Category: Mortgage

What You Should Know As A First Time Home Buyer

Posted on by First Western Trust Bank

Buying your first home involves more than just purchasing a place to live; it’s a significant step toward long-term financial stability. While being a first-time homebuyer can be exciting, the process can also be overwhelming for many people. Here’s everything you need to know about the importance of buying a home, how to purchase a home that maximizes your chances of financial success, and other first-time home buying do’s and don’ts. 

Getting Ready For Buying A Home

Buying a home for the first time can be overwhelming. Here are our top tips to help smooth the process — from saving for your first home to getting ready for your move-in date.

  • Start saving now. Even the lowest down-payment programs require you to pay at least 3% of the home value, not including moving or closing costs. This amount may seem small, but saving for a down payment can be a long process, so it’s best to start early.
  • Get pre-approved. A pre-approval letter gives you a better idea of how much you can afford by pre-approving you for a specific loan amount. Getting this pre-approval can save you time and ensure you have realistic expectations as you begin house hunting.
  • Ensure your credit score is high enough. You’ll need a credit score above a certain threshold to qualify for a particular loan amount. If your score is too low, consider boosting it to position you for loan approval and enable reduced interest rates.
  • Inspect the neighborhood with an eye to the future. Review neighborhoods and nearby amenities and ensure the local area will meet your current and future needs.

Know Your Mortgage Types

In addition to preparing for purchasing a home, first-time buyers also need to understand the complexities behind taking out and paying a mortgage. Finding the right home loan is important, and there are many options, including loans that:

  • Come in various terms, including 15-year and 30-year loans.
  • Have variable or fixed interest rates, enabling you to judge the circumstances of the moment before taking out a loan.
  • Are based on your eligibility with a certain membership group, like being a veteran. Sometimes, you may also qualify for a reduced interest-rate loan based on where you live or your profession.

To select a loan that fits your needs, you’ll need to understand the difference between the types of loans available and identify the one that will get you the best results for your economic situation. 

Key Budgeting Tips For First-Time Homebuyers

Buying a home requires you to consider several key budgeting aspects. Understanding these principles will ensure you can continue to afford your home’s mortgage, taxes, and upkeep. Here’s what you should consider when budgeting for a new home:

  • It’s not just the mortgage. When calculating what you can afford, remember that your mortgage payment isn’t the only payment you will make. You will also have property taxes, homeowners insurance, and more. Furthermore, there will be moving costs and inevitable repair costs. As such, you need to budget conservatively. 
  • Don’t just take out the maximum loan. Just because you qualify for a loan doesn’t mean you should take out the entire amount you qualify for. Doing so may saddle you with more debt than you can manage, leaving you in a position where you may need to catch up on your payments.
  • Build that buffer. Conservative budgeting also means that you start saving even more. Yes, you need to save for a down payment. However, you also need to create a budget reserve for major or minor repairs in case of catastrophic damage to your home due to wear and tear or an accident.
  • Remember the tax advantages and other cost reduction techniques. It is entirely understandable to be worried about the costs of homeownership. However, you should also consider the tax advantages of owning a home. Mortgage interest, insurance premiums, and property tax payments can be written off, reducing your overall tax burden. Furthermore, some investments — like an alarm system — can reduce the price of your homeowner’s insurance. Consult with a tax professional to understand how homeownership may impact your tax situation positively. 

Get Professional Support When Buying Your First Home

Buying a home for the first time is a significant responsibility, and the economic considerations that must be made cannot be understated. By following the tips above, you will be well on your way to purchasing your dream home and positioning yourself for future financial success.

If you are looking for a home to buy, remember it’s about more than just finding an excellent neighborhood, good schools, and kitchen layout. Your home is essential for generating wealth and preparing for your long-term financial future. There are certain things to know when you buy your first home, and at First Western Trust, we’re here to help. We have knowledgeable staff who can help you find the right mortgage lender, structure your loan appropriately, and ensure you are ready to make this major purchase.

