Category: Mortgage

Is a Fixed-Rate or Adjustable-Rate Mortgage Right for You?

Posted on by First Western Trust Bank

Choosing the right mortgage is one of the most important financial decisions you’ll make when buying a home. Two of the most common mortgage types are fixed-rate and adjustable-rate mortgages (ARMs). Each offers distinct advantages and potential risks, making it essential to understand how they work to select the best fit for your financial situation and long-term goals. 

Understanding Fixed-Rate Mortgages 

A fixed-rate mortgage features an interest rate that remains constant over the life of the loan. This means your monthly principal and interest payments will never change, providing a sense of stability and predictability. This loan type is often favored by homeowners planning to stay in their home for many years, as it allows for consistent budgeting without surprises from fluctuating interest rates. 

Fixed-rate mortgages come in various term lengths, with the 15-year and 30-year loans being the most popular. While the 15-year fixed-rate mortgage typically carries a lower interest rate and allows you to build equity faster, it comes with higher monthly payments. The 30-year fixed loan offers lower monthly payments but more interest paid over time. 

The primary benefit of a fixed-rate mortgage is the security it offers against rising interest rates. In a rising rate environment, homeowners with fixed loans are protected from increased payments. This can make long-term financial planning easier, especially for those with fixed or predictable incomes. 

What Are Adjustable-Rate Mortgages (ARMs)? 

Adjustable-rate mortgages start with a fixed interest rate for an initial period — commonly 3, 5, 7, or 10 years — after which the rate adjusts periodically based on a benchmark index plus a margin. These adjustments occur annually or semi-annually depending on the loan terms. 

The key appeal of ARMs is the typically lower initial interest rate compared to fixed-rate mortgages, which can result in lower monthly payments early on. For borrowers who expect to move, refinance, or see a significant increase in income within the initial fixed period, ARMs can offer substantial savings. 

However, the trade-off is the uncertainty of future payments. Once the fixed period ends, your interest rate and payments may increase or decrease depending on market conditions. If rates rise significantly, monthly payments can become substantially higher, potentially impacting your budget. 

Comparing Fixed-Rate and Adjustable-Rate Mortgages 

When deciding between fixed and adjustable rates, consider your personal financial goals, risk tolerance, and how long you plan to stay in the home. 

  • Stability vs. Flexibility: Fixed-rate mortgages provide payment stability and predictable budgeting. ARMs offer lower initial payments and can be more flexible, but come with uncertainty about future rates. 
  • Duration of Homeownership: If you plan to own your home long-term, a fixed-rate loan may provide greater peace of mind. If you anticipate moving within a few years, an ARM’s lower initial rate may save you money. 
  • Market Conditions: In a low-interest-rate environment, locking in a fixed rate may be beneficial. When rates are higher but expected to decline, an ARM might be advantageous. 
  • Income and Budget: Stable or fixed income borrowers often prefer fixed-rate loans for consistent payments. Borrowers with variable income or expecting future earnings growth might choose an ARM to capitalize on lower initial costs. 

How First Western Trust Mortgage Can Help 

Navigating mortgage options can be complex, particularly when balancing short-term affordability with long-term financial strategy. At First Western Trust, we work closely with each client to understand their unique circumstances and goals. We provide clear explanations of mortgage products and their potential impact on your financial future. 

Whether you are leaning toward the stability of a fixed-rate mortgage or the flexibility of an adjustable-rate mortgage, we can guide you through the process, ensuring you choose the right solution. Our team leverages deep industry knowledge and a commitment to personalized service to support your home financing journey. 

Final Thoughts 

Choosing between a fixed-rate and adjustable-rate mortgage requires careful consideration of your financial situation, goals, and market factors. Fixed-rate mortgages offer predictability and protection against rising interest rates, while ARMs provide potential savings and flexibility but carry more risk. 

Understanding these differences and how they relate to your needs will empower you to make an informed decision. Partnering with an experienced lender like First Western Trust Mortgage ensures you receive the guidance and support necessary to select a mortgage that fits your lifestyle and financial plans. 

