Individual Insights

Debt Consolidation with Your Home

There are multiple options with it comes to a Debt Consolidation Loan, and with those options come many factors to consider. These include:

1.  How much debt are you paying off?
2.  How quickly will you be paying it off?
3.  What, if any, collateral do you have available?
4.  What does your financial past and credit score look like?
5.  And most importantly, what can you qualify for?

Options that CSB offers include unsecured loans, cash-out refinance loans using your vehicle title, and home equity loans. All have their own unique characteristics, and a banker would be happy to walk you through what would fit your scenario best, but to get the conversation started, here is a deeper dive into a home equity loan!

Home Equity Loans (sometimes shortened to HELOANs) are fixed rate mortgages that use the equity in your home to lend you money. This can be the only mortgage you have on your house, or it can be a second mortgage which keeps your original loan (and interest rate) untouched. While a conventional, first mortgage can be a loan for up to 30 years, HELOANs are typically 5, 10, or 15 year loans. What that looks like is when you sign all your final documents, the funds from the loan will be used to pay off your existing debt and you will then begin to make fixed monthly payments (CSB offers weekly & biweekly payments also!) to pay down your loan in the allotted time.

Some of the reasons you might do a HELOAN over the other options listed above are that you are paying off a large amount of debt (over $10,000), you want to keep your monthly payments low (pay over a longer period of time), and you have equity available in your house (keeps the interest rate lower).

Because this loan does use your home as collateral, there are some unique aspects that you will need to consider. The bank will typically require an appraisal as well as new title work to be done which takes time (maybe 30 – 45 days) to be ready to fund your loan. This also means the actual loan itself has more fees up front, even though the interest rate would be lower than the other options which would save money in the long run.

If this sounds like something you’re interested in, it might be time to reach out to our team. It’s super easy to walk through the process. The best thing you can do to prepare is grab your most recent tax returns & W2s (2 years), paystubs (1 months worth), homeowners insurance declaration page, and copies of the debts you want to pay off. We are looking forward to helping you with your needs!

Written by Carla Fiandt

Vice President & Market Development Officer at Community State Bank
questions@csbemail.com
800.488.3958
February, 2024

Shed Your Extra Debt This New Year!

Do you have credit cards with balances that have snowballed from the holidays? Or loans that you had to obtain at a high interest rate (let’s be honest, everything feels like a high interest rate these days!) that are bogging you down every month? Do you feel like you are making payments that don’t seem to be lowering your balances at all? While there isn’t that one easy fix that makes all our debt disappear, a Debt Consolidation Loan does make it more bearable! Let me tell you more!

Debt Consolidation Loans combine your existing loans and/or credit card balances into one, potentially lower monthly payment! Sometimes you can cut back on how much you have to pay each month, and other times, you are able to pay off your debts in a shorter amount of time. Either way, you’re saving real money by consolidating your debt to this lower interest rate loan.

Debt Consolidation Loans have helped people save thousands of dollars in interest payments. And for those of you who have a hard time staying motivated, with debt consolidation loans you begin seeing your balances decrease each time you make a payment. That’s what I call motivation!

I talk with a lot of people throughout my day about how to better manage their finances and what type of loan funds they can qualify for, and this type of loan is one of my favorites to offer because of how it helps people get a hold of their financial situation again. Whether it’s me or another banker, walking through this process doesn’t have to be intimidating – that’s what I’m here for! To support our community as they make financial decisions to better themselves.

I typically start the conversation off with the basics. There are various avenues that can be explored when merging your debt into one payment. You’ll need to ask yourself:

How much do I need to borrow?
You will need to gather up all your previous monthly statements to calculate how much you will need to borrow to pay them all off. The goal is to transfer as many monthly payments as possible to the lower interest rate, debt consolidation loan.

What is my financial strength and how does it help or hurt me?
We all have a past, and it's important to understand how that will affect your loan terms. Your credit score, income, and existing debt payments will be considered and evaluated as the bank determines your ability to repay the loan. While it seems unfair to not lend someone the money just because the numbers don’t all add up, the last thing we want to do is put you in a position where you might default on a loan.

What collateral do I have to offer?
Collateral is a physical item that you own that the bank can take possession of if you are not making your payments as promised. Most frequently, this is a vehicle title or deed to your home. For smaller balances, you can usually obtain a consolidation loan without any collateral or with a vehicle. For larger balances, a home equity loan can be a great solution. The type of collateral used to secure your loan often directly impacts the type of interest rate you can receive and the process to receive the loan.

It’s a lot of information! I get it. I am a visual person, so below is a real life example to look at. Below shows you the savings if you were to make the exact same monthly payment on your current credit card balances as your future consolidation loan. As you can see, your monthly payment is the same, but you would have the loan paid off nearly 1 year (10 months!) sooner and you would save $4,461 in interest! Sounds like a no brainer to me!

Want to see how it looks for you? We have loan calculators available on our website for you to see what your savings might be! Or you can just reach out to one of our local CSB offices or officers to inquire about how you can save money and pay your debt down faster. Our team is here to support you and to help you build a better financial future! We can walk you through all the different scenarios so you can explore your options and feel comfortable with your path towards financial freedom!

