Loan Definitions — Explained

Clarifications of some tricky loan-related words

A loan is a certain amountPic_02(113) of money that needs to be repaid. Whenever you receive or need to take out a loan, you may hear certain phrases or words pop up that you’re not aware of. Here’s what some of them mean:

Amortization: The time when you pay off debt at the end of a fixed period. So, for example, if you took out a 15-year loan for $30,000, $2,000 would be recorded each year as an amortization expense.

Annual Percentage Rate (APR): If you’re paying or receiving interest on a loan, the APR is the percentage rate of the interest.

Equity: The amount of money between how much your home is appraised for and the dollar amount in mortgage that you still have to pay off. For example, if your home is appraised for $300,000 and you’ve paid off $100,000, you still owe $200,000. If you minus the balance owed ($200,000) from the appraised value ($300,000) you’re left with your equity: $100,000.

Escrow: Money being held by a reliable third party for the buyer and seller. The third party takes care of everything when it comes to closing or settlement, from paperwork to disbursement of funds.

Interest: When you borrow money and pay it back over a period of time, you have to pay interest for delaying the repayment — typically an annual percentage (see APR).

Principal: The amount of money remaining on a loan, not including its interest.

Private Mortgage Insurance (PMI): When you buy a house, if your down payment is less than 20 percent, you’re required to pay a PMI payment. This payment protects the bank lending the mortgage in the event you’re unable to make payments on your home in the future and you have to file for a foreclosure. Once you’ve paid 20 percent toward the principal amount of the loan, you no longer have to pay PMI.

Points: Points are a type of pre-paid interest — one point being one percent of the total amount of your mortgage loan. There are two types: discount points and origination points. Discount points are paid during closing, which will give you a better interest rate for your loan’s duration. With origination points, a broker processes the loan, and you and the lender pay for the service.

If you ever have any financial questions or need further explanation about any financial topic, don’t hesitate to call or stop in.

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How to Recycle Everything

A quick guide to ditching your stuff

Each year, thousands of itemsrecycling1 are thrown into trash piles and landfills, creating environmental headaches for future generations. Consider recycling or passing on your unwanted items to others who may have a need for them. Future generations will appreciate a cleaner environment, and others will appreciate receiving items they may need.

Because technology changes quickly, you may find your family has electronic equipment (mobile phones, computers and computer parts) collecting dust and taking up space. Before throwing away your old device and buying new, consider upgrading your current one. Often your computer hard drive or software can be upgraded to current technology without having to buy a whole new device. If it’s not possible to upgrade, the Environmental Protection Agency (EPA) provides a list of companies who offer buy-back programs or electronics recycling programs where you can dispose of your items safely.

Recycle your old furniture by giving it to someone who has a need for it. Donate your clean, good quality furniture items to non-profit organizations, such as Goodwill or the Salvation Army. Sell or donate your items to others on Craigslist, eBay, or local Facebook groups. Pass down items to family members or friends.

Before pitching your old clothing, consider giving it a second home. Sell your unwanted clothing at a garage sale, or take your items to a local consignment shop. If you don’t want to sell your clothing, consider donating it to a local thrift shop, clothing bank or family in need. If items are stained or torn, cut them up and use them for cleaning rags.

Plastic bags
While plastic shopping bags are convenient, there are now many homes overflowing with excess bags. To prevent bags from coming into your home, consider using reusable shopping bags when you shop. When you do have extra bags, drop them off at retail locations that collects plastic bags for recycling. Can’t find a location near you? Check the web site, which shows the latest on plastic bag legislation and recycling drop off points.

Aluminum cans
If you have a recycling program in your neighborhood, aluminum cans are usually accepted. However, you can go one step further and collect your aluminum pop tabs and donate them to help the Ronald McDonald House Charities, a nonprofit organization which houses families while their children are in the hospital. Visit to learn more about the program.

