Blog

Is it Time to Refinance?

VisionBank of Iowa — Sun, 24 Feb 2013 14:17:22 -0600

When you turn on the TV, open a newspaper, or surf the internet you hear that interest rates are at an all-time low. If you haven’t refinanced yet, now may be the time to do so.

The following is a list of questions that you might consider regarding refinancing.

What do I need to know about interest rates and closing costs?

A general rule, you want to reduce your rate by at least .50%, however that number is highly dependent on two things

Closing costs
Amount of time you plan to stay in your home.

An easy way to calculate if refinancing makes sense is to divide the closing costs by your monthly savings. This will show you the number of months it will take to recoup the amount you spend on the closing costs.

Example:

Closing Costs: $1,500

Monthly Savings: $100

$1500/$100=15 months to recover the cost of refinancing

If the plan is to occupy the home for longer than 15 months then it makes sense to move forward.

Some banks have programs in which they will pay for closing costs. Generally the rate is a little higher rate in exchange for not paying closing costs. This is a good idea for people who may be moving in the short term. It is a way to take advantage of a lower rate, but not be concerned about recovering the costs of the loan.

How do I know if I am getting a good rate?

When comparing interest rates, it is important to know that not all rates are created equal. When extremely low rates are advertised, typically the lender is charging “points or an origination fee” which are forms of pre-paid interest. On point equals one percent of the loan amount.

Paying points represents a calculated gamble on the part of the buyer. There will be a specific point in the timeline of the loan where the money spent to buy down the interest rate will be equal to the money saved by making reduced loan payments resulting from the lower interest rate on the loan. Selling the property or refinancing prior to the break-even point will result in a net financial loss for the buyer while keeping the loan for longer than this beak-even point will result in a net financial savings for the buyer.

What is a reasonable amount to pay in closing costs?

When closing on a mortgage loan there are two types of fees. They are closing costs and pre-paid items.

Pre-paid items are costs that are paid as a part of owning a home such as taxes and home-owners insurance. Most home-owners pay these items with their monthly house payment and those amounts are stored in an escrow account.

Closing costs are the appraisal, credit report, flood certification, title work and underwriting costs. These are the fees that are associated with processing a mortgage loan. Closing costs are the actual costs of obtaining a loan. In Iowa, closing costs generally run $1,500-$1,700.

Even if you have refinanced in the past couple of years, you still may want to talk to a loan officer at VisionBank see if it makes sense for you to refinance again.

Dan Boes is the VP-Mortgage and Consumer Lending Manager. See his profile here

Resilience and the State of the Market

VisionBank of Iowa — Mon, 04 Feb 2013 10:31:15 -0600

I never thought of myself as the “Blogging” type and I am sure my three teenagers would concur with my self-assessment, but yet here I am, writing my first blog.

So what is exactly is a Blog? The dictionary definition list a blog as a noun – A web site on which an individual or group of users record opinions, information etc. on a regular basis or as a verb – add new material to or regularly update a blog. So with that in mind let the blogging begin.

Let’s look back at 2012 and then ahead to 2013 as it relates to the economy at large and the stock and bond markets specifically.

Resilience in the face of adversity seemed to be the theme for 2012. Hurricanes shuttered Wall Street for two days, cut oil production and decimated many families’ homes; the threat of a "Grexit" (Greek exit) from the euro; Europe's record unemployment and second recession in four years; Chinese growth hit a three-year low and there was uncertainty about elections here and abroad and the looming “Fiscal Cliff.” These obstacles slowed the progress of the global economy, but didn't bring it to its knees.

Resilience - Despite cracks in the French/German alliance, the euro-zone took action and gave Greece a reprieve on its debt reduction deadline.

Resilience - Despite growth that went from explosive to merely robust, China chose new leaders for the next decade who are considered to favor existing policies.

Resilience - Rock-bottom CD interest rates and treasury yields dropped even further as the 10-year bond briefly hit a record low of roughly 1.43% in July.

Although the stock market certainly experienced some volatility during the year, the stomach-churning declines of 2011 gave way to 2012's more moderate fluctuations and dramatically improved performance.

The Nasdaq stock index gain helped set the pace for the domestic indices for much of the year and generally remained above its 2007 high, while the Dow--the strongest of the five indices in 2011--took a back seat last year. And Resilience propelled the S&P 500's 13.4% gain for the year which was a definite improvement over the 0.0% gain of the year before.

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In 2013, that Resilience could be tested. Though the last-minute bargain averted a full-scale plunge off the fiscal cliff, headwinds could pick up if Washington can't reach an agreement (again) on the debt ceiling and the spending cuts scheduled to begin in 2013. Like the previous attempts, I am confident Congress and the President will again come to a compromise, but I am sure not without a lot of bluster and grandstanding.

I expect to see improved personal consumption in 2013, improved jobs market, low inflation and an improving housing market which will help the stock market perform well providing opportunity for today’s investor and financial success in maintaining one’s standard of living throughout retirement.

