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February 27, 2018Feb 27, 2018

8 Facts About Applying for a Mortgage Loan in 2018

Whether you’re seeking your first home or refinancing your existing mortgage loan, the tax landscape for 2018 will bring some changes for homeowners that should give them pause. Despite the passage of a new tax bill late last year, mortgage applications rose sharply in the early moments of 2018, demonstrating a continued and even renewed interest in homeownership across the country.

You May Qualify for a Lesser Down Payment Mortgage Loan

First-time homebuyers often think they need to have at least 20% of the loan’s value in their savings just to secure a mortgage loan, but many lenders dispel this idea. For qualified borrowers, there are plenty of mortgage loan options and programs allowing them to secure funding for the purchase of their home with a lesser payment. Programs, such as FHA loans, allow you to provide a smaller down payment.

Those with Imperfect Credit Can Secure Other Loan Options

One of those options is insured by the Federal Housing Administration, FHA loans are incredibly attractive to many aspiring homeowners simply because they don’t require perfect credit. In 2016, the average credit score for an FHA homebuyer was about 680 for example.

Refinancing to a Shorter Term Loan Can Save You Big

While some market analysts expect mortgage rates to increase in 2018, current homeowners should still investigate refinancing the terms of their loan. In order to secure that built-up equity in your home and perhaps finance a remodel or home improvement project, a mortgage loan refinance can be a huge help. Additionally, you can save money in the long-term if you refinance into shorter term loan.

Be Wary of Alternative Mortgage Lenders

As we’ve covered previously, the influx of so-called “alternative mortgage lenders” has shaken up the mortgage lending world, but we’re skeptical. Because these lenders aren’t FDIC-insured, the risks of taking a potentially lower rate loan over what you’d find at a bank or traditional lender may be too bitter a pill to swallow.

Shop Around for Rates and Fees

Mortgage lenders rarely advertise their interest rates and fees, so you’ll need to speak with a few potential lenders to compare your options and ensure you get the best rate available. They’ll all have their own specific terms, so carefully comparing different mortgage loan offers will be a significant part of your house hunting experience.

Make Yourself as Attractive as Possible

Despite the lower barriers to entry required to secure a home mortgage loan, you should try and make yourself as attractive as possible to potential lenders. While you can certainly get approved for a mortgage loan with a lower credit score or imperfect credit history, the benefits of improving that score, adding a bit more to your down payment coffers, and waiting for the right home to come along rather than jump at the first opportunity will go a long way in the eyes of a potential lender. And to follow up on the previous section, getting pre-approved and pre-qualified for a mortgage loan can help dramatically in the home buying process.

Avoid the PMI Rate

Most mortgages come with a built-in interest fee known as Private Mortgage Insurance should you fail to provide the 20% down payment. It is a blip on the map on your monthly payments, but there is a comfort in knowing you’ll pay less over the life of the loan - and potentially improve your interest rate with a higher down payment at the outset.

To learn more about your potential home buying journey and to see how partnering with a local lender can be beneficial to your future, contact Bank of Bozeman today or come by during the week to discuss your viability as a borrower with a mortgage loan professional.
January 26, 2018Jan 26, 2018

Scouting Around for the Right Bank Account

Have you heard the adage, “There ain’t no such thing as a free lunch?” The “free lunch” in the saying refers to the nineteenth-century practice in American bars of offering a “free lunch” in order to entice drinking customers. Those customers ended up paying a lot for the “free lunch”. The basic idea of the adage is that you don’t get something for nothing.

There is no free lunch in banking services. If a bank is offering services for “free”, ask them to explain how they profit off your banking relationship. If you get a blank stare or the bank says that they just love to give stuff away, then you may want to find a bank that will be honest with you. A bank that is being transparent with their fees and has minimum balance requirements may actually cost you less money than the bank advertising “FREE”.  

How does a “free” account end up costing you? According to the Consumer Financial Protection Bureau, overdraft fees accounted for approximately 65% of revenues from consumer deposit accounts for banks over $1 billion in assets. Among the same sample of accounts, accountholders that incurred one or moreoverdraft fees paid an average of $225 in fees per year. Couple the overdraft fee with other ATM, maintenance, and account use fees (for wires, etc.) and everyone is paying for these “free” accounts.

Comparing accounts at different banks is difficult, because a checking account can house a bundle of services and the fee disclosures vary and can run up to 40 pages. The account that offers the monthly maintenance fee and a minimum balance could be the one that saves you a bundle. Without a lot of painful analysis and a lot of assumptions, how can you determine which bank account is right for you?

The key to picking the right bank is to determine first who offers the services you need, to fit you, your business and your lifestyle. Then seek to understand what the bank wants from you. If you receive a notice that your bank is increasing their account service fees, talk with them to ascertain if the fee will actually impact you, or maybe there is another account option . If they are willing to talk and work with you, then you probably have a relationship focused bank and the right financial partner.
About the Author: Clinton Gerst is the President of Bank of Bozeman, and Independent Community Bank in Bozeman, Montana.

This article is provided for educational and informational purposes only. All expressions of option reflect the judgment of the author, as of the date of writing and are subject to change.
January 1, 2018Jan 1, 2018

Community Reinvestment

(Photo courtesy of HRDC of Bozeman)
We believe in giving back to the community we live in, work and most important, love. One of the ways in which our employees give, is through our Blue Jeans Friday Program, where they pay to wear jeans to work on casual dress Fridays.  In 2017, Bank of Bozeman employees gave over $1,900 to local area non-profits!

