Personal Finance – Page 3 – Community Broker News and Views

Decisions, Decisions, (Mortgage) Decisions

by Vince Liuzzi
Executive Vice President and Chief Banking Officer, DNB First

To buy a home or not to buy a home? That is the question.

If you choose the former, your real estate professional will instantly hit you with a barrage of pressing questions:

Which city or town?
How many bedrooms?
Will you buy or build?
House or condo?
How much can you afford?

Once you find your new home, you’ll be faced with more difficult decisions including one of the most important ones:

What kind of mortgage do you need?

To answer that, you’ll want to pose questions of your own to your mortgage lender:

What type of loans do they offer? For example, if this is your first home, you may want to know if they offer first-time home buyer programs or affordable mortgage programs that offer more flexibility with credit and down payment requirements. Also, find out what terms they offer on both fixed- and adjustable-rate mortgages.

What are their rates? The lender must be able to tell you the annual percentage rate (APR) on a particular mortgage, which will reflect the interest rate, points, and fees they charge.

How much must you put down on the home? Most lenders require a down payment of anywhere from 3% to 5%. Keep in mind, however, that if you put less than 20% down, you may be required to pay private mortgage insurance (PMI), which increases the amount of your monthly payment.

What are the qualifying guidelines? In order to ensure you qualify for a loan, you should know the income, employment, credit, and other guidelines the lender requires. Keep in mind that some programs and lenders offer more flexible underwriting requirements. You should also ask the lender what documentation they require as part of the application process.

Will there be a prepayment penalty? In order to reduce the amount you owe on your mortgage, you may want to pay more than is required each month. You should check with your lender beforehand to ensure they don’t charge penalties for prepayment.

Here to help.
At DNB First, our knowledgeable mortgage loan officers can answer all your inquiries and help you find the perfect home. No question.

5 Ways to Get More Bang for Your Banking Buck

by Vince Liuzzi
Executive Vice President and Chief Banking Officer, DNB First

Summer wouldn’t be summer without fireworks. But there’s another way you can experience a big bang this summer — by reducing your banking fees. Here are some smart and easy ways to lower fees and get more banking “bang for your buck.”

Eliminate costly checking accounts. Why pay a fee to access your own money when you can take advantage of free checking? Many banks promote free checking, but require you to maintain high minimum balances or to jump through transactional hoops. Be sure to read the fine print.
Leverage your banking relationships. If you have multiple accounts – checking, savings, and loans — take advantage of a relationship checking package. These accounts let you pool balances to earn special rewards, such as better rates and fee waivers.
Avoid overdrafts. One of the biggest expenses people face in their day-to-day banking is paying overdraft fees. According to a report from the Consumer Financial Protection Bureau, consumers paid $34 billion in service charges in 2012, with a staggering 61% from overdraft fees. In fact, if you’re not careful, a $2 cup of coffee can cost you as much as $35 in overdraft fees. The best way to protect yourself is to get overdraft protection, by linking your savings account to your checking account or by obtaining a line of credit. If you have online banking, you can also sign up to receive email alerts that notify you when your balance is low.
Pay more than the minimum due on credit cards. If you have a credit card, you probably know that interest charges can be costly. The best way to avoid them is to pay off your balance in full before you even accrue interest. If that’s not possible, always try to pay more than the minimum balance.
Watch ATM fees. While it’s great to be able to get cash wherever you go, it’s not worth it if you end up paying costly ATM surcharge fees, which can range between $2 to $4 per withdrawal at some banks. Try to use ATMs within your bank’s network, or get a checking account that offers rebates when you use other banks’ ATMs.

Take the time to review your banking fees and to implement these smart tips. You may end up with even more money in your pocket to have fun or, in the spirit of summer…have a blast!

A Lesson in College Financing

by Vince Liuzzi
Executive Vice President and Chief Banking Officer
DNB First

If you’re a parent, you already understand that raising kids is not cheap. You probably also know that with soaring tuition costs, providing your child with a college education may be one of your greatest financial challenges. The truth is, however, that most of us don’t fully understand the shocking impact of educational costs until the first tuition bill arrives.

Or maybe you do. Take out a number two pencil and test your knowledge by answering the following question:

According to the College Board, what was the average cost of tuition and fees during the 2014-2015 school year?

a) $31,000 at a private institution
b) $9,131 at a public college for in-state residents
c) $22,958 at a public college for out-of-state-residents
d) All of the above

If you answered, “d) all of the above,” you’re correct and probably have had a little education of your own in college costs. Of course, that question is not so challenging compared to the most pressing one of all:

How can you finance your child’s education?