HELOC vs. Home Equity Loan: What is the Difference

Posted on by First Western Trust Bank

As a homeowner, you might find yourself in situations that require a large sum of money, such as kitchen remodeling or large-scale garage repairs. Cash-out refinance, which involves trading your current mortgage for a new mortgage and receiving the difference in cash, might not seem like the best choice due to the risk of higher interest rates and reduced equity.

In such cases, you have two loan options based on your home equity (the percentage of a property that you actually own by deducting the outstanding mortgage from the total value). These are home equity loans and home equity lines of credit (HELOC).

Choosing between the loan options depends on your spending habits and, ultimately, the purpose of the loan. By understanding the similarities and differences of each loan type, you can select the most stress-free option while fulfilling your financial commitments.

What is a Home Equity Loan?

Home equity loans are a type of installment usually repaid with fixed monthly payments over a fixed period of time. Most lenders usually offer loans of up to 85-90% of an individual’s home equity. Under home equity loans, you receive a lump sum of money upfront, which you can freely spend on your needs.

What is a HELOC?

HELOC is a revolving line of credit that functions similarly to a credit card limit. You can calculate the HELOC amount you may qualify for based on your property’s fair market values, outstanding home loans, and loan-to-value ratio limits.

You do not need to spend the entirety of the line of credit approved by your lender and only incur interest for the borrowed amount. The HELOC loan comprises two time frames: the draw and repayment period.

You can repeatedly borrow from a HELOC as long as you repay the previously loaned sum within the draw period, which usually lasts between five to ten years.

Once the draw period expires, you can no longer borrow from the line of credit as it enters the repayment period that extends between 10-20 years. During this time, you are required to make fully amortized repayment of the outstanding loan balance, which includes the principal sum and interest.

The Similarities Between HELOC and Home Equity Loans

HELOC and home equity loans are secured loans as they leverage home ownership stake or equity as collateral. Since secured loans provide lenders with collateral as added assurance, they often come with lower interest rates than unsecured personal loans.

By using the home as collateral, defaulting on loan repayment could result in property foreclosure. Both loans involve closing costs (often higher for home equity loans since they involve dispensing a lump sum of money), including loan application costs, attorney fees, and other miscellaneous charges.

Lenders of both loan types require a thorough assessment of a borrower’s credit score, equity, and debt-to-income ratio (lenders calculate this by dividing your fixed monthly debt over your monthly income). Similarly, lenders tend to provide a limit of 80-85% of a property’s appraised value while deducting the outstanding mortgage amount.

What’s The Difference Between HELOC And Home Equity Loans?

HELOC and home equity loans come with their own pros and cons, mainly in the cash out of the loaned funds and their repayment process.

HELOC – For the Flexibility in Spending

HELOC works best for you if you seek spending flexibility according to shifting financial demands and investments. For example, homeowners may tap on a HELOC’s revolving line of credit for managing each project’s varied renovations and remodeling costs.

A HELOC loan may provide a lower introductory rate compared to a home equity loan and borrowers are usually only required to pay the incurred interest during the draw period. However, the variable interest rates of HELOC could prove financially challenging in the long term, especially during high-interest markets.

Home Equity Loans – For Fixed-Rate Repayments

Home equity loans are most suited for you if you want to receive a fixed sum that you aim to pay off over an extended period of 15-20 years. Individuals who borrow home equity loans tend to have clarity of their borrowed spending, such as funding a home renovation or college education. With home equity loans, you can have peace of mind paying a fixed monthly amount without risking market-led interest fluctuations.

Closing Thoughts

Deciding between a HELOC or home equity loan comes down to your financial health and spending needs. While there is no limit to the number of home equity-leveraged loans you can apply for, each application reduces your total amount of available equity for qualifying for a loan.