Organizations included: Each year the program's reach grows. Employee's are encouraged to suggest local area non-profits who might receive a Blue Jeans Program donation.Interested in learning how your non-profit could benefit? Contact us, and let us know.
December 13, 2017Dec 13, 2017

8 Tips to Achieve Better Spending Habits and Save More Each Time

Sometimes the hardest thing about saving money is simply getting started. Especially when you’re young and have extra cash for the first time in your life, spending money can be an exhilarating activity. However, what most people don’t realizeis that establishing - and maintain - good spending habits is just as important to your financial security as saving money or reducing your debt. With that in mind, these tips can help put you on solid financial footing and help you change your bad financial habits into positive, effective savings habits to build on the rest of your life.
Simplify Your Budget

With so many apps and tools designed for personal finance, it can be easy to over-complicate your savings efforts. Start with a pen and paper and add more techniques as you go. A more minimalist approach could help sticking to your budget easier. After all, you don’t necessarily need to account for every single penny to maintain good personal finance habits.

Develop Passive Spending Barriers

By creating a few personal rules for yourself, you can help keep more money in your bank account and prevent unnecessary spending. Things like 30-day lists for your “wants” vs. basic needs, allowing only so much spending for frivolous purchases like coffee, shopping, and eating out, or establishing a “two items out for every item in” could help you reduce your clutter and make purchases only on things you really want. Furthermore, identifying bad spending habits (such as indecision between buying multiple items) as triggers and deciding not to buy anything at all could be beneficial to your wallet.
Utilize Automatic Savings Deposits

Just as you’d use for paying bills, some banks support setting up automatic deposits to a savings account, so if payday rolls around and the temptation to splurge arises, you can always ensure you’re moving in the right financial direction without having to manually make a deposit to savings.

Maximize Your Retirement Savings

While the general rule of thumb is that you can’t start saving for retirement too early, there are significant advantages in saving even more through retirement accounts. Both major types of investment account types have contribution limits, so if you can maximize those savings each year it’ll go a long way to help your personal wealth grow. Consult with your tax professional regarding these limits before you make any changes to your savings and investment habits.
Cook at Home

Busy people infamously don’t make time to eat properly - especially when you’re young and so many social events are tied to dining out or having drinks with friends. Not only will cooking at home save you an incredible amount of money -as much as $2,000 per year by simply packing your own lunches - it’s healthier for you. While the temptation to order takeout or delivery will certainly arise after a long,stressful day, resisting that with tasty leftovers and pre-cooked meals willhelp keep your budget in line.

Reconsider Savings Habits That Don’t Add Up

How often do you drive across town to save 3 cents at the gas pump? Or purchase some groceries at one store, but make an extra trip to buy things at another? And when was the last time you sat down and figured out if these habits were actually saving you money? To determine the efficacy of these frugal tasks, calculate your hourly income, how much you value your time, and what your actual savings are. Here’s a handy tool that can help you rethink some of your old savings habits.
November 8, 2017Nov 8, 2017

DETERMINE WHAT TYPE OF SAVINGS ACCOUNT IS RIGHT FOR YOU

Saving money can be difficult - especially if you’re in school or just starting your career. Keeping a small nest egg in case of an emergency car repair, unexpected bills, or planning for a large, future purchase is a wise financial strategy. But getting started with a savings account is often the biggest hurdle - and the most common question we get from our clients looking to be smarter with their money.
 
Bankof Bozeman offers three options for personal savings accounts, in addition to our healthcare-related savings options:
Personal Savings Account
 
A personal savings account from Bank of Bozeman offers competitive interest on your balance and quick access to funds when you need them. These accounts are not for everyday spending, (see our personal checking account options for that) and are actually regulated to limit online or card-based withdrawals or transfers to six per month, though you can avoid these restrictions by making in-person requests at the bank itself. You’ll need to keep a minimum balance/month of $100 to avoid monthly fees, but it’s a great way to keep your money safe and growing.
Money Market Account

Money market accounts
 garner higher interest rates than personal savings accounts, but carry a further restriction: you’ll need to maintain a minimum balance of $1,000/month to avoid monthly fees. While more cash up front is required, your money will grow faster and you’ll have the ability to use these funds with an ATM or debit card, though the six transactions per month limit applies here.
Certificate of Deposit (CD) Account
 
Certificate of deposit(CD) accounts tend to earn the highest interest rates of the three majors savings account types, but with a condition: you can’t withdraw funds from the CD for an agreed-upon period of time, or “term.” Early withdrawals will carry penalties, but terms can range anywhere between six months to five years or more.The longer the term, the better your interest rates will be, and most financial institutions will offer better interest rates depending on the size of the account. With a minimum opening balance of $5,000, you’ll need to shore up a bit of cash before considering a CD. Ask one of our personal savings professionals for more information if you’re interested in opening a CD account.

Ultimately, as with any financial decision, it’s up to you, but Bank of Bozeman is here to help. With the right insight and guidance to shape your financial picture into the short or long-term future, we can recommend a personal savings account and develop a strategy you can follow for years to come. Contact us today to schedule a meeting with a local personal savings expert or stop by our Bozeman location today to learn more.