Disclaimer: Personal banking services offered through First Western Trust Bank, Member FDIC  

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

This content is for informational purposes only and does not constitute legal or tax advice. Please consult your legal or tax advisor for specific guidance tailored to your situation. First Western Trust Bank cannot provide tax advice. Please consult your tax advisor for guidance on how the information contained within may apply to your specific situation.  

Building an ADU for Aging Parents: Comfort, Care, and Independence

Posted on by First Western Trust Bank

As more families seek practical solutions to support aging parents, building an Accessory Dwelling Unit (ADU) has emerged as an increasingly popular option. An ADU is a secondary housing unit on a single-family property — often a converted garage, basement, or a small separate structure. For families, an ADU can provide a comfortable, private space for elderly parents while keeping them close to loved ones. This arrangement offers a unique balance between independence and care, making it a thoughtful alternative to traditional eldercare facilities. 

Why Consider an ADU for Aging Parents? 

Rising costs of assisted living and in-home care have made many families reconsider how best to support their elderly loved ones. An ADU enables parents to retain a degree of autonomy, reducing the emotional challenges that come with relocating to a care facility or moving in with family members in shared spaces. It also allows adult children to be nearby for support, offering peace of mind and easier access to care without sacrificing privacy. 

The proximity encourages family connection and helps foster a comfortable living environment tailored to the parent’s needs. Additionally, an ADU can increase property value and offer future flexibility — for example, as a rental unit or guest house — making it a sound investment for the long term. 

Zoning and Permitting Considerations 

Before starting construction, it’s essential to understand local zoning laws and permitting requirements. Regulations vary widely by city and county, with some areas having strict size limits, design standards, and occupancy rules for ADUs. Many municipalities have recently relaxed restrictions to encourage ADU development, but due diligence is key to ensuring your project is compliant. 

It’s advisable to consult with local planning departments or hire professionals familiar with your jurisdiction’s ADU regulations. Understanding setback requirements, parking rules, and allowable square footage can save time and costs during the permitting process. 

Construction Costs and Design Options 

The cost of building an ADU depends on factors like size, location, design complexity, and materials. On average, constructing a detached ADU can range from $100,000 to $300,000 or more, while converting existing spaces such as garages or basements can be more affordable alternatives. 

Design choices should focus on accessibility and safety to meet aging parents’ needs. Features such as single-level layouts, wider doorways, no-step entrances, grab bars, and non-slip flooring improve comfort and reduce fall risks. Incorporating energy-efficient appliances and fixtures can also lower utility costs and increase sustainability. 

Many families choose a custom design tailored to their loved one’s preferences and medical needs, while others opt for modular or prefab ADUs that offer quicker construction timelines and potentially lower costs. 

Financing Your ADU Project 

Financing an ADU can be a significant concern, but several options are available. Traditional mortgage loans may allow homeowners to include an ADU construction or renovation as part of a home equity line of credit (HELOC) or a cash-out refinance. Some lenders offer specialized loans designed for ADU construction, recognizing the growing demand for these projects. 

Working with a bank or financial institution experienced in flexible lending options can help you find the right solution that fits your budget and long-term financial goals. Some programs also offer favorable terms for energy-efficient or accessible design improvements. 

Emotional and Financial Benefits 

Beyond practicality, building an ADU fosters emotional well-being for both aging parents and their families. Parents maintain independence and dignity, living in their own space, while children benefit from the reassurance that help is close by. This arrangement can reduce caregiver stress and improve quality of life across generations. 

Financially, an ADU can offset some elder care expenses by reducing the need for costly assisted living or round-the-clock in-home care. Additionally, the added living space increases property value and creates a potential rental income source if parents no longer require the unit. 

Long-Term Planning and Quality of Life 

Building an ADU is more than just adding a physical structure — it’s about creating a sustainable, compassionate living solution that supports aging with grace and dignity. Families should consider future needs and possible changes in health status, designing a space that can adapt to evolving requirements. 

