Author: First Western Trust Bank

7 Key Steps to Take After Finding Your Dream Home

Posted on by First Western Trust Bank

Finding your dream home is an exciting milestone. But once that emotional “yes” is out of the way, there’s a series of practical steps you need to follow before you can truly settle in. By tackling each of these key actions in a structured way, you’ll avoid last‑minute surprises, protect your investment, and ensure a smooth closing and move‑in process. Here are the seven critical steps to take once you’ve found—and put an offer on—your future home.

1. Secure and Confirm Your Financing

Even if you’ve been pre‑approved for a mortgage, it’s vital to reconfirm your loan details now that you have a specific property in sight:

  • Lock in Your Interest Rate: Mortgage rates can fluctuate daily. Ask your lender to lock in the rate to protect you from market volatility between now and closing.
  • Review Loan Terms: Examine your loan’s amortization schedule, closing costs, and any prepayment penalties. Ensure you understand exactly what you’ll pay each month, and for how long.
  • Submit Additional Documentation: The lender may request updated bank statements, pay stubs, or tax returns based on the home’s purchase price. Respond quickly to avoid delays in underwriting.

Securing your financing not only gives you peace of mind but also demonstrates to the seller that you’re a committed buyer.

2. Schedule a Thorough Home Inspection

A professional home inspection is your best defense against hidden problems:

  • Hire a Reputable Inspector: Choose someone certified through a recognized organization (e.g., ASHI or InterNACHI).
  • Attend the Inspection: Walk through the property with the inspector to learn firsthand about potential issues with the foundation, roof, HVAC, plumbing, or electrical systems.
  • Review the Inspection Report: Expect a detailed report with photos, cost estimates for recommended repairs, and notes on safety concerns or code violations.

This step helps you make an informed decision about proceeding with the purchase or negotiating repairs.

3. Negotiate Repairs and Seller Concessions

Once you have the inspection report in hand, you can approach the seller with confidence:

  • Prioritize Repairs: Focus on major structural or safety issues (e.g., mold, water damage, faulty wiring). Minor cosmetic fixes can often be handled after closing.
  • Request Credits or Price Reductions: Instead of asking the seller to complete repairs, you might negotiate a credit at closing, giving you the flexibility to choose your own contractor.
  • Set Clear Deadlines: Include language in the purchase agreement that specifies a timeframe for the seller’s response and completion of agreed repairs or credits.

A well‑negotiated deal ensures you won’t be hit with unexpected expenses after you move in.

4. Finalize Homeowners Insurance and Protect Your Investment

Lenders require proof of insurance before funding your mortgage, but homeowners insurance offers benefits beyond satisfying loan requirements:

  • Shop for Coverage: Compare policies for dwelling coverage, personal property protection, and liability limits. Look for endorsements that cover flood or earthquake risk if you live in vulnerable areas.
  • Set an Effective Date: Schedule your policy to begin on the day of closing so there’s no coverage gap.
  • Review Deductibles and Premiums: Higher deductibles lower premiums but increase out‑of‑pocket costs for claims. Balance your risk tolerance with your budget.

Insurance safeguards you against fire, theft, and liability, making it a non‑negotiable step before taking ownership.

5. Review Homeowners Association (HOA) Rules and Fees

If your new home is part of an HOA or condo association, take time to understand your obligations:

  • Obtain Governing Documents: Review the CC&Rs, bylaws, and any amendments to understand restrictions, maintenance responsibilities, and architectural guidelines.
  • Confirm Dues and Special Assessments: Know the monthly or annual fees, what they cover, and any pending special assessments that could affect your budget.
  • Attend an HOA Meeting: If possible, attend a board meeting or speak with current residents to get a sense of community dynamics and upcoming projects.

Familiarizing yourself with HOA rules early prevents surprises later, from exterior paint restrictions to landscaping requirements.

6. Conduct a Final Walk‑Through

A final walk‑through typically takes place 24–48 hours before closing to verify the home’s condition:

  • Check Repair Completion: Ensure all agreed repairs have been made to your satisfaction.
  • Test Systems and Appliances: Turn on HVAC, run water through faucets, flush toilets, and test appliances to confirm they’re operational.
  • Verify Cleanliness and Inclusions: Confirm the home is broom‑clean and that fixtures, window treatments, or appliances specified in the contract remain.

This step lets you address last‑minute issues with the seller before you sign the final documents.

7. Prepare for Closing and Move‑In

With inspections, financing, and insurance in place, turn your attention to the practicalities of closing and moving:

  • Organize Closing Documents: Bring identification, proof of funds for closing costs, and any documents your escrow officer requests.
  • Hire Movers or Rent Equipment: Book a reputable moving company early or reserve a truck and supplies if you plan a DIY move.
  • Change Your Address and Set Up Utilities: Notify the post office, transfer utilities (electric, water, gas, internet), and forward any subscriptions or billing addresses.

