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Should I Refinance My Home?

Person using calculator to discover if they should refinance their home.

Whether you’ve changed jobs or your family has grown since you first purchased your home, you may discover that your mortgage no longer fits your financial needs. Instead of tackling the lengthy process of selling your home and finding a new one, consider refinancing it.

Refinancing sounds fairly simple: You apply for a new home loan, which pays off your original one and leaves you with just one loan and payment. However, much like buying a home, refinancing one is a big decision—and it depends on a lot of different factors that could cause you to lose money if you don’t make the right refi decisions.

Wondering if you should refinance your home? Discover if it’s the right choice for you and your family with Landmark National Bank.

Benefits of Refinancing

While there’s a wide variety of factors that go into refinancing, there are many benefits to choosing this option for your home. By refinancing, you can make certain adjustments to your mortgage that fit your budget, such as lower interest rates or shortening the term of your mortgage.

Want to learn more about the benefits of refinancing? Contact Landmark National Bank’s lending experts— they’d be happy to answer any questions you may have about refinancing.

 Lower Interest Rates and Smaller Payments

The most common benefit of a refi is receiving a lower interest rate for your loan payments, so you can stay in the home you love without hurting your finances. In addition to a lower interest rate, you may be able to shrink monthly payments for your mortgage. This can provide a much-needed break for your budget.

Shorter Term Length

If you’re considering moving to a new home in a few years, refinancing can also help you shorten the term for your mortgage. If you currently have a 30-year mortgage, you could refinance for a 15-year mortgage, which can lower your interest rate but increase your monthly payments.

Switching to an ARM or Fixed-Rate Mortgage

Whether you chose an adjustable-rate mortgage (ARM) or a fixed-rate mortgage when you first bought your house, it may no longer fit your plans for the future. If you’re rethinking your choice of mortgage, refinancing your home lets you switch to a more manageable option for your current lifestyle or situation.

Factors to Consider Before Refinancing

Before diving into refinancing your home, it’s crucial to calculate the factors of refinancing. If your credit score is less-than-thriving, for example, you may find yourself struggling to get your refinancing plans off of the ground.

Luckily, many factors of refinancing your home reflect the factors of buying a home. When you apply for a refi, these are some things you should consider:

  • Home Equity – If you have little to no home equity, refinancing with a conventional loan can be difficult. However, you can refinance with a federal housing administration (FHA) loan even if you have no equity. In addition, if you’re a veteran and your previous mortgage was a VA loan, you will also qualify for an Interest Rate Reduction Refinance Loan (IRRRL), or a VA streamline.
  • Credit Score – Credit score requirements vary by lender and your type of mortgage. In general, you’ll need a credit score of 640 or higher for a conventional mortgage refinance. Most lenders currently require a credit score of 660 or higher for government programs.
  • Refinancing Costs – Just like when you purchased your first home, refinancing includes closing costs. From appraisal fees to title fees, expect your home refinance to range from 2% to 6% of your loan amount. Prior to refinancing, it’s important to see how much you will owe in closing costs compared to how much the refinance will save you over time.

What to Expect During the Refinancing Process

Once you’ve looked over the financial factors of applying to refinance, it’s time to get the ball rolling. Refinancing shares some similarities with buying a home, but it’s typically far less complicated. When you’re ready to refinance, you can expect these general steps in the process:

Applying for a Refi

When you’re ready to start the process of refinancing, you’ll apply for a loan with your lender, who will review your income, assets, and other financial information before approving it.

Locking in Your Rate

You’ll have the option to lock your new interest rate to keep it from changing during the process. Rate locks can last between 15 to 90 days.

Beginning Underwriting with Your Lender

During the underwriting process, your lender will verify your provided financial information before taking the refinancing process further. Additionally, they will have a licensed appraiser visit your home to appraise its value.

Closing the Deal

After they’ve completed underwriting, your lender will send you an initial closing disclosure, which contains the numbers for your new loan. After reviewing the details, you’ll sign the document and return it to your lender. Generally, three business days later, you will sign all your official closing documents. Remember, when refinancing your primary residence, it is a federal law to allow you an additional three business days to ensure this loan is right for you. If not, you have the right to cancel the transaction during the three-day rescission period.

Landmark Can Help You Refinance Your Home

If you believe refinancing your home is the best option for you and your family, Landmark National Bank can help you chart this new territory. As one of the top lenders in Kansas, our team of home loan specialists is dedicated to helping you find the refinancing solution that best fits your needs.

We know how valuable your time and money is to you, which is why we always strive to keep costs low and make the refinancing process as easy as possible. Discover how Landmark can help you plan for the future of your home today.

Buying Your First Home? Here’s What You Need to Know.