Consulting with healthcare professionals, financial advisors, and housing experts ensures a comprehensive approach that balances comfort, care, and independence. Taking the time to plan carefully results in a home environment that enriches relationships and provides security for years to come. 

Partnering with First Western Trust Mortgage

For families considering an ADU, First Western Trust offers personalized financial guidance and lending solutions tailored to these unique projects. With experience serving clients who have complex financial situations and a commitment to thoughtful planning, First Western Trust can help you navigate financing options that make building an ADU feasible and affordable. 

Whether exploring home equity financing or specialized loans for ADU construction, partnering with a trusted bank provides the expertise and support to bring your vision to life — ensuring your parents enjoy comfort, connection, and independence in their golden years. 

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.

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.

First-Time Homebuyer Mistakes and How to Avoid Them

Posted on by First Western Trust Bank

Purchasing your first home is a thrilling milestone but can also be filled with potential pitfalls. There are many things to know when you are a first-time home buyer and many lessons to be learned from others’ mistakes. To ensure a smooth process, save money, and ultimately be happy with your new home, it’s crucial to avoid common mistakes that many first-time homebuyers make. Here are ten critical mistakes to steer clear of:

Looking for a Home Before Getting Preapproved

One of the most common errors is viewing homes without securing a mortgage preapproval. In a competitive market, sellers are more likely to take offers seriously if they have proof that they can obtain financing. Without preapproval, you might fall in love with a home that is out of your price range, leading to disappointment and wasted time.

Do this instead: Obtain a fully underwritten preapproval from an experienced mortgage lender before beginning your house hunt. This process requires you to submit financial documents, like tax returns, pay stubs, and bank statements, to verify your income, assets, and creditworthiness. A preapproval letter from a lender signals that you are a serious buyer prepared to make an offer.

Fixating on the House Over the Neighborhood

It’s easy to love a home’s aesthetics, but the neighborhood is equally important. A beautiful home in an undesirable area can lead to regret. Consider the lifestyle and long-term satisfaction that the neighborhood offers. A great house in an unfavorable location can negatively impact your quality of life.

Do this instead

  1. Research potential neighborhoods thoroughly.
  2. Spend time exploring the areas at different times of the day and week.
  3. Consider factors like school ratings, commute times, crime rates, and local amenities.
  4. Talk to current residents and visit local businesses to get a sense of the community.
  5. Make sure the neighborhood aligns with your lifestyle and long-term plans.

Waiting for the Perfect Home

First-time buyers often wait for the perfect home that checks every box on their wish list. This can lead to missed opportunities and prolonged house hunting. The reality is that no home is perfect, and waiting for perfection can cause you to miss out on good homes that meet most of your needs.

Do this instead

  1. Be flexible with your criteria.
  2. Prioritize your must-haves and be open to compromise on features that are less important and that you could change in the future.
  3. Consider homes that need cosmetic updates or minor renovations.
  4. Keep an open mind and recognize that you can make changes over time to create your dream home.

Making Emotional Decisions

Purchasing a home is a major financial commitment, and it’s easy to get swept up in the excitement, especially in a competitive market. Emotions can impact your judgment, causing you to be okay with overpaying or ignoring critical factors like structural issues.

Do this instead:

  1. Stick to a budget and remain objective during the homebuying process.
  2. Make sure your purchase aligns with your long-term financial goals.
  3. Take the time to thoroughly evaluate each property, be bold, and walk away if something doesn’t feel right.
  4. Remember, there will always be other opportunities.

Talking to Only One Lender

Many first-time buyers get a mortgage from the first lender they speak to, potentially missing out on better deals. Different lenders offer varying interest rates, fees, and loan terms, and shopping around can save you thousands over the life of your mortgage. Picking the right lending will help make the housebuying process smoother.

Do this instead:

  1. Consult lenders to compare rates, fees, and loan terms.
  2. Request quotes on the same day to ensure an accurate comparison, as rates fluctuate daily.
  3. Search for lenders who are offering competitive rates.
  4. Don’t hesitate to negotiate terms and ask questions to ensure you understand all aspects of the loan.

