Wednesday, February 24, 2016

4 Financial Benefits Of Homeownership

When you think of the American Dream, what comes to mind? If you're like most people, you imagine a family with a few kids, a stable job, and a home of your own. Homeownership has been an integral part of the American Dream since America's birth, and for good reason. Homeowners get to cultivate a stable, nurturing environment in which to raise their children and enjoy the unique sense of pride that only comes from owning a home of their own. However, the perks of homeownership do not stop there - owning a home also has several financial benefits. Here is a quick look at some of these financial benefits, courtesy of the team at First Bank of the Lake.

1. You Can Avoid Rising Housing Costs
As inflation tightens its hold on the United States, both house prices and the cost of rent continue to rise. When you purchase a home with a fixed mortgage, however, you can lock yourself into set monthly payments that will never increase. This financial stability can be a major advantage, especially when you need to make room in your budget for other expenses such as home repairs or a new car.

2. A Portion Of Your Monthly Payment Comes Back To You
It's sad but true - when you write your check for rent, you send that money to your landlord knowing that you will never again see a single penny of that money. However, making your monthly mortgage payment is entirely different. While the majority of your payments go toward interest (especially towards the beginning of your term), some of it goes towards paying off your principal. When it comes time to sell your home, you can get money back from the sale - possibly even more than you originally paid for the property.

3. You Build Home Equity
Every dollar that you put towards the principal of your mortgage loan comes back to you in the form of home equity. Equity refers to the dollar amount of your home that you actually own; the home's current market value minus your outstanding loan balance. You build equity by paying back your loan, as well as by increasing your home's value through upgrades and remodels. Home equity can be used to fund any number of things - a child's college education, major remodels, retirement, and more.

4. You Get Tax Deductions
Homeownership is one of the few major expenses that still qualifies as certain tax deductions. In most cases, homeowners are able to deduct the money they spent on mortgage interest and (if applicable) private mortgage insurance (PMI). These deductions can be a huge help when tax season rolls around. However, it is important to be aware that many of the other costs of homeownership (upgrades, repairs, etc) do not qualify as tax deductions.

Homeownership Helps Build Wealth
In summary, homeownership helps families build long-term wealth. In fact, postulates that homeowners' family wealth will be 45x that of renters' by the end of 2016. If you are looking for a way to invest in your future, buying a home could be a great financial move.

Let First Bank Of The Lake Be Your Local Financial Resource!
As the best bank at the Lake of the Ozarks, we place our customers' financial needs at the top of our priority lists. Whether you're looking for checking accounts, savings accounts in Osage Beach MO, retirement accounts, or other investment accounts at the Lake of the Ozarks, we are sure to have something that meets your needs. Visit our website to learn more!

First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!
4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265

Thursday, February 18, 2016

#1 Reason To Start Investing Early

If you are old enough to ask when you should begin saving for retirement, the answer is simple: right now. Many financial experts suggest that young adults begin setting aside money for retirement with their very first paycheck, even though the amount you can set aside may be incredibly small at that point in time. One can argue many different reasons as to why you should begin investing early, but First Bank of the Lake is here to clue you in on the most important one.

#1 Reason To Start Investing Early:

The secret is out! Starting to save for retirement while still in your twenties offers several advantages, but the biggest and most important one is that doing so allows you to maximize your compound interest.

Compound interest may seem a little difficult to wrap your brain around at first, but the concept is really quite simple. The main distinction lies in whether or not you take out interest earned so you can spend it on other things or reinvest it back into your account.
  • If you take out the interest earned every year, your principal amount stays the same. In this case, the interest earned will always be based off of your initial investment amount, yielding the same amount of interest every year.
  • If you take the interest earned and reinvest it into your account, you increase the principal amount. Your interest earned will now be based off your new principal amount, which means it will be greater than the year before. This is when compounding occurs.

Compound Interest Can Accumulate Exponentially

Essentially, compounding means that you keep rolling your earnings into the account. Given time, compound interest can accumulate in massive quantities. Consider this example:

John sets up a retirement savings account at the Lake of the Ozarks when he is 23 years old with an initial investment of $5,000. He earns compound interest at an annual rate of 5%. By the time he retires at age 65, his account will have grown to $38,807.94 if he reinvests the interest earned every year.