Family sits on the front steps of their brand new home.

From landing your first job to the day you get to retire, there are a lot of important milestones in your life. One of the most exciting life events, however, is unlocking the door to your very first home. But, while house-hunting for the first time is a fun and exhilarating experience, there are many things first-time homebuyers should know to avoid financial frustration and unnecessary roadblocks in the future.

Discover what you should know as a first-time homebuyer with this helpful guide from Landmark National Bank.

Make Sure You Can Afford a Home

Before you start scrolling through Zillow or setting up showings at your dream properties, make sure you can afford the unexpected costs associated with a home. While the idea of owning your own property is often more appealing than renting, it comes with a variety of extra expenses that rentership typically covers, such as utilities and home repairs. So, to ensure you have enough to cover homeownership, it is important to figure out dollar amounts for your:

  • Earnings after taxes
  • Total debt (i.e., car loan, student loans, credit cards, etc.)
  • Average monthly expenses (i.e., groceries, gas, cell phone bill, etc.)
  • The amount you would like to save each month

Once all these expenses are calculated, you are in a better position to tailor your budget to include a mortgage payment. While your current budget may be able to cover the cost of renting, it’s crucial to calculate how your current financial situation will cover owning a home. Typically, it is best to keep the combined cost of your mortgage, taxes, and insurance between 25 and 30 percent of your income.

Reduce Your Debt

Before buying your first home, go the extra mile to prepare financially by calculating how you can lower or eliminate your debt. By having little to no debt, you can show a lender that you are in a stable place to purchase a home. In addition to lowering your debt, it is also wise to create an emergency fund in case something happens during your home purchasing process.

Be Ready with a Down Payment

By having a down payment ready to go before you start house hunting, you can lower your monthly principal and reduce the amount you owe on the home. Typically, home purchasers are required to come to the table with 20% of the property’s value, but there are many first-time homebuyer programs that reduce the down payment cost. In fact, many first-time buyers can qualify with as little as 3% down. In addition, veterans applying for a Veterans Affairs (VA) loan or first-time buyers applying for a Rural Development (RD) loan can qualify for no down payment!

When choosing a way to cover your down payment, keep in mind that your home is an important investment. While properly saving money for the down payment may require more patience, it can save you financial frustration in the future.

Find the Best Mortgage Loan Type and Payment Options

Oftentimes, you will need a loan to purchase a home. In fact, getting pre-qualified for a mortgage loan is a key part of deciding if you are ready to buy a home. Your pre-qualification can help ballpark your house-shopping budget.

Mortgage Loan Types

Before choosing a mortgage, it is crucial to understand the differences between a fixed-rate mortgage and an adjustable-rate mortgage. Discover the following pros and cons of each mortgage type:

  • Fixed-rate Mortgage: Charges set interest rate that does not change.
    • Pro: Borrower is protected from spikes in mortgage payments
    • Pro: Easy to understand
    • Pro: Does not vary from lender to lender
    • Con: Difficult to qualify for when interest rates are high
  • Adjustable-rate mortgage: Charges interest rate that constantly changes.
    • Pro: Cheaper than a fixed-rate mortgage
    • Pro: Often easier to apply for a larger loan
    • Con: More complicated than fixed-rate
    • Con: Monthly payments can change frequently

Choosing a Realtor

After you have been pre-qualified for a mortgage and have a general home-hunting budget, it is important to choose a realtor who will consider your needs and wants while finding a home that is still affordable.

Additionally, a realtor can help you negotiate the contract terms of your new home and guide you through the complicated paperwork. A Realtor can also help you navigate through the final stages of closing the deal on your home.

Get Your New Home Inspected

When you have found the home that is right for you, schedule a thorough home inspection. While you do have to pay for a home inspection, it is worth the cost. The inspector may find hidden issues that an untrained eye may miss, such as termites, mold, and foundation issues.

In addition to saving you thousands of dollars in home repairs, a home inspection can help you renegotiate the asking price for the home, or help you leave a deal without losing money.

Avoid Major Life Changes During Escrow

After your offer for your new home is accepted, there is a stage called “escrow.” During this period before closing on your house, your lender will examine your documents, finances, and other information to see that are all are in order. To help your escrow period run smoothly, remember the following:

  • Do not buy or lease a car
  • Do not buy furniture on store credit
  • Do not change jobs
  • Do not change your marital status

Prepare For Your Move After Closing

When it is time to close on your home, you will sign your final papers and complete the sale. Before you move into your new home, be sure to change your address with your bank, utility providers, and other important parties. Taking care of your address change quickly can help you avoid missing important mail or bills.