Overlooking FHA, VA, and USDA Loans

First-time buyers often overlook government-insured loan programs that can offer favorable terms. These programs are designed to help buyers with limited savings or less-than-perfect credit achieve homeownership.

Do this instead: Research FHA, VA, and USDA loans. FHA loans only require 3.5% down and a minimum 580 credit score, making them accessible to many first-time buyers. VA loans offer benefits for eligible veterans and active-duty service members, including no down payment and lower closing costs. USDA loans assist moderate—to low-income buyers in rural areas and often require no down payment. Explore these options to find the best fit for your financial situation.

Missing Out on Assistance Programs

Many assistance programs are available to help first-time homebuyers. These programs can include local government grants, community loans, or even special rates offered by lenders for first-time buyers and can significantly reduce the financial burden of buying a home.

Do this instead: Explore various assistance programs that might be available to you. Check with your local, state, and federal housing authorities to find out what grants and loans you may qualify for. Many programs offer reduced interest rates, down payment assistance, or even grants that don’t need to be repaid. These resources can make a big difference in your homebuying budget and help you achieve homeownership sooner.

Not Negotiating a Homebuyer Rebate

Many first-time buyers are unfamiliar with homebuyer rebates, also known as commission rebates. These rebates can be up to 1% of the home’s sales price and come from the buyer agent’s commission, offering substantial savings.

Do this instead: If you live in a state that allows homebuyer rebates, see if your agent will provide one at closing. On a $300,000 home purchase, this can be a $3,000 savings for you. Discuss a homebuyer rebate early on with your real estate agent to understand if and how it can apply to your transaction. Check state regulations, as some states prohibit or limit these rebates.

Buying More House Than You Can Afford

If you find your dream home, it can be tempting to stretch your budget. However, overextending yourself can lead to future financial difficulties and stress. Buying a house that surpasses your financial capacity can stretch your budget and impede your ability to save for other significant goals.

Do this instead:

  1. Focus on what monthly payments you can comfortably manage.
  2. Use an online calculator to estimate your mortgage payment, and remember to include taxes, insurance, and maintenance costs.
  3. Consider your entire financial picture, including debts, future expenses, and emergency savings.
  4. Stick to a budget that allows you to live comfortably and meet your other financial goals.

Draining Your Savings

Cutting into your savings for a down payment and closing costs can leave you financially vulnerable to emergencies or things that come up after closing. Homeownership includes unforeseen expenses, so maintaining an emergency fund is essential to prevent financial strain.

Do this instead:

  1. Have an emergency fund with three to six months of living expenses to cover unexpected events such as house repairs, medical expenses, or a sudden job loss.
  2. Consider putting down a smaller percentage if it means preserving your savings.
  3. Remember, temporarily paying for private mortgage insurance is better than depleting your financial safety net.

Closing Thoughts

By avoiding these common mistakes, first-time homebuyers can navigate the homebuying process more smoothly, make wise financial decisions, and find a home that provides long-term satisfaction and happiness. Remember that thoughtful planning and informed choices are crucial for a successful home purchase. 

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

Tips for Spring Home Buying Season

Posted on by First Western Trust Bank

As the weather warms up, many prospective homebuyers eagerly anticipate the arrival of spring, widely recognized as the peak of the home-buying season. If you’re among those considering purchasing a home, you’re likely wondering when exactly is the best time to start your search, what to look for, and how to navigate the process smoothly. As experienced mortgage lenders, here are valuable insights and tips to make the most of the spring home-buying season.

Understanding Home Buying Season

What exactly is the home-buying season? Home buying season refers to the time of the year when the real estate market experiences increased activity from buyers and sellers. While there isn’t a strict start and end date, traditionally, the spring months — March through June — are considered a favorable time for buying and selling homes in many regions.

Spring holds several advantages for homebuyers, making it a favored season for diving into the real estate market. Here’s why:

Optimal Weather: Spring brings milder temperatures and longer daylight hours, providing more comfortable conditions for attending open houses and conducting home inspections.