Nathan Brammer is our VP-Financial Advisor with Vision Wealth Management.

Investment Centers of America, Inc, (ICA) member FINRA, SIPC and a registered investment advisor is not affiliated with VisionBank® of Iowa or Vision Wealth Management. Securities, Advisory services and insurance products offered through ICA and affiliated insurance agencies are *not insured by the FDIC or any other Federal Government agency *not a deposit or other obligation of, or guaranteed by any bank or their affiliates *subject to risks including the possible loss of principal amount invested.

Headlines!

VisionBank of Iowa — Mon, 31 Dec 2012 14:13:39 -0600

Headlines! The banking world has certainly been in the mix of the headlines for the last handful of years; locally, nationally, and internationally. From 2007 to 2011, the national economy struggled, which trickled down to every part of our local economy for large and small businesses, individuals, and families, to the banks that help manage the loans for all of these groups.

In central Iowa, many of us feel the recession has, at a minimum, stabilized and we see improvement in the local economy and better yet, a general improved attitude of Joe Public.

Are we finally “out of the woods” and is it all “downhill’ from here with rapid economic growth? Well, I certainly don’t have a crystal ball and we still have that “fiscal cliff” thing pending, so nothing is for sure, but here at VisionBank we certainly have a positive attitude towards our future.

VisionBanks’ five communities, range in size from a small agricultural town, to a mid-size community with a University environment, to a bank located on the fringes of a metro area. This gives our lenders an opportunity to work on many different types of loans and keeps our loan portfolio diversified. Recently, most of our banks’ loan funding has been in owner and non-owner occupied commercial real estate area. This includes a range of properties, from single use commercial space, to multi-family residential real estate properties.

One economic area of the commercial banking world that has been very strong the last few years has been agriculture. Grain prices, specifically corn and soybean commodities, for farmers in central Iowa, have set high market records in 2012. As of October of this year, corn prices were twenty one percent higher than a year ago and sixty one percent higher than two years ago. Soybean prices are twenty percent higher than last year and thirty-nine percent higher than two years ago. These strong prices have in turn made the demand as well as the prices for agriculture real estate land extremely strong. Iowa farmland prices have increased by twenty four percent in the last year and sixty percent since 2009.

With positive growth in the local economy, as well as in our business, it is easy for us at VisionBank to feel excited about what 2013 will bring. We look forward to continued growth in the economy and in turn look forward to helping our current customers grow and we look forward to showing new customers how we can help them to expand their business. VisionBank commercial staff has a wide range of lending expertise and have the ability, capacity, and willingness to complete many types of deals.

Come in today and visit a commercial lender and “see what we can do for you”.

Chris Brinkmeyer is Executive Vice President and head of the Commercial Loan Department at VisionBank.

A Season to Give Thanks

VisionBank of Iowa — Tue, 27 Nov 2012 16:17:50 -0600

When I started at VisionBank (then, Ames Community Bank) 5 months ago, I jumped right into all things related to the name change. As all new employees, I read our strategic plan which listed the bank’s values and the direction that our executive team wanted the bank to head. I read the employee handbook (well…most of it) that spells out the company’s expectations for how we as employees should act. But it wasn’t until a few weeks ago that I was able to take a breath, reflect and start to notice if the bank and our employees actually lived up to the words on those pages.

Well, our employees proved it last month. During the 2012 LIVE UNITED annual campaign our employees stepped up to the plate and proved that our commitment to our communities is not just something the bank says, but it is what our employees are doing which showed by 100% of employees participating in the campaign!

So what does that mean? Well, it means that our employees found it in their hearts (and budgets) to give to a cause that helps those less fortunate that us. It means that during the holiday season, when there never seems to be enough money, our employees made room to support an organization that operates to help those with financial struggles.

What about the bank? What does it mean for us as a business? It means that even though we removed the word “community” from our name, we did not change our focus. It means that we are supporting our employees so that they can help support others. And it means that we have so many things to be thankful for during this holiday season.

We are thankful for a successful name change. We are thankful for a successful year of business, we are thankful for going into 2013 stronger than ever and we are thankful that we have the ability to give back. But most of all we are thankful to our employees for making it all happen. Without their support and excitement through the name change, the name change would not have been the success it was. Without their dedication, we would not have the success that we have experienced and without them we would not be able to serve our communities and customers the way we do.

Thank you VisionBank employees. Thank you for making me proud to say I work for VisionBank and thank you for your commitment to our organization and our communities.

Mary Savage is the Marketing Coordinator for VIsionBank

The ?Special? might not be so special for your funds

VisionBank of Iowa — Thu, 01 Nov 2012 10:43:13 -0600

What is your highest current CD interest rate?

As bankers, we become used to hearing our customers ask this question. Recently, customers have been disappointed with the answer.