By tackling these tasks in advance, you’ll reduce stress on closing day and be ready to enjoy your new home immediately.

Conclusion

Finding your dream home is just the beginning of an exciting journey. By following these seven key steps—securing financing, scheduling inspections, negotiating repairs, finalizing insurance, understanding HOA rules, performing a final walk‑through, and preparing for closing—you’ll protect your investment and ensure a smooth transition. A methodical approach lets you focus on the joy of homeownership while minimizing unforeseen hurdles. Congratulations on your new home, and here’s to many happy years in your dream space!

What You Need to Know Before You Buy A House This Spring

Posted on by First Western Trust Bank

Spring is often considered the peak season for real estate, and many potential homebuyers are ready to jump into the market. With more homes on the market, warmer weather, and a sense of new beginnings, it’s easy to get excited about finding your dream home. However, purchasing a home is a significant financial decision, and it’s important to be well-prepared before you dive in. From assessing your budget to understanding current market conditions, here’s what you need to know before buying a house this spring.

1. Assess Your Budget and Understand What You Can Afford

Before you even begin your home search, it’s crucial to assess your financial situation. Understanding your budget will help ensure that you are looking at homes that are within your financial reach. Start by reviewing your monthly income, expenses, and debts to get a clear picture of your financial standing.

Consider how much you can comfortably afford to pay for a mortgage each month, keeping in mind other homeownership expenses such as property taxes, insurance, utilities, and maintenance costs. A good rule of thumb is that your monthly housing costs should not exceed 28-30% of your gross monthly income. Additionally, take into account your savings for a down payment—typically between 3% to 20% of the home’s price, depending on the loan type.

2. Get Pre-Approved for a Mortgage

One of the most important steps to take before starting your home search is getting pre-approved for a mortgage. Pre-approval involves a lender reviewing your financial information, including your credit score, income, and debt, to determine how much they are willing to lend you. This process will give you a clearer understanding of your purchasing power and help you avoid wasting time looking at homes that are out of your budget.

A pre-approval letter also shows sellers that you are a serious and qualified buyer, which can be a big advantage in a competitive market like spring. Sellers are more likely to consider offers from buyers who are pre-approved, knowing that these buyers are financially capable of closing the deal. Keep in mind that pre-approval is different from pre-qualification—pre-qualification is an estimate of how much you can afford based on the information you provide, while pre-approval is a more formal process with a thorough review of your financials.

3. Understand Current Market Conditions

The real estate market can vary greatly depending on location, so it’s essential to understand the current conditions in your area before making a decision. Spring tends to be a popular time for home buying, and as a result, inventory can be limited, leading to more competition and potentially higher prices. In a seller’s market, where demand exceeds supply, you may need to act quickly and be prepared for bidding wars.

Interest rates also play a key role in the housing market. While rates can fluctuate, they significantly impact your monthly mortgage payments and the overall cost of the home. If rates are low, it may be a good time to buy, as you can lock in a more favorable rate and save money over the life of the loan. On the other hand, if rates are higher, it may be worth weighing the pros and cons of waiting or exploring different loan options to ensure you get the best deal.

In addition to interest rates, consider the long-term outlook of the market. Are home prices expected to continue rising, or is there potential for a slowdown? Having a good understanding of the market trends in your area can help you make a more informed decision about when to buy and how much to offer on a home.

4. Work with a Trusted Mortgage Advisor

Navigating the mortgage process can be complex, and working with a trusted mortgage advisor is essential to ensure you find the right loan options for your situation. A mortgage advisor can guide you through the different loan types, such as conventional loans, FHA loans, and VA loans, and help you understand the pros and cons of each. They will also be able to explain terms such as interest rates, loan terms, and down payment requirements, allowing you to make an informed decision.

A good mortgage advisor will work closely with you to find the best loan options that fit your budget and financial goals. They can also help you understand any additional fees or costs associated with obtaining a mortgage, such as closing costs, appraisal fees, and mortgage insurance. Their expertise will not only ensure that you secure the best financing option but also help make the entire process smoother and less stressful.

5. Get Your Documents Ready

The mortgage application process requires a significant amount of paperwork, and having everything ready in advance will help streamline the process. Gather documents such as your tax returns, pay stubs, bank statements, and proof of assets. Your lender will also likely request information about your debts, such as credit card balances, student loans, and car loans. The more organized you are upfront, the faster and easier the approval process will be.

Having your documents prepared can also help you avoid delays, which is crucial in a competitive market. If you’re ready to submit everything quickly, you’ll be able to move forward with your home search without unnecessary hold-ups.

Conclusion

Purchasing a home this spring is an exciting opportunity, but it’s important to be well-prepared before you begin your search. By assessing your budget, getting pre-approved for a mortgage, understanding market conditions, and working with a trusted mortgage advisor, you can set yourself up for success in a competitive market. With the right preparation and guidance, you’ll be better equipped to make informed decisions and secure the home of your dreams. Make sure you take the necessary steps before you begin the home-buying process to ensure a smooth and successful experience.