NMLS #477166 | Equal Housing Lender

How to Buydown Your Mortgage Interest Rate

Posted on by First Western Trust Bank

In the current economic climate, rising interest rates are one of the most significant barriers to home buying. Current interest rates are higher than they have been in decades, putting major financial roadblocks in the way of individuals who want to buy a home.

Many potential solutions exist to help you get an affordable interest rate that would allow you to buy the home of your dreams. One such example is a mortgage rate buydown. Unsure of what a buydown mortgage is? Read on for more information and how this financial maneuver can help make your mortgage more affordable.

What is a Mortgage Rate Buydown?

Simply put, a mortgage rate buydown allows you to reduce the interest rate on your mortgage. You do this by paying extra points–also known as discount points—on your mortgage when you first take the loan out, meaning you pay more upfront. In doing so, you can reduce the interest you pay toward your mortgage, potentially allowing you to find massive savings over the length of your loan.

A mortgage rate buydown is more worth it in some situations than others. Individuals struggling to make a down payment may find that they do not have the money to buy down their mortgage interest rate, as they simply will not have achieved the savings necessary to purchase discount points. However, individuals who have achieved adequate savings may find this expense well worth it, as an investment in discount points can result in significant savings over the life of the loan.

These tools have been more used today than ever before. The reason is simple: Interest rates have risen significantly since the Fed began hiking rates to try and slow inflation. As of this writing, interest rates are higher than in roughly twenty years.

An Example of a Mortgage Buydown

Considering that one discount point costs 1% of the total loan amount, the overall expense for discount points is directly tied to the loan amount you decide to borrow. A discount point represents a prepaid interest fee, paid one time and upfront, which is deducted from your loan.
Consider the following example. Suppose you are taking out a loan on a $1,000,000 property. In this instance, the borrower may be willing to reduce your 30-year fixed mortgage loan by .25% for every point you purchase. Current interest rates are roughly 8%, and one point will cost you $10,000. As such, if you purchased four points, you’d pay $40,000, and your interest rate would decrease to 7%.

By lowering the interest rate, monthly mortgage payments will be more affordable during the specified time period. This can be particularly helpful if you anticipate financial constraints or are purchasing during a period of high-interest rates.

How Are Buydowns Structured?

There are actually multiple ways to buy down mortgages. The standard way is described above. In that example, flatly purchasing points will reduce a mortgage loan for its entire lifetime. However, there are additional ways.

For example, consider a 3-2-1 buydown mortgage. In this method, the seller, homebuilder, or lender will cover the cost of buying the points, enabling the homebuyer to reduce their interest rates. The rates will reduce by 3% in the first year, 2% in the second year, and 1% in the third year. In the fourth year, interest rates return to normal.


There is also a 2-1 buydown mortgage. This technique is a “lighter” form of the 3-2-1 buydown mortgage, as rates reduce by 2% in the first year and 1% in the second year.


3-2-1 and 2-1 buydown mortgages have become more popular today, as they can provide incentives for homebuyers who want to buy a home but may worry about current interest rates. In this method, an individual can reduce interest rates – even temporarily – before rates return to their full price. Furthermore, there is nothing that would stop an individual from refinancing their interest rate when the 3-2-1 or 2-1 mortgage expires. As such, it is possible that an individual would be able to take advantage of lower interest rates through refinancing. From the seller or lender side, 3-2-1 or 2-1 buydown mortgages can be an excellent incentive to close a sale, particularly during high-interest rates.

However, individuals who take advantage of either form of these buydowns must prepare for the spike in interest rates. They must also ensure they have the income to afford such a spike and thus work with a lender to plan their finances appropriately.

Final Thoughts

A mortgage rate buydown can be an excellent tool that allows an individual with a high net worth to reduce the interest rate they pay over the life of a mortgage loan. Alternatively, a 3-2-1 buydown mortgage or 2-1 buydown mortgage can be effective, but it requires appropriate planning for when interest rates rise again.