The good news is that there are some good options available, which include:

Financial Aid/Grants/Scholarships. Even if you think your child may not qualify for Financial Aid, it’s important to at least apply. You can do so by filling out the Free Application for Federal Student Aid or FAFSA (as it’s commonly known) at https://fafsa.ed.gov. There are also a number of grants and scholarships available, so it pays to research them and have your child apply for as many as they can.
529 Plans. Created by Section 529 of the Internal Revenue Code, these college savings plans provide a tax-advantaged way for you to save for your child’s education. With 529 plans, earnings are not subject to federal taxes when used for qualified educational expenses, such as tuition, books, and room and board.
Home equity credit. If you’re a homeowner with equity in your home, you can obtain a home equity line of credit. A home equity line provides the benefit of potential tax savings (consult your tax advisor) and the ability to borrow and repay funds over time.

Of course, the college financing option that’s right for you depends on your unique financial situation. That’s why it’s important to research all the available options, and practice what you preach to your own children: “Do your homework.”

When Soaring College Costs Hit Home

“Poverty is hereditary – it comes from your children.”

Comedian Phyllis Diller may have been joking when she said that, but anyone who is raising a child today knows that there’s nothing inexpensive about having kids. In fact, according to a report from the U.S. Department of Agriculture, “it will cost an estimated $241,080 for a middle-income couple to raise a child born last year for 18 years.”

If that doesn’t shock you, consider an even more eye-opening fact: that figure doesn’t include one of the most expensive costs for parents – financing a college education. According to The College Board, an “in-state public college for the 2013–2014 academic year averaged $22,826 while a private college averaged $44,750.” In the last 30 years, college costs have quadrupled.

A shared burden

The burden of financing college education isn’t just falling on parents; today’s students are amassing significant debt. As the infographic below shows, the average student graduates with nearly $25,000 in debt, giving them an uphill climb on the road to financial success. The burden of this debt may be why they delay getting married and purchasing homes.

So how can parents help their children finance the costs of college and fill the gap where Financial Aid and other student loans leave off? One popular solution is actually close to home — home equity credit. With home equity, parents can borrow off the equity in their homes to pay for college costs, and take advantage of some very significant benefits, including:

Lower rates than those available with private student loans.
Potential tax savings.
The ability to borrow and repay funds with a home equity line.
Interest-only options to keep payments low.
The flexibility to use funds to cover any educational expense — from books to computers to room and board and tuition.

Here to Help.

At DNB First, we have competitive home equity options, including a special rate on a home equity line. Stop by or call us today to learn more. Of course, as with any financial decision, it’s important to carefully weigh your options. After all, college is one of the biggest investments you will make as a parent, so you’d better do your homework.

10 Mind-blowing Facts About The Cost of College Tuition Created by: TakeLessons

Avoiding Jeopardy with Reverse Mortgages

It’s Final Jeopardy. Contestants eagerly await as Alex Trebek, the man with all the answers, smugly reads the final clue of the game.

“A type of mortgage where the bank pays you.”

Within a millisecond, the Jeopardy champion pounds the buzzer and proudly declares “Reverse Mortgage.”

After the dreaded “fail” buzzer goes off, Alex disdainfully declares, “No sorry, that is incorrect. The correct answer is “What is a Reverse Mortgage?”

In reality, this question – What is a reverse mortgage? – has been posed more and more frequently today as mature adults and baby boomers struggle with rising expenses and their adult children worry about how they can help their parents manage them.

So what exactly is a reverse mortgage?

By definition, a reverse mortgage is a type of home loan that lets borrowers age 62 or older receive cash payments based on the equity in their homes. So instead of a borrower making payments to a mortgage lender, the lender makes payments to them, hence the term reverse mortgage.

A growing trend for those growing older.

Reverse mortgages offer some unique benefits, not the least of which is that they generally allow aging homeowners to remain in their homes (borrowers usually do not have to pay back loans until they are no longer living in their homes). Reverse mortgages can also provide a steady stream of income to help seniors manage rising expenses – a benefit that’s become increasingly attractive as cost of living and healthcare expenses have risen.

But despite their popularity, reverse mortgages come with many drawbacks, including risk of foreclosure and higher costs than those associated with traditional loans. Because of the risk involved, potential borrowers must complete a counseling program from a government-approved agency to help them evaluate the pros and cons of obtaining a reverse mortgage. And, they must be careful to avoid overzealous lenders who might try to sway them toward reverse mortgages when a traditional option, such as a home equity loan, or no loan at all, may be a wiser decision.

A model reverse mortgage success.

If used properly, a reverse mortgage can be a very wise investment decision as demonstrated by a retired family friend. The friend had inherited an older home in an affluent community. Though he owned the home outright, the home needed major renovations, including upgrades to the electrical and heating systems. Without the savings to finance these expenses, my friend was faced with three choices: to sell the home and rent, tap into his retirement savings to pay for the repairs, or obtain a reverse mortgage. He chose the latter and received a lump sum distribution that he used to finance repairs and renovation in the home. It proved to be a wise decision as the renovations helped improve the home’s value, and of course, allowed my friend to remain in the home and avoid renting or depleting his retirement nest egg.