Disclaimer: First Western Trust is an Equal Housing Lender, NMLS #477166

Spring Selling Tips for Homeowners

Posted on by First Western Trust Bank

Spring is one of the busiest seasons for the housing market, making it an ideal time for homeowners looking to sell. Buyers are eager to find their next home as the weather improves, and properties tend to show their best in the springtime. To make the most of this competitive market, homeowners should focus on strategic preparation, curb appeal, and understanding the financial aspects of selling and buying simultaneously.

Enhance Curb Appeal to Make a Strong First Impression

First impressions matter, and curb appeal plays a crucial role in attracting buyers. Consider these steps to make your home stand out:

  • Refresh Landscaping: Trim overgrown bushes, plant seasonal flowers, and maintain a healthy lawn.
  • Clean and Paint the Exterior: Power wash siding and driveways, and touch up any chipped paint.
  • Update the Front Door: A fresh coat of paint and new hardware can make a big impact.
  • Add Welcoming Touches: Place a new doormat and potted plants near the entrance.

Stage Your Home to Appeal to Buyers

A well-staged home can help buyers envision themselves living there. Here’s how to create a welcoming and attractive space:

  • Declutter and Depersonalize: Remove personal items and excess furniture to make spaces appear larger.
  • Deep Clean: Ensure every room is spotless, including windows, carpets, and kitchens.
  • Let in Natural Light: Open curtains and blinds to brighten rooms and highlight features.
  • Make Minor Repairs: Fix leaky faucets, squeaky doors, and chipped tiles to present a well-maintained home.

Price Your Home Competitively

Setting the right price is key to attracting buyers and securing a successful sale. Consider these factors:

  • Analyze Market Trends: Research comparable home sales in your neighborhood.
  • Work with a Real Estate Professional: An agent can help determine a competitive price.
  • Be Prepared to Adjust: If your home doesn’t receive interest, consider strategic price reductions.

Timing Your Sale for Maximum Impact

Spring brings an influx of buyers, making it essential to time your sale correctly:

  • List Early in the Season: More buyers enter the market in early spring, increasing demand.
  • Be Ready for Quick Offers: Homes sell faster in spring, so have a plan for your next move.
  • Leverage Peak Market Conditions: Take advantage of strong buyer interest to negotiate favorable terms.

Navigating the Transition from Selling to Buying

Selling your home and purchasing another requires careful financial planning. From a mortgage perspective, consider the following:

  • Understand Your Financing Options: Speak with a mortgage lender to explore loan pre-approval and financing for your next home.
  • Coordinate Closing Dates: Work with your agent and lender to align selling and buying timelines.
  • Consider Bridge Loans: If you need funds for your next purchase before your current home sells, a bridge loan may be a solution.

Ensure a Smooth Selling Process

By taking these steps, homeowners can position themselves for a successful spring sale. Preparing your home, setting a competitive price, and understanding mortgage options will help ensure a seamless transition to your next property. With the right approach, you can maximize your home’s value and enjoy a smooth move into your next home.

Disclaimer: Investment products and services are not a deposit, are not FDIC- insured, are not insured by any federal government agency, are not guaranteed by the bank and may go down in value.

First Western Trust is an Equal Housing Lender, NMLS #477166.

The Guide to Paying Off Your Mortgage Early

Posted on by First Western Trust Bank

Owning your home outright is a financial dream for many, and paying off your mortgage early can help make that dream a reality. It can save you thousands in interest, free up your budget, and bring a sense of financial freedom. But how do you balance this goal with other priorities like saving for retirement or building an emergency fund? Here’s your ultimate guide to making an early mortgage payoff work for you.

Why Pay Off Your Mortgage Early?

  1. Save on Interest
    The longer you hold a mortgage, the more interest you pay—especially with a 30-year loan. Early payoff significantly reduces the amount you’ll pay over the life of the loan.
  2. Achieve Financial Freedom
    A mortgage-free home means fewer monthly obligations, allowing you to allocate funds to other goals or enjoy a stress-free retirement.
  3. Build Equity Faster
    Paying down your mortgage early increases your home equity, which can be a valuable financial safety net if you ever need to access it.
  4. Peace of Mind
    Eliminating a major debt provides emotional relief and financial stability, especially during uncertain economic times.