How To Choose A Mortgage Lender

Posted on by First Western Trust Bank

A property purchase often ranks as one of the biggest purchases in a person’s life. Under most circumstances, for financial or investment reasons, it is recommended that the buyer take out a mortgage to fulfill their big-ticket payment. Determining how to choose a good mortgage lender remains critical for accessing the most suitable arrangement.  

Therefore, before settling for a mortgage, buyers need to reach out to a financial provider that offers the right plan for their needs. A buyer planning to make their first home purchase has different financial priorities and refinancing strategies than a high net worth individual (HNWI) interested in accruing multiple property investments. 

By discussing your mortgage objectives and options with a reliable financial provider and carefully choosing the appropriate plan, you can greatly enhance your long-term cash flow and profitability.

Prioritize Trust

Trust remains vital when reaching out to any mortgage lender. Quality lenders should have proven track records for reliable mortgage services at reasonable interest rates.

While many available mortgage options in the market, including credit unions, established banks, and external brokers, each brings a different level of credibility and assurance. Therefore, it is important to pick a lender that has a wide variety of options AND the knowledge and expertise to guide you to the loan product that best meets your needs. A lender with significant lending experience and knowledge that is consistently available to speak with you directly about the various options is critical.

Make Careful Comparisons

Finalized mortgage fees involve multiple factors that include:

  • Interest Rates – These refer to the interest accrued from a mortgage loan. Interest rates usually serve as the first point of consideration for buyers seeking to secure the best deal for their property investment. Mortgage lenders may also offer origination or discount points that buyers can apply to make their loans more manageable. Buyers can benefit from the tax-deductibility of mortgage points, similar to its interest rates.
  • Down Payments – The down payment for mortgages can significantly impact a buyer’s finances. Trusted lenders can help guide buyers toward the most suitable down payment arrangement based on their financial considerations. Lenders can present down payment assistance programs to mitigate long-term loan commitments if necessary.
  • Fee Breakdown – Mortgage fees involve multiple components. It is important to request that vendors break down their rates for transparency of the amount.

The sum usually includes underwriting and application fees settled upon closing the loan. Trusted mortgage lenders should provide the opportunity to guide buyers through each portion of the fees and provide room for negotiation where applicable.

Ask Essential Questions Before Choosing a Mortgage Lender

Due to the complex and often lengthy process of mortgages, buyers must ask a few key questions before proceeding with a lender’s offer. Some of these questions require self-research before approaching a mortgage provider.

The three primary questions below can help start the conversation with mortgage lenders during the first meeting.

What Are the Available Types of Mortgage Loans?

When choosing a mortgage lender, learning about their complete list of loan options is necessary. Mortgage options often include VA loans (applicable for active-duty personnel and veterans), conventional loans, and Federal Housing Administration (FHA) loans.

Conventional loans usually offer quicker mortgage approvals but have higher interest rates. Additionally, conventional loans often have strict requirements for spotless credit ratings. Most buyers need to present a credit score of 720 or higher to access the best conventional mortgage rates. Credit scores have become more crucial with the spike in mortgage rates.

Alternatively, government-backed FHA loans require lower credit scores for approval. However, since buyers can reduce the upfront fees for FHA, they may need to pay for mortgage insurance (applicable if the down payment amounts to less than 20% of the mortgage).

What Are the Loan Rates and Periods?

Lenders typically provide two types of mortgage rates: fixed rates and adjustable rate mortgages (ARMs) or floating mortgages. Fixed-rate mortgages support stable monthly payments throughout the loan’s lifetime, while ARMs present an initial low introductory rate while adjusting for market conditions in subsequent months.

Who Is My Main Contact During the Process?

Buyers should clearly understand the professionals assigned to their mortgage application, typically the Mortgage Loan Originator. A primary contact person, that is available 7 days a week via phone, email, text, or face-to-face, can help provide the specific details and progress throughout the mortgage process so buyers can make the necessary planning and financial arrangements. The primary contact can also clarify the online and in-person steps to offer a seamless lending experience.