Purchase Your First Home with Help from Landmark

If you’re not sure where to start when it comes to choosing a mortgage, Landmark National Bank offers a wide variety of mortgage services, including:

  • First-Time Homebuyer Programs
  • Conventional Fixed-Rate Mortgages
  • Adjustable Rate Mortgages (ARM)
  • VA, FHA, USDA Programs
  • Jumbo Loans

When you are ready to buy your first home, we are here for you. Our team of home loan specialists is available and happy to help you find the mortgage solution that is right for you. Take the first step toward your first home and find a Landmark National Bank branch near you today. Ready now? Reach out to a mortgage lender near your market area to begin the pre-qualification process.

How to Find the Best Bank for Your Small Business Loan

Business banker goes over business plan with small business owner.

From putting in late-night hours to using your own personal funds, getting your small business idea off the ground is no easy feat. But, once your business plan is finalized and it comes time to present your loan request and acquire funding, how can you decide which bank is best for your small business?

While a bank will evaluate you on all aspects of your business plan, it is also important that you evaluate the bank to ensure you can maintain a long-term working relationship. Rather than basing your decision solely on your bank’s current interest rate, you should focus on the future of your business and how a successful partnership will lead to growth and success.

Here at Landmark National Bank, we have compiled a list of the most important questions to ask your commercial banker when evaluating a potential partnership for a business loan.

9 Questions to Ask Your Small Business Loan Lender

When determining the best bank for your small business loan, make sure to ask all the questions you need to. A commercial banker should be receptive to your concerns, and their answers should help you decide if the partnership is right for you and your future goals. Also, do not forget to trust your gut. Your instincts are an important part of the process, as you know what is best for your business.

1. What are your primary responsibilities and goals with this partnership?

Along with general responsibilities surrounding your loan request, your commercial banker should be more than someone you use to complete a transaction. He or she should have goals that align with you and your business.

Simply put, you will want a bank that is more than just a “money chucker.” The right bank should add unique value to your business outside of the transaction and interest rate.

2. What types of commercial industries and businesses does the bank work with?

It is important that your bank has experience lending money to businesses in your industry. Their understanding of your market and insider knowledge will help you navigate unforeseen situations and growth opportunities.

3. What is your local business lending experience?

You may find it important to have local decision-makers that can better understand your business and the community you serve. These local lenders may know your market better than a corporate banker on the other side of the country. Also, when considering loan decision timeframes, you may want a quick, localized loan decision to take advantage of a timely opportunity.

4. What is the bank’s rating for financial safety and soundness?

A bank’s financial safety and soundness are important, as you want to know that your bank will still be there to serve you in the future. A great source to research bank safety and soundness is BauerFinancial, as they provide star ratings based upon financial strength and longevity.

5. How will you gain an understanding of me and my business?

The more your banker knows about you, your business idea, and your business plan, the better they will be able to tailor solutions for you. Having honest conversations about your financial health early in the loan process will ultimately improve your business loan and help you reach your goals.

6. Will I have a primary point of contact?

 Ideally, your commercial banker will not change on a transactional basis. You will want to build a relationship with your banker for them to get to know your business and provide services and suggestions that fit your long-term plan.

7. How does our banking relationship evolve past our initial transaction?

Banking is always evolving. Having a commercial banker sit down with you on an annual basis to go over those changes, and how they can benefit your business, keeps you on the leading edge of cash flow management.

8. What happens if I have difficulty making my payments on the loan?

While you expect to be successful, adversity can strike at any time. It is important to understand what will happen if difficulties arise and whether your bank will work with you through the tough times.

9. How will you promote my business as a customer of the bank?

Banks work with many different businesses, and some banks love to facilitate introductions and promote your business to other clients. Find a bank that will be a cheerleader for your business and help you expand your network.

Apply for Your Small Business Loan with Confidence at Landmark

When you partner with Landmark National Bank for your small business loan, our commercial bankers are here to help you through every step of the process. With local lending expertise and a drive to see you succeed, we are happy to work with you through all your questions or concerns.

Plus, with over a century of experience and a 5-Star rating from BauerFinancial, you can feel confident that you are in good hands. Don’t put off your small business project any longer—find a Landmark National Bank branch near you and reach out to one of our friendly associates.

 

How to Ask for a Loan from Your Bank

Small business owners goes over business loan documents with commercial banker.

Building your own business takes time, commitment, and perseverance in today’s economy. From developing a comprehensive business strategy to getting your final product or service buttoned up for your customers, it takes research, prep work, and working capital to realize your passion and become your own boss. But, once you have your business plan finalized, just how do you go about presenting your idea to secure the funding you need?