Construction and building supplies
Have a garage full of usable, but unneeded, building supplies? Consider donating items to your local Habitat ReStore with your nearby Habitat for Humanity affiliate. The items are sold at a discounted price to help lower-income families, and the profits raised through the store help build homes.

Before throwing unwanted items in the trash, be creative. Recycle your old items to save them from the landfill, or sell them for extra cash. Help another family or local nonprofit organization. Each small effort makes a larger impact on the environment for future generations.

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The Financial Skills Employers Wished You Had

Find out the financial-related skills your boss is after

When entering the workplace,Pic_01(28) employers are on the hunt for workers with a wide variety of skills — and expertise in the financial realm fall heavily on the list.

”Knowing which skills are in high demand can help guide decisions around education and work experience,” says Brent Rasmussen, president of CareerBuilder North America. “It can help workers identify where they can potentially transfer their current skill sets or supplement their education to prepare for future opportunities.”

So whether it’s being adept in computers or the ability to manage finances, here are some of the top financial skills that your employers are likely seeking:

1. Proficiency in computers and technology.
Knowing multiple platforms — from basic programs like Microsoft Word to devices such as tablets — is useful in any career, and one that many employers deem vital.

“The most sought-after skill-sets for recruiters are becoming less and less about proficiency in specific processes and coding languages and more about how you think systems through and work within the context of the team,” says Rich Milgram, CEO of career network Beyond. “While having IT knowledge is important, knowing when and how to apply it is even more important.

“Learning a technology is the easy part,” Milgram says. “Having the mindset to apply it, having the mindset and logic to process it, being thorough and detail-oriented while doing so, these are the critical skills.”

2. Problem solving.
Having good problem-solving abilities means you excel in both logic and creativity in order to produce a workable solution.

“Globalization and advancements in technology means the productivity and efficiency demanded from workers is higher, adding pressure to new workers,” explains Jody Miller, CEO of Business Talent Group. Those good at solving problems are able to think strategically, and bring to the table both ideas and solutions — and that’s the key to making your boss and company money.

Additionally, when your employer knows you excel in problem solving, they’re able to trust you with important projects necessary to the company’s success.

“Leaders don’t want to micromanage their employees, but often they are forced to because the employees lack critical thinking skills,” says executive coach and leadership consultant Dave Gambrill. “Ideally, you’d like to say, ‘I trust you to make decisions that are good for the business,’ and let people come up with their own solutions.”

3. Money management.
Knowing how to manage money on the job means that you’ll succeed and running into cash issues will be few and far between. It requires discipline, responsibility and independence — all key skill sets in the workplace.

“People need to have a plan for their money,” says Steve Bucci, debt adviser of Bankrate and president of Money Management International Financial Education Foundation. “If you don’t have a plan and the other person does have a plan, they’re going to win because they have the discipline, goal and desire and you’re just sort of playing by ear.”

4. Math skills.
Whether you’re ordering supplies, need to follow a budget or just want to sort out your paid time off, basic or even advanced math skills are essential in the professional world. Another example: Many businesses track their revenue with mathematical charts and tables, measurements or financial calculations. By being able to comprehend the mathematics in these data, you can get the job done quicker and more efficiently.

5. Experience.
Above all, having previous work experience is one of the finest accomplishments to have under your belt.

“You don’t want to hire someone who needs extra training and won’t be able to hit the ground running and get the job done,” explains Jody Miller, CEO of Business Talent Group. If you’re just entering your field, be sure to take on a few internships or other work if you’re lacking experience.

Study up and you can get to the head of the work class.

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The Pros and Cons of Leasing a Vehicle

What do you need to know for your next vehicle?
There’s a lot to consider when you’reCarKeyFob on the market for a new vehicle. Once you’ve decided on the perfect make, model and color, you also have to find the best way to finance your new car. In order to determine if leasing is right for you, consider the following pros and cons:


You get more for your monthly payment – When you lease a vehicle rather than purchase one, the same monthly payment can typically get you a better vehicle. This is because when you lease a vehicle, your monthly payment only covers how much the vehicle’s value depreciates over the life of the lease, rather than the entire sale price.