Strategies to Pay Off Your Mortgage Early

  1. Biweekly Payments
    Instead of making one monthly payment, divide your monthly amount in half and pay that every two weeks. This results in 26 half-payments—or 13 full payments—a year, effectively shaving years off your loan term.
  2. Extra Principal Payments
    Add extra money to your principal whenever possible. Even small amounts—like rounding up your monthly payment—can make a big difference over time. For example, applying an extra $100 each month to a 30-year mortgage could save you tens of thousands in interest.
  3. Lump-Sum Payments
    Use windfalls like bonuses, tax refunds, or inheritance money to make large principal payments. Just ensure your mortgage doesn’t have prepayment penalties.
  4. Refinance to a Shorter Term
    Refinancing to a 15- or 20-year mortgage often comes with lower interest rates and forces you to pay off the loan faster. Keep in mind that your monthly payments will likely increase.
  5. Reduce Expenses and Redirect Savings
    Cutting back on discretionary spending or finding ways to increase income can free up funds to put toward your mortgage.
  6. Automate Your Payments
    Set up automatic payments to ensure you stay consistent with your payoff strategy.

Balancing Payoff Goals with Other Financial Priorities

Paying off your mortgage early is a worthwhile goal, but it’s important to ensure it doesn’t come at the expense of other financial needs:

  • Emergency Fund: Before prioritizing extra payments, make sure you have 3-6 months’ worth of expenses saved for emergencies.
  • Retirement Savings: Don’t sacrifice your long-term financial security. Contribute enough to retirement accounts to take full advantage of employer matches and compound growth.
  • High-Interest Debt: Pay off credit cards or personal loans with higher interest rates before focusing on your mortgage.

A balanced approach allows you to enjoy the benefits of paying off your mortgage early while safeguarding your overall financial health.

How First Western Trust Can Help

At First Western Trust, we believe in empowering you to achieve your financial goals, including paying off your mortgage early. Here’s how we can assist:

  • Customized Planning: Our advisors can evaluate your financial situation and develop a strategy to balance early mortgage payoff with other priorities.
  • Refinancing Options: We offer tailored refinancing solutions to help you secure a shorter term or lower interest rate.
  • Guidance on Prepayment Penalties: We’ll help you understand the terms of your mortgage and avoid penalties that could negate your savings.

Our team is here to provide the tools and expertise you need to make informed decisions and move closer to financial freedom.

Final Thoughts

Paying off your mortgage early is an achievable goal with the right strategy. Whether it’s biweekly payments, refinancing, or using windfalls wisely, small actions can lead to big results. Just remember to balance this goal with other financial commitments to ensure you’re building a stable and secure future.

Ready to take control of your mortgage? Contact us today to start planning your path to a mortgage-free life. Together, we’ll help you create a plan that fits your needs and accelerates your journey to financial independence.

9 Common Mortgage Mistakes and How to Avoid Them

Posted on by First Western Trust Bank

Buying a home or refinancing your mortgage is one of the most significant financial decisions you’ll make. Yet, it’s easy to stumble into pitfalls that can cost you time, money, and peace of mind. Here are 10 common mortgage mistakes—and how you can avoid them with confidence.

1. Skipping Professional Guidance

The Mistake: Navigating the mortgage process alone can lead to oversights or misunderstandings.
The Fix: Work with a trusted lender or mortgage advisor who can guide you through the complexities and answer your questions.

2. Overlooking Total Loan Costs

The Mistake: Focusing solely on the interest rate and ignoring other costs like closing fees, points, and mortgage insurance.
The Fix: Compare the annual percentage rate (APR), which factors in both the interest rate and fees, to get a more accurate picture of your loan’s cost.

3. Misunderstanding Loan Terms

The Mistake: Borrowers often don’t fully grasp whether their loan is fixed-rate or adjustable, or how an ARM might reset.
The Fix: Ask your lender for a detailed explanation of your loan’s terms, especially how payments may change over time.

4. Ignoring Your Credit Score

The Mistake: Applying for a mortgage with a low credit score can result in higher interest rates or even loan denial.
The Fix: Review your credit report before applying and work to improve your score by paying down debts and disputing any inaccuracies.

5. Taking on Too Much Debt Before Closing

The Mistake: Opening new credit cards or financing large purchases while your loan is in process can disrupt your debt-to-income (DTI) ratio.
The Fix: Avoid significant financial changes or new debts until after your loan has closed.

6. Skipping Pre-Approval

The Mistake: House-hunting without knowing what you can afford can lead to disappointment or overcommitting financially.
The Fix: Get pre-approved for a mortgage to understand your budget and make offers with confidence.

7. Not Factoring in All Homeownership Costs

The Mistake: Many buyers only consider their monthly mortgage payment, overlooking taxes, insurance, maintenance, and HOA fees.
The Fix: Use a mortgage calculator that includes these costs to determine your true monthly obligations.

8. Failing to Lock in Your Rate

The Mistake: Waiting too long to lock your interest rate can backfire if rates suddenly rise.
The Fix: Work with your lender to lock in a favorable rate when the market conditions are advantageous.

9. Overextending Your Budget

The Mistake: Stretching to afford the maximum loan amount approved by your lender can leave little room for unexpected expenses.
The Fix: Choose a loan amount that fits comfortably within your budget and leaves room for savings.

