The Ledger | Third Quarter 2017

How to Refinance Your Mortgage

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are several reasons you may consider refinancing your mortgage. The most common reasons include the opportunity to obtain a lower interest rate; the chance to shorten the term of the mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage; and the desire to consolidate debt. However, the number one reason most consult with Texas Gulf Bank on this subject is to lower monthly payments.

If you are seriously considering refinancing your home, here are a few steps to help you prepare:

Determine your goal for refinancing. Maybe you are willing to accept a higher monthly payment if it shortens the amount of time to pay off your mortgage. Or, perhaps a lower monthly payment is your goal and you are willing to accept a longer loan period to achieve it. Knowing your goal from the beginning will help you easily determine if the decision you are making aligns with your desired outcome.

Know your all-in costs. Texas Gulf Bank’s mortgage refinance calculator can give you a good idea of what to expect. How long will it take to break even on a mortgage refinance? That depends on a multitude of factors including your current interest rate, the new potential rate, closing costs and how long you plan to stay in your home. Once you input the data, the tool will calculate your monthly savings, new payment, lifetime savings and the number of months until you break even, based on the costs of your refinance. This calculator can help you sort through the confusion and determine if refinancing your mortgage is a sound financial decision.

Gather paperwork. A refinanced mortgage is generally reserved for well-qualified borrowers—those homeowners with sufficient income, good credit and typically at least 20 percent equity in their homes. As such, borrowers must prove their mortgage worthiness by submitting the designated documents to the prospective lender. Rather than going back and forth with your lender, it is smart to gather the necessary paperwork ahead of time. A few examples of what you will need include proof of income – pay stubs, tax returns, W-2’s and/or 1099’s, statement of outstanding debt, and statement of assets.


Why Small Business Owners Need to Plan for Retirement

Most small business owners tend to invest extra wealth back into the business. Saving for retirement is a secondary thought after growing a business. However, waiting too long to invest in your golden years could be detrimental.

According to a July 2016 BMO Wealth Management survey of 400 small business owners, only a fraction of America’s entrepreneurs are prepared for retirement. There is no requirement for independent contractors and small business owners to set up a retirement plan. Therefore, many keep delaying it, thinking that they can start contributing to a small business 401(k) when the business improves. Business owners must also face the reality that if they are relying on the hope that the business will sell to fund retirement, there is a possibility of a sale not coming to fruition. So how can you ramp up your savings for retirement?

Know your personal numbers. What is your current financial status? How much will you need to live on in retirement, especially when the business isn’t picking up the tab for some expenses? Get a sense of what your living costs might be when you quit working so you can get a true understanding of the amount of money you need to set aside for retirement.



A Financial Toolkit for Victims of Hurricane Harvey

The following information was pulled from an article on the Consumer Financial Protection Bureau website.

When a catastrophe like Hurricane Maria, Hurricane Irma, or Hurricane Harvey happens, your world can be turned upside down. During these tough times, it may be difficult to know who to trust and where to look for guidance and assistance, as well as what financial steps to take as you begin recovering. These are a few organizations that can help immediately after a natural disaster:

Once your most urgent needs are addressed

Start thinking about your financial obligations once you have addressed your most urgent needs, especially if you have experienced damage to your home or property. We have five steps you can take to help you secure your home and finances:

  1. Contact your insurance company. If the storm damaged your home, car, or property and you have insurance, you can start the claims process by calling your insurance company. If you plan to claim damages related to flooding or storm damage, you should verify that you have the right kind of coverage. If you don’t have a copy of your insurance policy, you can ask for one. Ask for an electronic copy of your policy—receiving physical mail may be difficult following the flood. That will help you verify your coverage. If possible, take photos and videos of your damaged property. Documenting damage will help you with your insurance claim.
  2. Register for assistance. Registering online at www.DisasterAssistance.gov is the quickest way to register for FEMA assistance. If you are unable to access the internet, you can also call at 1-800-621-3362.
  3. Contact your mortgage servicer. Talk to your mortgage lender right away and tell them about your situation. Damage to your home does not eliminate your responsibility to pay your mortgage; however, your lender may be willing to work with you given the circumstances. If you don’t have your lender’s contact information, your monthly mortgage statement, or coupon book with you, you can search the Mortgage Electronic Registration Systems (MERS)  or call toll-free at (888) 679-6377 to find the company that services your mortgage.
  4. Contact your credit card companies and other lenders. If your income is interrupted or your expenses go up, and you don’t think you will be able to pay your credit cards or other loans, be sure to contact your lenders as soon as possible. Ask your creditor to work with you. Explain your situation and when you think you might be able to resume normal payments. It is important to make those calls before your next payments are due
  5. Contact your utility companies. If your home is damaged to the point you can’t live in it, ask the utility companies to suspend your service. This could help free up money in your budget for other expenses.

After contacting the companies related to your most urgent financial needs, take a look at your bills and set priorities—including your mortgage, rent, and insurance payments. Given the countless people experiencing distress from the flooding, contacting your creditors may be difficult. Be persistent and make every effort to reach them.