“This is one of the biggest single attractions of car leasing for many people,” states Eric Peters from AOL Autos. “A car (or truck) that might cost you $500-$600 per month to buy might cost $100 per month less with car leasing.”

Save money on the down payment
– Another of the most attractive features of a lease is the fact that leasing typically requires little to no down payment. Although choosing a small or nonexistent down payment when you sign your lease can set you up for higher monthly payments, it may still be the right choice for people who need a vehicle right away and don’t have the ability to wait to save up for a down payment.

Better warranty coverage
-Three years is a typical lease term, and it’s also the duration of many new vehicle’s bumper-to-bumper warranty coverage. This means that if you lease, your car may be covered the entire time you drive it. Once the warranty runs out, you’ll be ready to lease a new vehicle, potentially saving you money on repairs that arise after the warranty period.

Newest technology
– Leasing a new vehicle every few years means that your vehicle will never lack the latest technology. This makes leasing a great option for tech lovers and drivers who simply like to have the newest features in their vehicles.

Tax benefits
– There are several tax advantages that come with leasing a vehicle. When leasing, you rid yourself of the upfront sales tax.“If you own a business and use the vehicle only for business purposes, you can claim it as a tax deduction,” according to the DMV.


Limited mileage – One of the biggest drawbacks of leasing a vehicle is that the lease will specify a maximum number of miles that you can drive per year. For example, if your three-year lease has a yearly 12,000-mile limit, this means you have 36,000 total miles. At the end of your lease, if you have exceeded that limit, you will need to pay a fee for each mile over the limit. These fees can be substantial, so it’s important to consider how much you typically drive per year before leasing.
Potential fees for modifications or damage – Another disadvantage of leasing is that you likely won’t have full freedom to modify the vehicle without incurring a fee. This means you may not be able to install a better audio system or make other improvements. It can also mean that you could be charged a fee if you alter the appearance of the vehicle in a negative way, such as by harming the paint with a bumper sticker.

You won’t build equity – “Since you’re basically renting the car when you lease, you’re not building any equity,” states Liz Opsitnik from U.S. News. “This is similar to renting an apartment versus buying a condo or house.”

No end to the payments
– When you lease a vehicle, you will need to make a payment every month. If you purchase your vehicle, however, you will be free from monthly payments once you pay off the full purchase price of the vehicle.

Higher credit scores may be required
– “Another potential downside to leasing is that usually only shoppers with good credit scores will qualify for a car lease,” states Opsitnik. “If your credit score is less than perfect, you may want to consider buying a used car.”

If you’re not able to afford the big down payment and monthly payments associated with buying a new vehicle, but don’t want to deal with the downsides of leasing, purchasing a used vehicle with affordable financing from your local financial institution may be your best bet.

In order to find out more about purchasing a used vehicle, please give us a call today.

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What is an Investment Strategy?

How to understand and evaluate investment strategies
Investing is similar to cooking,investment no two people go about it in exactly the same way, and great results can be had from very different techniques. The following information about investment strategies can be useful whether you’re interested in learning how to develop your own strategy or if you want to be able to communicate with your financial adviser more effectively.

Each investor spends a significant amount of research and time considering a client’s future capital needs, comfort with risk and individual goals in order to form a plan of attack that guides investment choices. This is known as an investment strategy. An investment strategy typically includes guidelines for asset allocation, assessing risk and determining when to buy and sell.

“Investment strategies can differ greatly from a rapid growth strategy where an investor focuses on capital appreciation to a safety strategy where the focus is on wealth protection,” according to Investopedia. “The most important part of an investment strategy is that it aligns with the individual’s goals and is closely followed by the investor.”

If you’re looking to form an investment strategy for making your own investments, Investopedia has put together the following four questions that you should answer:

Can you write down your strategy?
Writing down your strategy ensures that it is complete and that you fully understand what your goals are and the framework that you will follow to achieve them.