Not always the best move.

Reverse mortgages are not for everyone. Because of their high cost, and the risk involved with putting one’s home at risk, borrowers and their children must be careful to use reverse mortgages wisely and not for frivolous purposes. Such decisions can put a homeowner in a more tenuous situation than they were in before they sought the reverse mortgage – in real jeopardy.

Employee Engagement 2.0 – A Holistic View of Engagement in Today’s Workplace Environment

Statistics show that 78% of business leaders rate employee retention and engagement as critical or important to the success of their business. Organizations are looking for new and different ways to understand and improve employee or team member engagement. Effective and meaningful, active employee engagement is truly a competitive differentiator for the high performing business.

Active employee engagement goes far behind an annual survey facilitated by human resources that companies use as a measurement for employee morale. It speaks to the culture an organization fosters, and its willingness to make the right investments within the environment benefitting much-loved employees. In a recent study by Deloitte, three key areas of strategic focus on employee engagement were identified: Lead and Develop, Attract and Engage, Transform and Reinvent. These three priorities go far beyond a typical survey “temperature check” followed by an executive summary turned into an action plan – many companies still call that an engagement program. Its en excellent study with rock solid conclusions and some pretty interesting tools and resources.

In past decades, Gallup and other leadership organizations have led the way around the concept of employee engagement program surveys. Employee engagement has in reality, been a topic companies have considered since the industrial revolution. These concepts were essentially rooted in the late 1800’s by an industrial engineer Frederick Taylor who was looking for ways to improve industrial efficiency. In his book “The Principles of Scientific Management” Taylor theorizes that four principles of scientific management center around the engagement of employees and how their attitude impacted productivity in the steel industry. It was ground breaking work for its time – but that was over 100 years ago!

Developing, enhancing and maintaining a high performing work environment is truly a complex issue to tackle. It blends an organization’s mission and values with its people, culture and performance. Once people join an organization, companies must continuously improve, redesigning and developing the work environment to make it more enjoyable and rewarding, making the employees happier and more productive. In today’s environment, companies need to update the way they look to engage employees. With the influx of younger workers and the proliferation of technology, organizations need to change the way they think about engagement making the workplace environment more flexible, modern, humane and enjoyable. Organizations must build an environment that is fun, meaningful, stimulating and rewarding to attract and retain high performing employees in today’s workforce.

Forward thinking companies truly understand the critical need to go beyond traditional engagement survey programs to create more productive and successful work environments. They design jobs, change the work environment, add benefits, invest in people and develop managers. New employees hired into these organizations are screened for culture and job fit to ensure success. Effective hiring, on-boarding, training and development programs have never been so important.

Josh Bersin Principal and Founder of Bersin by Deloitte was recently quoted in a recent study published by Forbes magazine stating, “Let’s change our thinking and move beyond the concept of engagement. If we really achieve the goal of making organizations “irresistible”, we can make work fun, meaningful and enriching for everyone.”

Vince Liuzzi

EVP, Chief Banking Officer

DNB First, Banking since 1860

Early Mortgage Payoff?

DNB First shared a link to an article today about “why you should make an extra mortgage payment” and it made me wonder, how many people have been able to pay off their mortgage early? Continue reading “Early Mortgage Payoff?”

Get Ready for Tax Season!

If you haven’t done so already, taxes will be due before you know it! Here are some helpful resources to assist you in preparing:

1) Bonnie Lee of Fox Business outlines 5 tips for preparing for taxes this year.

2) Need help preparing your taxes? If you qualify, the IRS has Free Tax Preparation by volunteers.

3) H&R Block put together this helpful checklist of everything you should put together in order to file your taxes.

4) Finally, know anyone filing for the first time? Teenagers with their first job? This is a very simple to understand video that lays out the basics of filing.

If you have more questions, consider seeing a personal finance expert to talk you through. Happy Filing!

Vince Liuzzi

Thinking of a refinance – what’s holding you back?

Since 2012, many consumers across the United States took advantage of low rates and refinanced their high rate mortgages, lowering monthly payments and freeing up cash for other purposes. If you happen to be one of the approximately 20 million households who have never refinanced, and are paying 6% or more on your mortgage, you may want to take advantage of the current environment and refinance now, but hurry – time’s a wastin!

Continue reading “Thinking of a refinance – what’s holding you back?”

Retire Early?

Although it may not always be a possibility for everyone, preparation is key. Remember, its’ never to early to plan for retirement. As this couple found out early retirement was achievable by making some quick drastic changes. In her article, Andrea Coombes lays out 8 tips for success from early retirees.

http://youtu.be/6l5HXLWBFqo

Vince Liuzzi