that it is insured by the FDIC.

October 5, 2020

Four Reasons to Get Pre-qualified for a Mortgage Loan

One of the most common goals for people is being able to afford and purchase their very own home. Understandably, the process of buying a home can be quite intimidating, and thus people will not choose the best route. Although going through the process is time-consuming and often difficult, it doesn’t mean that you can’t do certain things to make the process easier. One of the best steps you can take is to pre-qualify for your mortgage loan. Why is this so important, however? Here are four reasons why you must prequalify for your home loan before starting your search.

1. Creates a More Solid Financial Situation

The absolute worst thing that you can put yourself through during the buying process is stressing out about the state of your financial position. This can lead you to either purchase too much of a home or too little. Pre-qualifying for your mortgage provides you with the knowledge that you are getting a home that is within your purchasing power. Besides, removing this stress can open your eyes to making sure that you are purchasing a home within a good area.

2. Gives You a Leg-Up on Negotiations

When a home sale takes place, sellers are looking to make as much money as they can, and buyers are trying to pay as little as possible. When you aren’t pre-qualified for a mortgage loan, you are essentially giving the seller all the power. Sellers can make it seem like they are doing you a favor when, in reality, they are simply looking for the best deal. Having a pre-approved mortgage loan allows you to have walking-out power. This means that sellers can see that you have readily available funds and are not afraid to walk away if the deal isn’t right.

3. Priority Buyer

The fact is that buyers want to close on a home as fast as possible; therefore, when you enter the picture with a pre-approved mortgage loan, you are not only showing them that you have the funds but that you are serious about the deal. This leads sellers to place you on top of their priority list, which, as you may know, is very important when bidding on the home of your dreams.

4. Faster Closing Time

A common part of the home buying process that many don’t speak about is the length of closing a deal. Closing a home deal can take over 50 days to complete, and that’s due to a number of reasons. One of those reasons is the approval of a mortgage loan. Real estate agents attempt to protect their clients by making sure that the loan is approved before proceeding with any signed documents. When you have a pre-approved mortgage loan at the ready, you are much more likely to shorten the length of that closing time.

Evolve Bank & Trust Home Loan Centers (HLCs) are not full service branch locations of Evolve Bank & Trust. These HLCs do not engage in general banking transactions, such as deposits or payments, and only provide Residential Mortgage Loans. Equal Housing Lender. All loans subject to credit approval. Corporate NMLS# 509256

October 6, 2020

How to Buy a House Without a Huge Down Payment

Saving for a full 20% down payment on a house is a huge challenge for many people. In parts of the United States where an average home sells for $250,000 to $500,000, you might not have a way to save $50,000 to $100,000 for the down payment. Even if you have enough income to pay the mortgage, insurance, taxes and maintenance costs of owning a home, the down payment situation could get in your way. Here’s what you need to know about what happens if you don’t have the full down payment and some programs you might consider in order to help you buy your first home.

What Happens If You Don’t Have a 20% Down Payment?

If you don’t have a 20% down payment for the home you want to buy, you must purchase private mortgage insurance. The private mortgage insurance covers the lender if you default on the mortgage. This is required until you reach 20% equity on the principal of the loan. The private mortgage insurance will be automatically added on to the mortgage payments that you pay every month.

USDA Loans With No Down Payment

The United States Department of Agriculture (USDA) offers mortgage loans to homebuyers with low-to-moderate income. The goal of this program is rural development. This financing is available to qualifying buyers who purchase a home in a rural area. The USDA considers most places outside of large cities to be “rural.” This is a zero-down payment with a mortgage insurance premium of just 0.35%.

VA Loans With No Down Payment

If you are active-duty military or a veteran of the United States Armed Forces, you could be eligible for a VA mortgage. This mortgage is 100% financing with no down payment required. You don’t have to pay for private mortgage insurance with this financing plan. There is a 2.15% VA funding fee, and that fee can be rolled into the amount of your mortgage loan. You need to have a credit score of 620.

Navy Federal Credit Union With 100% Financing

Members of the Navy Federal Credit Union can get a 100% financed mortgage with no required down payment and no private mortgage insurance. It offers financing for conforming and jumbo loans up to $1 million. This is a program for first-time homebuyers.

FHA Loans With Down Payment Assistance

Loans from the Federal Housing Administration (FHA) give first-time homebuyers a lot of flexibility in the financing of the home. If your credit score is at least 500, you can get a home with just a 10% down payment. If your credit score is at least 580, you can make just a 3.5% down payment on the home. FHA loan options include 15-year and 30-year fixed-rate mortgages. An adjustable-rate mortgage is also available through some FHA lenders if you have a high enough credit score.

Evolve Bank & Trust Home Loan Centers (HLCs) are not full service branch locations of Evolve Bank & Trust. These HLCs do not engage in general banking transactions, such as deposits or payments, and only provide Residential Mortgage Loans. Equal Housing Lender. All loans subject to credit approval. Corporate NMLS# 509256

October 13, 2020

5 Reasons For Getting To Know Your Personal Banker

If you have certain savings or financial aspirations, you may want to consult a personal banker who has experience helping clients get to various goals. While nearly anyone can open a personal bank account, actually having a plan for growing that account or getting to a better place financially may take a little more know-how. An experienced personal banker will have that know-how and will usually sit down and listen to their client’s needs and discuss financial road maps to follow. There are five areas that getting to know your personal banker can benefit you.