How to Avoid These Mistakes with Confidence

Making informed decisions during the mortgage process doesn’t have to be overwhelming. Here’s how to ensure you stay on track:

  • Ask Questions: Don’t hesitate to ask for clarification on anything you don’t understand.
  • Do Your Homework: Research different loan types, rates, and terms before committing.
  • Stay Organized: Keep track of deadlines and required documents to avoid delays.

How First Western Trust Can Help

At First Western Trust, we know the mortgage process can feel complex. That’s why we offer personalized support to help you navigate every step with confidence. Our experienced team works closely with you to:

  • Explain loan options and terms in plain language.
  • Help you compare rates and costs to find the best fit.
  • Guide you through pre-approval and rate lock decisions.
  • Provide expert advice to avoid common pitfalls.

With our proactive approach, you can trust that no detail will be overlooked, helping you secure a mortgage that aligns with your goals and financial well-being.

Final Thoughts

Avoiding common mortgage mistakes starts with being informed and working with the right partner. By steering clear of these pitfalls, you can simplify the process, save money, and approach homeownership with confidence.

Ready to take the next step? Contact us today for expert guidance and tailored mortgage solutions that put your goals first.

How Home Equity Works: Smart Ways to Use Your Home’s Value

Posted on by First Western Trust Bank

Your home isn’t just a place to live—it can also be a powerful financial asset. Home equity, the portion of your home you truly own, can help you achieve various goals, from making renovations to consolidating debt. But what exactly is home equity, and how can you use it wisely? Here’s a beginner-friendly guide to understanding home equity and the smart ways to leverage it.

What Is Home Equity?

Home equity is the difference between your home’s current market value and the balance of any loans secured by the property. For example:

  • If your home is worth $500,000 and you owe $300,000 on your mortgage, your equity is $200,000.

As you pay down your mortgage and your home’s value increases, your equity grows. This equity can be used as collateral for loans or lines of credit, giving you access to funds without selling your home.

Smart Ways to Use Home Equity

  1. Home Improvements
    Investing in renovations or upgrades can increase your home’s value while enhancing your living space. Kitchens, bathrooms, and energy-efficient upgrades often offer the best return on investment.
  2. Education Expenses
    Using home equity to fund higher education for yourself or a family member can be a more affordable alternative to student loans, thanks to typically lower interest rates.
  3. Debt Consolidation
    If you have high-interest debt, such as credit cards or personal loans, you can use home equity to consolidate and pay it off. This approach simplifies your payments and can reduce your overall interest costs.
  4. Emergency Expenses
    Home equity can provide a financial safety net for unexpected medical bills, job loss, or other emergencies.
  5. Starting a Business
    Entrepreneurs may use home equity to finance a new business or expand an existing one, though this involves a higher level of risk.
  6. Investing
    Some homeowners use home equity for investment opportunities, such as purchasing rental properties. However, this strategy requires careful planning and risk management.

Home Equity Loan vs. Line of Credit: What’s Right for You?

If you’re considering tapping into your home equity, you’ll typically choose between a home equity loan and a home equity line of credit (HELOC). Here’s a quick comparison:

Home Equity Loan

  • Structure: Provides a lump sum with a fixed interest rate and set repayment term.
  • Best For: One-time expenses, such as major renovations or debt consolidation.
  • Advantages: Predictable monthly payments and stable rates.

Home Equity Line of Credit (HELOC)

  • Structure: Functions like a credit card, allowing you to borrow as needed during a draw period (usually 10 years), followed by a repayment period.
  • Best For: Flexible, ongoing expenses like home improvements or unexpected costs.
  • Advantages: Interest is charged only on the amount you use, and rates are often lower initially (though they may be variable).

How to Decide If Using Home Equity Is Right for You

  1. Evaluate Your Financial Situation
    Before borrowing, ensure you have a stable income and can comfortably afford the payments.
  2. Consider the Risks
    Borrowing against your home means your property serves as collateral. If you can’t repay the loan, you risk foreclosure.
  3. Research Costs
    Both home equity loans and HELOCs come with fees, including appraisal costs, closing costs, and potentially annual fees. Compare offers from multiple lenders to ensure you’re getting the best deal.
  4. Have a Clear Purpose
    Only use home equity for purposes that improve your financial standing or quality of life. Avoid using it for non-essential expenses, like vacations or luxury purchases.

How First Western Trust Can Help

At First Western Trust, we understand the importance of making informed decisions when it comes to your home equity. Our team of experts is here to help you:

  • Determine how much equity you can access and whether a loan or HELOC is right for you.
  • Navigate the application process with ease, ensuring you understand the terms and costs.
  • Develop a plan to use your equity responsibly and align it with your broader financial goals.