Written by Lindsay Shook

Vice President & Market Development Officer at Community State Bank
lindsays@csbemail.com
260.570.4634
January, 2024

What to do before finding a house to buy!

Are you thinking about buying a house but don’t know where to start? You’re not alone. This is often the biggest purchase most people will make in their lifetime, and it’s not like most people will buy houses often to get good at it. Instead of taking it all on yourself, you can have a team who is actually trained in the process and understands the ins and outs. But the key with that, is you have to be able to trust who you are working with, which is why it’s important you choose a bank that is concerned about you, your life, and your goals. Community State Bank can help.

Our team can help you even before you start looking for a house. If you come to see us, we can sit down with you to see how much you can qualify for and can go over your options based on credit score, credit history, down payment, and debt to income. We will get you pre-qualified so you can start looking whenever you feel ready. Your other partner in this processes – your realtor – will want to see your pre-qualification letter from a bank before they start showing you homes. So, what do I do next?

Step 1: Make an appointment

This process is all about you getting what’s best for you, and the first step to that is finding a bank that will partner with you on this journey.

Step 2: Have Initial Meeting

During your first meeting, you will go over the documents that you brought with you in addition to your financial goals and housing needs. Oftentimes, banks will provide you a list up front that shares all the documents you can bring in. This will help the conversation be more meaningful, and you can walk away with actionable items.
Important things to look for in this meeting:

• A banker that’s listening to what you want to do
• Time set aside to discuss options – not just tell you what to do

Step 3: Underwrite Request

For banks, it’s important to make sure they are only lending money out to individuals that can afford to make the payments. The lending team will underwrite your loan based off your documentation and information provided to ensure all regulations and policies are met before issuing a pre-qualification letter. This process typically takes less than 48 hours.

Step 4: Begin House Hunting

It’s time to really dive into searching for your dream home. To make the process run smoothly when you find “the one”, follow these tips and tricks!

• Stay within the pre-qualification limits
• Don’t change jobs
• Don’t open or close any personal loans or credit cards
• Keep in contact with your lender
• As soon as an offer is accepted, reach out to your lender

Step 5: CSB will start the formal mortgage process

Congratulations! You’ve made it to an application with your bank. The process will go fast. In most cases, your loan will be finalized within 30 – 45 days. The hard part is done – you found your dream home. Your banker and realtor will help you along the way to finish everything up and get you to move-in day!

Written by Doug Hanes

Vice President & Market Development Officer at Community State Bank
dough@csbemail.com
260.994.6036
May, 2024

Equity: What is it and how do I get it?

Don’t you hate when someone is talking to you, and you have no clue what they are talking about? It takes me back to being a child, and I would just nod and smile until that part of the conversation was over. Sometimes it’s not even a big word! Working as a loan officer, I find we have a lot of seemingly small words that can be just as confusing as the huge ones. I thought I could walk through the basics of a term I use all the time - EQUITY - so that the next time you hear it you will not only know what it means, but you’ll understand how to obtain it, and what you can do with it!

What is it?
Equity is simply the difference between what your possession is worth and what you owe someone else (typically a bank) for it. You can have equity in many different possessions including your home, vehicle, and other valuable assets! If you look at it from the perspective of owning a home, it would be the amount of money you would get if you sold the home and paid off all your loans.

Take the example of your home being worth $200,000 and you owing the bank $125,000. If you sold the house for $200,000, you would give the bank back their $125,000, and you would get the remaining $75,000. That’s the equity you had built up in your home: $75,000.

How do I get it?
Having equity is a good thing. Equity is obtained by owing someone else less money than what your property is worth. This can be done in many different ways including:

• Paying cash for your house or vehicle and not having a loan against it. You instantly have 100% of the equity for your new possession!
• Making a cash down payment when buying your home or vehicle. When buying a house, the downpayment can be a lot of money, but it is all going towards growing your equity in your house. While you might not have as easy of access to it as when it was in your bank accounts, that cash is an investment that you can access if needed through a refinance or sale of your house.
• Making your monthly payments and lowering your balance owed to the bank over the life of your loan. With CSB, biweekly and weekly payments help you build your equity even quicker as it applies additional funds towards your loan balance!
• Refinancing for a lower rate or term. Both how long you have your loan for and your interest rate on it will impact how quickly you can build your equity.

Now I have it, so what exactly can I do with it?
Equity can be used for many things, and what you choose to do with it is entirely up to you! Do you need a new roof or flooring in your home? Maybe you’d like to install that swimming pool you’ve been dreaming about since you moved in! Sometimes it can be those unforeseen expenses when you’re extra thankful for this financing option. Whatever it is, being able to use the equity in your house for these scenarios will save you money over going a different route.

Don’t hesitate to reach out to one of our local CSB lenders today! There are many financing options for pulling equity out of your property including a cash out refinance, home equity loan, and home equity lines of credit (HELOC), and we can help you identify what’s right for you! It’s time to put your equity to work for you!

Written by Lindsay Shook

Vice President & Market Development Officer at Community State Bank
lindsays@csbemail.com
260.925.3567
February, 2024