1. They Can Direct You To The Right Savings Accounts

Different checking and savings accounts have different requirements and benefits to them, and there’s not usually a one size fits all approach to which you should open. Maybe you have a certain amount you want to go strictly to savings, or maybe you need more to spend in checking. If you have a large savings goal, a money market or CD account might be better for you. These are things to discuss with your personal banker when beginning your relationship.

2. They Can Help You With Loan Products

Do you feel ready to buy that new car or new house but aren’t sure what kind of auto loan or mortgage you should get? It can be easy to be caught up in certain sales gimmicks that banks may try and get you with their loan products, but if you have the right personal banker you might make better decisions on which ones you go with. Personal bankers can keep their clients focused on their goals and keep the big picture in mind, and therefore recommend a loan that can help them. Plus they may suggest good payment strategies for them as well.

3. They May Be Able To Help You Budget Or Build Credit

Maybe you’re trying to improve certain financial skills such as being more disciplined with your spending or improving your credit score. A good personal banker may have tips or a plan that could help you with these goals that maybe you never heard of before. They may refer you to a certain credit card program or maybe even a budgeting app that could give you insights into your spending and offer tips on saving more.

4. They Can Also Be Great Investment Advisors

Investing can be where major challenges come to financial goals. The average person will need quality advice on which investment vehicles they should get whether it’s opening a brokerage account or IRA. A personal banker will know how to get through all the yellow tape that comes with this and will be able to advise you on funds to invest in, IRS and tax issues and many other things. And you’ll be able to meet with them to track your investment goals.

5. They May Know Other Professionals Who Offer Specific Services They Don’t

In some cases such as buying life insurance, planning your will or estate, refinancing a mortgage, or getting a specialized investment product, you need a certain professional to guide you. While your personal banker may not offer certain products where you do banking, they may have connections to a firm where you can find those services. If you know your personal banker well, you can usually trust their recommendations to other professionals.

October 15, 2020

When is a good time to refinance your mortgage?

Refinancing a mortgage means paying off the existing home loan and replacing it with a new one. Hopefully the new loan will come with a more attractive interest rate or terms. Now might seem like the right time to refinance because rates are low and have been dropping steadily since 2018. There was a slight increase in September but overall interest rates have been well below 4%. Attractive interest rates may be reason enough to refinance, but homeowners may decide to refinance for a number of reasons:

  • Obtain a lower interest rate.
  • Modify the term of the mortgage.
  • Convert an adjustable-rate mortgage to a fixed-rate mortgage.
  • Tap into equity in the home to consolidate debt or finance a large purchase.

Refinancing can be expensive, and you need to evaluate all factors before making the decision to refinance. Let’s first look at when you should not refinance:

  • When you have had your mortgage for a long period of time. If you have been paying your mortgage for a number of years, refinancing will result in paying interest again rather than continuing to build equity.
  • When your current home loan carries a prepayment penalty. Refinancing will likely increase the time it will take to break even.
  • When you have plans to move relatively soon. Planning to move from your home within the next couple years may not give you enough time to offset the cost of refinancing.

The Best Time of the Year to Refinance

If you have plans to refinance this year, choosing the right time can make a big difference. As the year ends, loan officers may be working hard to close more loans to increase income and year-end bonuses. The key is to know when the fiscal year ends for the lending institution. Applying for refinancing during the last quarter of the fiscal year could be a win for you if your loan officer is looking to add your loan to their list of accomplishments for the year.

Best Time of the Month to Refinance

Just like car salespeople, loan officers want their monthly numbers to be impressive. According to Financial Samurai, loan officers sometimes make a final push to close loans in the last half of the month. By refinancing during the last half of the month, you may be offered better terms due to the loan officer’s push to meet their monthly goals.

Before speaking with a lender about refinancing, you will want to:

  • Evaluate your goals. Consider how long you plan to be in your home.
  • Review your credit history. You will only get the awesome advertised interest rates if you meet the lender’s credit criteria. This generally means source of income and high credit score.
  • Determine if you will be required to obtain private mortgage insurance. If you are refinancing 80% or more of the value of your home, you will likely have to get private mortgage insurance. This expense may offset any savings you would get from refinancing.

Regardless of when you decide to refinance, one of the best reasons to refinance your mortgage is to get a lower interest rate. The rule of thumb is that refinancing is ideal if your interest rate can be reduced by at least 2%. Some borrowers believe even a 1% savings can be enough of a reason to refinance their existing home loan. When used wisely, refinancing can be a valuable tool for getting debt and expenses under control.

Evolve Bank & Trust Home Loan Centers (HLCs) are not full service branch locations of Evolve Bank & Trust. These HLCs do not engage in general banking transactions, such as deposits or payments, and only provide Residential Mortgage Loans. Equal Housing Lender. All loans subject to credit approval. Corporate NMLS# 509256

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