Final Thoughts

Home equity is a valuable resource that, when used wisely, can help you achieve significant financial milestones. By understanding how it works and exploring your options, you can leverage your home’s value to create a brighter financial future.

Ready to explore your home equity options? Contact us today to speak with a financial specialist who can guide you through the process and help you make the most of your home’s potential.

Should You Refinance Your Mortgage? Key Questions to Ask Yourself

Posted on by First Western Trust Bank

Refinancing your mortgage can be a smart financial move, but it’s not a one-size-fits-all solution. Whether you’re looking to lower your monthly payments, shorten your loan term, or tap into your home’s equity, it’s essential to weigh the benefits and potential drawbacks. Here’s what you need to know to decide if refinancing is right for you.

Why Consider Refinancing?

Refinancing replaces your current mortgage with a new one, ideally under better terms. Here are three common reasons people choose to refinance:

  1. Lowering Your Interest Rate
    If current rates are lower than what you locked in on your existing mortgage, refinancing could save you thousands over the life of your loan. Even a 1% decrease in your rate can significantly reduce monthly payments.
  2. Shortening Your Loan Term
    Switching from a 30-year mortgage to a 15-year term can save on interest payments and help you build equity faster. However, this typically comes with higher monthly payments, so it’s important to ensure the change aligns with your budget.
  3. Accessing Home Equity
    A cash-out refinance lets you borrow against your home’s equity, giving you funds to pay off debt, make renovations, or cover major expenses. Keep in mind, this increases your loan balance and may extend your repayment period.

Pros and Cons of Refinancing

Refinancing isn’t without its trade-offs. Let’s look at both sides:

Pros:

  • Potential Savings: Lower interest rates can mean substantial savings over time.
  • Improved Cash Flow: Reduced monthly payments free up funds for other expenses.
  • Debt Consolidation: Use home equity to consolidate higher-interest debts.
  • Faster Payoff: Shorter loan terms help eliminate debt sooner.

Cons:

  • Closing Costs: Refinancing isn’t free. Expect to pay 2-6% of your loan amount in closing costs.
  • Restarting the Clock: If you refinance to a new 30-year loan, you might pay more in total interest.
  • Equity Risk: Cashing out too much equity can leave you financially vulnerable if home values drop.

How to Calculate Potential Savings

Understanding the financial impact of refinancing is key to making the right decision. Here’s a simple way to estimate your potential savings:

  1. Determine Your New Monthly Payment
    Use an online mortgage calculator to estimate your new monthly payment based on the proposed interest rate and loan term.
  2. Compare Closing Costs to Savings
    Add up the total closing costs for the new loan. Then calculate how long it will take to recoup those costs by dividing them by the amount saved each month. For example, if closing costs are $4,000 and you save $200 monthly, it will take 20 months to break even.
  3. Evaluate Long-Term Benefits
    Look beyond the break-even point to assess the total savings over the loan’s life, including any reduction in interest payments.

Steps to Start the Refinancing Process

If refinancing seems like a good fit, follow these steps to get started:

  1. Review Your Credit
    A strong credit score improves your chances of qualifying for the best rates. Check your score and address any errors on your credit report before applying.
  2. Gather Documentation
    Lenders will require financial documents such as pay stubs, tax returns, and bank statements to verify your income and assets.
  3. Get Pre-Approved
    A pre-approval gives you a clear idea of your refinancing options and helps speed up the process.
  4. Lock in Your Rate
    Once you’ve chosen a lender, lock in your rate to protect yourself from market fluctuations during the closing process.

How First Western Trust Can Help

Refinancing is a significant financial decision, and it’s important to have an experienced partner by your side. At First Western Trust, we’ll work with you to understand your goals, run the numbers, and guide you through every step of the process. Our team specializes in tailoring solutions to fit your unique needs, ensuring your refinance decision is as seamless and beneficial as possible.

Final Thoughts

Refinancing your mortgage can be a powerful tool for improving your financial health, but it’s not the right choice for everyone. By understanding your goals, calculating the potential savings, and working with a trusted lender, you can make a confident, informed decision.

Ready to explore your refinancing options? Contact us today to schedule a consultation with one of our mortgage experts. Together, we’ll help you determine if refinancing is the best move for your future.

Understanding Today’s Mortgage Rates: What Homeowners Need to Know

Posted on by First Western Trust Bank

If you’re considering buying a home or refinancing your mortgage, you’ve likely noticed the chatter around mortgage rates. These rates can feel like a moving target—one moment they seem reasonable, and the next, they spike. Understanding what drives these fluctuations and how to navigate them can empower you to make smarter financial decisions. Here’s a breakdown of today’s mortgage rates and tips to help you secure the best deal.

What Determines Mortgage Rates?