“Writing down your strategy gives you something to revert back to in times of chaos, which will help you avoid making emotional investment decisions,” according to David Allison from Investopedia. “It also gives you something to review and change if you notice flaws, or your investment objectives change.”

Does your strategy include a way to determine if an investment is over or undervalued by other investors?

Examine ways that you can determine if an investment seems to be over or undervalued by other investors. This may be special industry knowledge, or any other competitive advantage that sets you apart as an investor. Once you figure out your advantages, use them to choose investments that others may miss.

How will your strategy perform as the market changes, and when will it do poorly?

Looking ahead to determine when you think your investment strategy will do poorly can help you form action plans for those times. It can also prevent you from acting rashly and making bad decisions.

“As market trends and economic themes change, many great investment strategies will have periods of great performance followed by periods of lagging performance,” states David Allison. “Having a good understanding of your strategy’s weaknesses is crucial to maintaining your confidence and investing with conviction, even if your strategy is temporarily out of vogue.”

How will you measure the effectiveness of your strategy?
If you don’t have parameters in place for measuring the success of your strategy, you won’t be able to figure out when to make changes or determine what those changes should be.

Even if you aren’t forming your own strategy, it’s important to understand the strategy a fund manager uses. This will help you choose the best fund manager to meet your personal goals.

“The criteria that mutual fund managers use to select their assets vary widely according to the individual manager,” states Dan Weil from Bankrate. “So when choosing a fund, you should look closely at the manager’s investment style to make sure it fits your risk-reward profile.”

Top-down and bottom-up investing strategies are two of the most popular. Top-down involves picking assets that fit into an overarching theme of the market. An example would be buying stocks across the board based on the hypothesis that the market will improve greatly in the near future.

This strategy has the benefit of providing a big payout when the overall theme is correct because all investments were chosen to match that theme. On the other hand, there is no guarantee that the investor was right about the theme, and even if the theme was correct, the investor might have chosen the wrong investments to support it.

Instead of looking at the overall market and fitting investments into the general picture, bottom-up investors choose investments based on their individual performances and strengths. These investments are considered good or bad, regardless of the overall market.

“A bottom-up manager benefits from thorough research on an individual company, but a market plunge often pulls even the strongest investments down,” states Weil.

There are countless investment strategies, so be sure to talk to your financial institution about any questions you have. It’s the best resource for finding your perfect investment strategy. Please don’t hesitate to give us a call with any questions.

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How to Do a Home Energy Audit

Save money on your future electric bills with an independent review

As the record-breaking winteristock_home-energy_1 weather clears in most areas of the country, many families are experiencing higher-than-usual energy usage. This additional energy consumption not only leads to expensive energy bills, but can be damaging to the overall environment. Consider conducting an energy audit of your home to save on future bills. Many energy providers offer audits to their customers at no charge, but if yours doesn’t, consider spending an afternoon conducting your own home energy audit.

Seal any air leaks
On a chilly or windy day, check every closed window and door in your home to see if you feel air drafts coming through the openings. If you find drafty windows or doors, seal them properly to prevent air from seeping through.

Check insulation
Venture upstairs to your attic and evaluate the insulation there. If there is proper insulation, check to be sure the insulation is still in its intended place and has not fallen or been misplaced. Look closely for wet spots, decay or signs of animals. If there are leaks in the roof, have them fixed by a professional or repair them on your own.

Service heating and cooling equipment
Maintain your furnace and air-conditioner by having them checked by a professional every one to two years. If your current equipment results in large energy bills, consider replacing your units with more energy-efficient, cost-effective units.

Replace light bulbs
Standard light bulbs can result in high energy bills. As your light bulbs burn out, replace them with more energy efficient bulbs for increased savings.

Check appliances and electronics
Check your appliances for energy efficiency. If you have a deep freezer that is almost empty, use the contents and unplug it until you have more food items to store. Unplug televisions and computers at night to lower the use of “phantom energy” (the energy used when items are plugged into the wall, but not turned on). Unplug cell phone chargers when they are not in use.