Final Thoughts

First Western Trust offers personalized and strategic banking services, including a wide range of effective mortgage plans. This well-established bank is a reliable financial partner providing premium personal and private/commercial loan options and wealth-building strategies.

Every Mortgage Loan Officer offers the knowledge, experience, availability, and dedication to guiding buyers through the most comprehensive banking options, including the various types of home loans.

How First Western Trust Can Help You Find the Right Home Loan

Posted on by First Western Trust Bank

Even in the best of circumstances, finding the right mortgage loan can be an extremely complicated and daunting process. Fortunately, at First Western Trust, we’re here to help. With decades of experience with high-net-worth individuals and a genuine understanding of a family’s financial needs in a constantly changing market. 

Experience With High-Net-Worth Individuals

At First Western Trust, we’re proud to offer a vast array of mortgages for all clients. We have years of experience and have successfully completed mortgages in all fifty states, giving us some of the broadest perspectives on the market today. No matter our client’s financial situation, we’re here to help ensure they get the mortgage product they need, and we guarantee that we offer superior service to every one of our clients.

However, we also understand that high-net-worth individuals have specific requirements and need concierge-level services for managing their portfolios. This high level of needs demands that high-net-worth families partner with a bank that knows how purchasing a home will impact their portfolio. 

For example, a high-net-worth individual may need a jumbo loan to finance their property since it is valued too high for a conventional conforming loan. At the same time, a family may buy a larger home for a growing family. They may also buy a vacation home to spend a summer at or be looking to downsize towards retirement.

For any reason, a person obtains such a mortgage, mortgages for high-net-worth individuals are always more complex than mortgages than average home loans. A high-net-worth family may need to consider various implications of their loans, including how such a mortgage will impact their overall banking services or when it may be appropriate to begin working with a private bank to handle their financial needs.

Types of Loans Offered

Our mortgage consulting team works closely with high-net-worth clients to ensure we find the right solution for their needs. Furthermore, we work closely with our clients at all steps of the mortgage planning process, ensuring they are comfortable with the various financial solutions provided. 

At First Western Trust, we offer many loan types and services. We offer jumbo loans, conventional loans, loans for second homes, portfolio loans, investment property loans, and deed-restricted loans.

This vast array of loan types can be overwhelming, and even the most financially astute of clients may need assistance differentiating the best product for their needs. Not knowing how to identify the right loan is entirely understandable, as mortgages for high-net-worth individuals may have various financial implications, including:

  • How a mortgage will impact tax planning
  • The need to fold in a mortgage with overall estate planning
  • The need to balance repayment of a mortgage loan with investing in the stock market, businesses, and repayment of other debt

High-net-worth individuals need to work with a bank like First Western Trust. At First Western Trust, we have experience working with clients with extremely specific and complex needs. We understand the intricacies and implications these products can have on a portfolio. By working with our clients, we can help them identify which loan best suits their needs and ensure they get a more valuable product than one found at any other national chain of banks. 

More to the point, we also know that our clients demand the highest level of service and as much time as possible to consider a loan’s implications on a portfolio. That’s why we ensure that we provide our clients with as much detail as possible. We always give all closing figures at least 72 hours in advance. Doing so enables our high-net-worth clients to be as prepared as possible for closing. 

Final Thoughts

Jumbo loans, mortgages for second homes, investment property loans and more are major loans that can have a massive impact on the financial future of high-net-worth individuals and their ability to plan their finances for years to come. That’s why a bank with no experience in this area can’t just handle mortgages for high-net-worth individuals.
First Western Trust has years of experience working with high-net-worth mortgage lenders and ensuring that any home loan ultimately fits with the financial future of these individuals. We’re here to fulfill our customers’ mortgage needs and help them get whatever mortgage loan will fulfill their financial planning requirements. Contact a Mortgage Loan Officer today for more information on how we can help you get the mortgage loan that fits your financial future.