Mortgage rates are influenced by a mix of global and national economic factors, along with your personal financial situation. Let’s simplify the big picture:

  1. The Federal Reserve’s Influence
    While the Fed doesn’t directly set mortgage rates, its decisions on short-term interest rates indirectly impact them. For example, when the Fed raises rates to combat inflation, borrowing costs across the economy—including mortgages—tend to rise.
  2. Bond Market Activity
    Mortgage rates are closely tied to the yield on the 10-year U.S. Treasury bond. When demand for these bonds increases, yields fall, and so do mortgage rates. Conversely, when demand drops, yields and mortgage rates go up.
  3. Your Financial Profile
    Lenders assess your credit score, income, debt-to-income ratio, and loan-to-value ratio to determine your individual rate. A strong credit profile can qualify you for a lower rate, potentially saving you thousands over the life of your loan.
  4. Loan Type and Term
    The type of mortgage you choose—fixed-rate, adjustable-rate, FHA, or VA—also influences your rate. Similarly, shorter-term loans, like 15-year mortgages, often come with lower rates than 30-year options.

How to Lock in a Good Rate in a Fluctuating Market

The mortgage market is unpredictable, but with the right strategies, you can improve your chances of securing a favorable rate:

  • Act Quickly When Rates Dip
    Mortgage rates can shift daily, sometimes even hourly. If you see a rate that aligns with your financial goals, be prepared to act swiftly.
  • Get Pre-Approved
    A pre-approval not only helps you understand what you can afford but also positions you to lock in a rate as soon as you find the right property.
  • Work on Your Credit
    A higher credit score often means lower rates. Check your credit report for errors, pay down debt, and avoid opening new lines of credit before applying for a mortgage.
  • Consider Points
    Paying for discount points upfront can lower your interest rate over the loan’s lifetime. While this requires more cash at closing, it can result in significant long-term savings.
  • Stay Flexible
    If rates are higher than you’d like, consider adjustable-rate mortgages (ARMs). These often start with lower rates than fixed-rate loans but carry the risk of adjustment later.

Where to Monitor Rates and Find Help

Tracking mortgage rates doesn’t have to be overwhelming. Start by visiting trusted financial websites like Bankrate or Freddie Mac’s Primary Mortgage Market Survey for regular updates. You can also set alerts with your preferred lender to receive notifications when rates drop.

At First Western Trust, we understand that securing the right mortgage rate is a critical piece of your financial journey. Our team is here to guide you through the process, offering tailored advice based on your unique circumstances. Whether you’re buying your first home, refinancing, or exploring investment properties, we’ll help you confidently navigate the mortgage market’s complexities.

Your Next Steps

Mortgage rates may fluctuate, but your financial security doesn’t have to. By understanding how rates are determined and employing smart strategies, you can position yourself to achieve your homeownership goals.

Ready to take the next step? Contact us today to speak with one of our mortgage specialists. Together, we’ll make sure you’re prepared for whatever the market holds.

What to Know Before Applying for a Mortgage: A Checklist for Homeowners

Posted on by First Western Trust Bank

Applying for a mortgage is an exciting step toward homeownership, but it can feel overwhelming if you’re not prepared. With the right knowledge and documents in hand, you can streamline the process and approach it with confidence. This checklist outlines everything you need to know and how to make the application process as smooth as possible.

Key Documents and Information You’ll Need

Lenders require a range of documents to assess your financial stability and determine your eligibility for a mortgage. Be prepared to provide:

  1. Proof of Income
    • Recent pay stubs (typically from the past two months).
    • Tax returns and W-2s from the past two years.
    • If self-employed, profit and loss statements and 1099 forms.
  2. Proof of Assets
    • Bank statements from the past two months for checking, savings, and investment accounts.
    • Documentation of other assets, such as retirement accounts or properties.
  3. Credit Information
    • Authorization to pull your credit report.
    • Explanation of any credit issues, such as late payments or defaults.
  4. Debt Information
    • Documentation of outstanding debts, such as student loans, credit cards, or car loans.
    • Monthly payment amounts for each debt.
  5. Identification
    • Government-issued photo ID (e.g., driver’s license or passport).
  6. Property Information (If Known)
    • Purchase agreement for the home you intend to buy.
    • Details on the property’s taxes, insurance, and HOA fees (if applicable).

Understanding Key Financial Metrics

  1. Credit Scores
    Your credit score is one of the most important factors in determining your loan eligibility and interest rate. Most lenders prefer a score of 620 or higher, but a higher score can unlock better terms.

Tip: Check your credit report in advance and address any inaccuracies or debts that could be paid down to improve your score.

  1. Debt-to-Income Ratio (DTI)
    Your DTI compares your total monthly debt payments to your gross monthly income. Lenders typically look for a DTI below 43%, though lower is preferable.

Tip: Reduce unnecessary debts before applying to strengthen your financial profile.

  1. Pre-Approval
    Getting pre-approved for a mortgage provides an estimate of how much you can borrow and demonstrates to sellers that you’re a serious buyer. Pre-approval involves submitting financial documents and undergoing a credit check, so it’s a more detailed process than pre-qualification.