At Landmark National Bank, we know it might seem daunting at first to present a loan request for your business plan, but we are here to help you pitch your idea like a pro. With this guide, we will prepare you for a meeting with one or our friendly, knowledgeable commercial bankers—giving you the confidence you need to walk through our doors and showcase all that your business has to offer.

Present Your Loan Request with Confidence

When it comes to presenting a loan request for your business, there are a few key strategies that will help show off your industry expertise, experience, and passion, including:

Building an Open Relationship

The foundation of requesting a loan for your business starts with building a strong relationship. From having honest conversations to bouncing ideas off one another, a good working relationship between you and your commercial banker relies on open communication and a strong focus on what will make your business the best it can be. At Landmark National Bank, our commercial bankers are passionate about helping you find success, so it’s important to be upfront about your situation and your future goals right from the get-go.

Requesting a Loan

 When you meet with one of our commercial bankers, he or she will want to know a little about you, your background, and your business. Your banker will need to understand some general information about your request, such as:

  • How you plan to use the money
  • The amount of money you are requesting
  • Your desired loan terms
  • How you plan to pay back your loan
  • And collateral to be used

You may have this information ready in writing, or you can verbally communicate these facts to your banker. Remember, it is important to be prepared with this information before your meeting at Landmark National Bank, as it lets your banker know that you are serious and have put the time and effort into your plan.

Evaluating Your Proposal with the 5 C’s

Once your commercial banker has all the information he or she needs about your request, it will be evaluated against the 5 C’s—which include character, capacity, capital, collateral, and conditions.

1. Character

Your commercial banker will take a careful look at your character. A borrower’s character is generally considered the most important factor in the lending process. Are you trustworthy and honest? Do you have integrity? In your meeting, make sure to tell the truth, good or bad. You can make all the money in the world, but if you do not make good on your promises, it will be difficult to establish a trustworthy relationship.

In addition, your banker will want you to understand the risks associated with your business and discover if you have the industry-related experience to mitigate them. Make sure to highlight all your experience in your line of business and how it relates to your future endeavors. For example, a hairdresser wanting to open his or her own hair salon will be more likely to acquire funding than a hairdresser wanting to open a construction company.

2. Capacity

Your financial ability to meet your debt obligations is your capacity. You may hear your commercial banker refer to “primary source of repayment” and “secondary source of repayment.” For example, if you are opening a gym, your primary source of repayment will be the income generated from selling memberships and other operating revenues.

Typically, a business will want to generate about $1.20 in operating cash flow for every $1.00 of debt payments. This is where a cash flow projection will come in handy. Think about a year’s worth of operations and put a number to the revenue and expenses you expect.

3. Capital

Your “skin in the game” is your capital. This can be from you directly or an investing partner. The more capital you can bring upfront, the better chance you have at being successful in securing a loan. Simply put, the capital funnel into your project illustrates your commitment to the business.

Depending on the type of financing you are seeking, a bank is going to want you or investors to provide at least 20% of the total project cost upfront. However, there are Small Business Association (SBA) loan programs that can help reduce the capital investment to 10%, but specific requirements must be met. Be sure to ask your banker if you meet SBA loan program qualifications.

4. Collateral

The asset that secures your loan is the collateral. Collateral is usually what the proceeds of the loan are used for and can be anything from accounts receivable, inventory, cash, equipment, or real estate. Collateral is usually considered as the secondary source of repayment in case the primary source of repayment fails.

In most cases, Landmark National Bank will secure a loan with an asset that has the same useful life as the length of the loan. For example, a 15-year loan will be secured by real estate and not inventory that will turnover multiple times a year.

5. Conditions

The current state of the economy and trends in your industry are the conditions. While these conditions can be out of your control, they will still affect your ability to repay the loan. You will want to define your market area and describe how those outside factors affect your business plan. Be prepared to discuss your competition and how you plan to differentiate your business from those competitors.

 Additional Information You Will Need

In addition to bringing your business plan (which should include most of the information mentioned above) to your loan request meeting, your commercial banker will also request to see the following financial information:

  • Three years of financial statements and tax returns
  • Pro forma income statement and balance sheet
  • Three years of personal tax returns
  • Personal financial statement

These documents will help one of our team members grasp your past, current, and future financial positions. If you have any questions about these additional documents, don’t hesitate to reach out to our friendly team today.

Achieve Your Business Goals with Landmark National Bank

At Landmark National Bank, we want you to feel confident presenting your loan request to one of our commercial bankers. Aside from preparing the proper documentation and information for your meeting, it is important to remember to just be yourself. We enjoy doing business with honest, hard-working people who are passionate about their goals. For more information on what we require for your loan request meeting, feel free to find a Landmark National Bank location near you or give us a call today.