We are in a time of historically low interest rates. Regardless of what bench mark rate you examine…the Federal Funds Rate, Prime, or U.S. Government Securities… rates are low. While this is very good news for consumers that need or want to borrow money, it is bad news for investors and savers.

Rate, or APY, is an important component of making an investment decision. However, other factors are also important to insure the best decision is made for your unique situation.

Investors generally consider three factors when choosing where to invest.

1. Rate – Return on investment

2. Risk – Probability that you will lose money

3. Liquidity – Accessibility to your money

Each investment option fairs a little differently on each of these factors and no option gives you a “perfect” combination (high rate, low risk and easily accessible).

Consumers wanting to invest in a CD are typically risk adverse. This means they want to insure preservation of their principal. Banks are a relatively safe place for people to invest in CDs and as long as your bank helps you manage your money correctly, you will not risk losing principal.

Investing in CDs does not automatically mean you are avoiding all investment risk, there are other risks to consider. Anytime a CD investor places a majority of CD funds in one maturity term, the investor is exposed to interest rate risk.

Well…what does that mean?

Let’s suppose a CD investor has $50,000 to invest in a bank CD. The investor shops the competition and determines that bank “X” currently has the best deal. Let’s suppose that bank “X” is currently offering an 18 month CD “special” with an APY of 1.0%. Since this is the best “deal” in the market, the investor makes the decision to purchase that CD. In this scenario, the investor will earn $752.50 of interest over the term of the CD (18 months).

But what happens if during that 18 month term rates rise? The entire $50,000 balance is unavailable to be invested at the now higher interest rate. The investor will have to make a decision: Pay the early withdrawal penalty and reinvest at the higher rate (in some cases this might be financially beneficial) or hope that interest rates stay high until the current 18 month CD matures.

I would propose to this investor that there is a better way. Laddering. By laddering your CD investment, the investor can take advantage of higher CD rates in longer maturity terms at current offering rates and reduce the exposure to interest rate risk over time.

For example, if the investor chose to place $25,000 in a 12 month CD offering a 0.50% APY and placed the remaining $25,000 in a 60 month CD offering a 1.70% APY, the investor would earn a total return over the same 18 month period of $828.93, a $76.43 increase from the first scenario. In addition to an increase in the total return, the investor has exposed half the total investment to less interest rate risk. If rates rise in the short term, the investor will have the ability to reinvest half of the total investment at a higher rate, increasing total return on investment and the added benefit of increased liquidity with funds coming available more frequently if needed.

While achieving that “perfect” investment opportunity may be a fantasy, this is one option to achieve 2 of the 3 factors (low risk and liquidity) while achieving a better overall return on your investment.

Has your banker discussed CD laddering with you?

We will.

VisionBank. See what we can do for you.

*CD rates in this article are hypothetical and not a prediction or offering of future rates or earnings.

Mike Philips is the Senior Vice President of Retail Banking at VisionBank

What took us so long?

VisionBank of Iowa — Fri, 12 Oct 2012 16:33:02 -0600

What took us so long? Well we have been a little busy.

Most of you reading this are likely long-time customers. Thanks for your business and support. You probably have identified your bank for some time as Ames Community Bank, Community Bank of Boone, City State Bank (Ogden), Ballard Community Bank (Huxley) or maybe even VisionBank in Grimes. But more than likely you identified your bank with the level of service you receive and the relationships formed.

There have been a lot of changes with our bank over the past several years. New faces. New products. New banking rules and regulations prompting new practices.

Now a new name. More change you say? Well yes and no.

The new name may take some time getting used to. However you do not need to get new checks, debit cards, new loan numbers, nor a new internet log in. All your past products and services are remaining the same.

So why the change? The decision to have one name was made in July 2011. The bank was in a good and improving position and poised to grow again. One barrier to achieving this growth was our identity, or more accurately, identities.

Many of our customers were confused on who we were, where we were, and where they could get service. Also, it was holding back our ability to fully promote our bank and its great staff. These things also led to some challenges in having our staff feel unified as one company, one team. For these reasons, the plan was put into motion.

We went through a thorough process including market research and focus groups in each of our communities. We learned people choosing a bank are primarily concerned with the level of service they receive, the commitment to building a relationship, fair pricing/fees, good products/technology, and a commitment to their communities.

We used those characteristics in choosing a name so those items could be reflected as the bank’s values because we believe strongly in those too. Several names were considered. Some were discarded due to similarities to other area businesses or due to trademark/copyright protection. We just kept coming back to a name we felt could relay those messages. One that we controlled, and one with a lot of potential.

The VisionBank name was updated with a new logo to represent the direction we are going: forward. And the tagline to succinctly lay out the challenge we take on every day in helping find solutions for and building relationship with our customers and our teammates: See what we can do for you.

The VisionBank team is excited about the new opportunities that lie before us and we hope our customers and friends share in our excitement. We look forward to maintain and building those relationships for years to come. I encourage you to visit with our great staff to See what we can do for you.

Kurt E. Kuta
President/CEO