Preparing for the Application Process

Here are steps to help you stay organized and confident as you apply:

  1. Save for a Down Payment
    Determine how much you can afford to put down. Conventional loans often require 5-20%, though some programs allow for smaller down payments.
  2. Set a Budget
    Use a mortgage calculator to estimate what you can afford based on your income, expenses, and the expected loan terms.
  3. Avoid Major Financial Changes
    Steer clear of opening new credit accounts, making large purchases, or switching jobs before or during the application process.
  4. Shop Around for Lenders
    Compare rates, fees, and loan terms from multiple lenders to find the best fit for your needs.
  5. Understand Loan Types
    Research the differences between fixed-rate, adjustable-rate, and government-backed loans to determine which suits your goals.

How First Western Trust Simplifies the Process

At First Western Trust, we understand that applying for a mortgage can feel daunting, especially if you’re a first-time buyer or haven’t gone through the process in years. Our experienced team is here to make it easier by:

  • Providing Clear Guidance: We explain every step of the process, helping you understand what’s required and why.
  • Streamlining Documentation: Our digital tools and expert advisors help you gather and submit necessary documents quickly and efficiently.
  • Offering Tailored Solutions: We work with you to identify the right loan type and terms based on your financial situation and goals.
  • Pre-Approval Support: We’ll help you get pre-approved so you can shop for your dream home with confidence.

Final Thoughts

Being prepared before applying for a mortgage can save you time, reduce stress, and improve your chances of approval. By organizing your documents, understanding financial metrics like credit scores and DTI, and working with a trusted lender, you’ll be ready to navigate the process with ease.

Ready to take the next step? Contact us today to speak with a mortgage expert and start your journey toward homeownership with confidence.

What is the Community Reinvestment Act?

Posted on by First Western Trust Bank

The Community Reinvestment Act (CRA), enacted in 1977, addresses the discriminatory practice known as redlining, where banks deny services to communities based on economic demographics. This landmark federal law mandates that financial institutions meet the credit needs of all community sectors, particularly low- and moderate-income neighborhoods.

Historical Context and Legislative Intent

Before the CRA, redlining was a pervasive practice in American banking. Certain neighborhoods, often with high proportions of racial minorities, were deemed high-risk and undesirable for investment. This practice restricted access to mortgage financing and other essential financial services, exacerbating poverty, limiting homeownership, and contributing to urban decay. The CRA was introduced to eradicate these discriminatory practices and ensure that all community members have fair access to financial services regardless of their socio-economic status.

CRA Provisions and Implementation

The CRA requires federal agencies, including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), to evaluate banks’ efforts in meeting the diverse credit needs of their communities. These evaluations are public and involve assessing financial services, from home loans to small business support. Institutions that fail to comply may face penalties that can impact their operations, such as restrictions on business expansion or denials of merger requests. Conversely, a good CRA rating can significantly enhance a bank’s reputation and open up new business opportunities.

First Western Trust’s Inclusive Financing Initiative

First Western Trust Mortgage aligns closely with the CRA’s goals by offering specialized financing programs that make homeownership more accessible and affordable. Targeting low to moderate-income families and buyers of qualified properties, these programs often allow borrowers to apply 1% of their loan amount towards rate reduction and/or closing costs, making it easier to afford a home.

Qualification Criteria

To be eligible for CRA support, applicants must meet certain criteria, typically defined by income levels or the location of the property in question. These programs are designed to support those in low- to moderate-income brackets or those purchasing homes in designated areas that benefit from economic revitalization. First Western Trust provides personalized consultations to help potential borrowers understand their eligibility and the benefits available to them.

Impact and Future Prospects

Since its inception, the CRA has significantly increased investment in historically underserved areas, fostering improvements in community services, small business growth, and housing accessibility. Despite its successes, the CRA faces modern challenges, particularly with the shift towards digital and mobile banking, necessitating updates to its regulatory framework to stay relevant and effective.

Recent Developments

Recent calls for modernizing the CRA aim to adapt its framework to account for the rise of online banking services. This would ensure that the law’s foundational goals of expanding credit access and promoting community development are maintained in the digital era. These adaptations are crucial as banking evolves from traditional brick-and-mortar branches to more digital engagements.

Promoting Economic Equality

The Community Reinvestment Act remains vital for promoting economic equality and community development. As banking practices and community needs evolve, the CRA must adapt to continue its mission of ensuring fairness in financial services. First Western Trust’s dedicated efforts to support the CRA’s objectives demonstrate a commitment to financial success and the advancement of communities it serves, helping more individuals achieve the dream of homeownership.

To learn more about this topic or mortgage services in general, contact the First Western Trust mortgage team today.

First Western Trust is an Equal Housing Lending, NMLS #477166