Keep track of your energy bills
Check your energy bill each month and make note of any major increases in usage. If possible, determine what caused the increase in usage and make changes. Did you run a dehumidifier, operate a window air-conditioning unit, etc.?

Keep track of your energy improvements
As you go through your audit, note any changes you want to make. Write down the date you made any changes, and then re-evaluate those changes when you receive your upcoming energy bills. If you want to use a pre-printed form, provides a printable checklist to keep track of your independent audit and the resulting changes.

Taking time out of your schedule for an independent energy audit is time well-spent. Small, incremental changes can often result in substantial savings in energy usage and a lower energy bill.

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Safe Online Banking

How your financial institution is keeping you safe online

Whether you need to pay a parking ticket, buy a birthday gift or make a utility payment, the ability to make financial transactions online has made so many day-to-day activities easier. Despite the convenience, it can be scary to provide your debit/credit card or financial account information online. As more and more people bank online, hackers are taking notice. Fortunately, financial institutions know just how to keep your account information and your money safe.

Because hackers are always trying to hack into financial institution’s websites, they are continuously improving their technology to keep your account safe.

“In addition, even if hackers are able to steal money from your account, you will still be protected, as [financial institutions] are liable for those stolen funds,” states Rob Berger for MSN Money.

One of the best ways that financial institutions protect your account is by informing you how to keep your account information safe yourself. One of the most common ways that hackers obtain a person’s account information is by phishing — sending an e-mail that tricks people into providing private account information.

Your financial institution will never send an e-mail that requires you to reply with your account number, pin, online login or password. Financial institutions maintain this policy so that you’re immediately able to tell if someone is phishing for your information. Never respond to an e-mail, even if it appears to be from your financial institution, with your account information. Instead, call the number on the back of your debit or credit card or on your financial institution’s website and speak directly to an employee if you’re unsure about the origin of an e-mail.

Another type of phishing scam involves receiving an e-mail with a link that appears to be from your financial institution. If you log into that copycat page, your information may be stolen. Instead of clicking on links within e-mails, it’s best to open a new browser window and type in your financial institution’s website information yourself. Once you’re on your financial institution’s page, you can login and see if you have an alert that matches the content of the e-mail you received.

“Mobile banking is generally considered safe. But online frauds like smishing are gaining some traction,” according to “Smishing occurs when you get a dubious text message from a fraudster posing as a [financial institution] representative.”

You can deal with this threat in the same manner as phishing threats. Don’t call any number that you get from a text. Instead, call the number on your card or financial institution’s website to inquire about the text message.

Many financial institutions have a verification process that keeps track of computers and mobile devices that log into your account, in order to watch out for unusual activity. This can involve a multistep login process that requires you to answer a security question along with providing the correct login information when you use a new computer or mobile device. Talk to a representative of your financial institution to find out what types of security measures are in place so you know what information will be needed if you bank on more than one computer.

While phishing and other online scams may make online banking seem scary, it can actually be one of the best ways to prevent fraud. Online and mobile banking makes communication between you and your financial institution faster and more efficient than ever, and financial institutions are using this fact to prevent fraud.

Many financial institutions send out alerts to your phone or e-mail address if a charge is made that is unusually large or outside of your typical geographic area. Some even offer a multistep process for large purchases, such as confirming a pending transaction through an app or text.

Just as online banking helps your financial institution prevent fraud, it helps you protect yourself. Because financial transactions are reported online instantly, it’s easy to keep an eye out for suspicious charges.

With traditional banking, you have to wait for a paper statement in the mail.

“That gives fraudsters ample time to spend your money,” according to “With online banking, you’ll know when a charge is recorded with the [financial institution], especially if you set up cell phone text or e-mail alerts.”

If you would like to discuss online banking, please don’t hesitate to give us a call.

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