Abundance of Listings: Sellers tend to list their homes during spring to take advantage of the increased demand. This surge in inventory gives buyers a broader selection of properties to choose from.

Family-Friendly Timing: Many families prefer to move in the summer to avoid disrupting the school year. Therefore, purchasing a home in spring allows for a seamless transition before the new academic year begins.

Tips for Spring Home Buyers

Start The Home Buying Process Early

Starting your search early gives you a competitive edge in the bustling spring market. Begin by researching neighborhoods, browsing online listings, and attending open houses to get a feel for the market. Starting early gives you more time to explore different areas, refine your preferences, and make informed decisions.

Get Pre-Approved

Securing pre-approval for a mortgage is crucial before you start house hunting. This process involves submitting financial documentation to a lender, who then assesses your creditworthiness and determines the loan amount you qualify for. Pre-approval strengthens your bargaining power and streamlines the purchasing process by demonstrating to sellers that you’re a serious and capable buyer.

Define Your Priorities

To stay focused and avoid getting overwhelmed during your search, create a clear list of your priorities so you can easily evaluate if a home matches your needs. Consider location, commute time, school districts, number of bedrooms and bathrooms, yard size, and desired amenities. Rank your priorities based on their importance to ensure the homes you view align with your lifestyle and needs.

Ask the Right Questions

When touring potential homes, be bold about asking detailed questions to gather as much information as possible. Inquire about the age and condition of major components like the roof, HVAC system, electrical wiring, and plumbing. Additionally, ask about any past or ongoing maintenance issues, recent renovations, and the seller’s reason for listing the property. A solid understanding of these details will help you avoid unexpected and potentially costly surprises and make informed decisions.

Work with a Realtor

Having an experienced real estate agent that is reliable is essential to your home-buying success. Your agent should listen to your needs, guide you through each step of the transaction, work in your best interest, and provide advice when making an offer. They’ll help you navigate negotiations, interpret contract terms, and handle any challenges that arise, ensuring a smooth and successful home purchase.

Attend Open Houses Strategically

Attending open houses is an excellent way to familiarize yourself with the local housing market and gain firsthand experience touring different properties. Prioritize attending open houses for homes that align with your criteria and schedule multiple viewings on the same day to maximize your time. Take thorough notes, snap photos, and ask the listing agent clarifying questions to help you remember each property’s unique features and drawbacks.

Don’t Rush the Decision

While the spring market can move quickly, resisting the urge to rush into a decision is essential. Take the time to evaluate each property carefully, weighing the strengths and drawbacks against your priorities and budget. Consider resale potential, future maintenance costs, and neighborhood dynamics before making an offer. Finding the right home is worth the wait, so trust your instincts and exercise patience.

Be Flexible

Flexibility is key when navigating the spring housing market, as you may need to compromise on certain aspects of your ideal home to find the right fit. Keep an open mind and be willing to adjust your criteria based on market conditions, availability, and budget constraints. By remaining flexible, you’ll expand your options and increase your chances of finding a home that meets your needs and budget.

Stay Positive and Persistent

Finally, remember to stay positive and persistent, even if you face setbacks or rejection in a competitive market. The spring home-buying season can be challenging, but you will stand a better chance of finding the right home with patience and help from an experienced real estate agent. Trust in the process, stay focused and remain open to new opportunities that may arise along the way.

Find a Trusted Mortgage Lender

Securing a mortgage is critical to home buying, and finding the right lender can significantly impact your overall experience. Begin by researching reputable mortgage lenders who understand the local market, reading online reviews, and seeking recommendations from friends, family, or your real estate agent.

Conclusion

Navigating the spring home buying season requires careful planning, proactive decision-making, and strategic execution. From understanding the market dynamics and why spring is an ideal time to buy to implementing essential tips for success, prospective homebuyers can confidently embark on their journey toward homeownership. By starting early, defining priorities, working with reputable professionals, and staying flexible and persistent, you can confidently succeed in the competitive spring housing market. Whether you’re a first-time buyer or a seasoned homeowner, the spring home-buying season offers ample opportunities to find your dream home and make a sound investment in your future.