John's earnings do not have to stop there. If he were to invest an additional $1,000 every year at the start of each compounding period, his account will have grown to $180,801.28 in that same amount of time.

By making deposits in addition to reinvesting the interest earned, John increases his principal amount much faster. At the start of each compounding period, the interest amount is calculated based off the new principal amount. It is easy to see how, given time, these investments have the power to grow exponentially.

Compound Interest Has To Have Time To Work

Compound interest can be very powerful, but it has to have time to work. We have seen that John's account can grow up to $180,801.28 over the course of 42 years, but what would happen if he were to wait longer before he began investing? (For the sake of the comparison, we will assume that his initial investment amount is always $5,000, he always reinvests the interest earned as well as contributing an additional $1,000 every year, his interest rate is always 5% compounded annually, and he always retires at age 65.)
  • If he begins investing at age 30, he will have $122,416.40.
  • If he begins investing at age 35, he will have $91,370.50.
  • If he begins investing at age 40, he will have $67,045.23.
  • If he begins investing at age 45, he will have $47,985.74.
  • If he begins investing at age 50, he will have $33,052.13

Obviously, the longer John waits to begin investing, the less money he will have to support himself in retirement.

Contact First Bank Of The Lake To Set Up Your Retirement Savings Account!

Hopefully these examples make it easy to see why it's so important to begin investing at an early age. Even if you do not have much money you can afford to invest now, every little bit helps. You can always increase your additional contributions down the road. 

To learn more about saving for retirement at the Lake of the Ozarks, visit our website about our IRA accounts in Osage Beach MO. We would be honored to help you plan for retirement!

First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!
4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265

Wednesday, February 10, 2016

Meet Our President & CEO, Michael Anderson!

As a local bank at the Lake of the Ozarks, outstanding customer service is one of our top priorities. Being a local bank gives us several advantages, such as allowing people who live right here in our community to perform loan approvals and other key decisions. It also gives us the opportunity to get to know our clients on a more personal basis.

This week, First Bank of the Lake is here to help you, our valued customer, get to know our team a little bit better. We'd like to take this opportunity to introduce you to President & CEO, Michael Anderson. Mike is a great guy who is truly dedicated to the success of both the bank and its clients. Keep reading to learn more about him!

Q&A With Michael Anderson:

How Did You Get Started In The Banking Industry?
I went straight from college into banking in Oklahoma City. My father was in banking for a few years and it appealed to me. I was hired by the largest bank in Oklahoma into a management training program. Over the years I have worked in International Banking, Correspondent Banking, President and CEO of several banks in Oklahoma, and over the following 23 years I was Chief Operating Officer of three larger community banks and bank holding companies in Oklahoma and Missouri.

What Is Your Position At The Bank? What Are Some Of Your Key Responsibilities?
I am the President & CEO. I am responsible for the overall executive management and operation of First Bank of the Lake. I am also a Director of the bank.

What Brought You To The Lake Of The Ozarks?
Since 1997 I was an executive at two larger mid-Missouri community banks and my wife and I resided in Jefferson City. In 2005 we purchased a condo at the Lake of the Ozarks and spend much of our time here.

Where Did You Attend School?
I went to high school in Oklahoma City and earned my Business Administration degree at the University of Central Oklahoma in Edmond, Oklahoma focused on Accounting, Marketing and Economics.

What Do You Enjoy The Most About Your Job?
Working with the bank staff and getting to know customers, along with having to juggle so many responsibilities at one time.

How Do You Enjoy Spending Your Time When Not At Work?
I enjoy golfing, boating, fishing, and reading.

When You Were Young, What Did You Want To Be When You Grew Up?
I wanted to be an FBI agent or a pro golfer - a bit delusional on that one!

What Is Your Dream Vacation Destination? Why?
Places like Washington DC, Philadelphia, Boston, and Gettysburg are on my travel bucket list. I'm a U.S. history buff and haven't ever had the time to go to many historical places I studied and spend quality time.

What Is Something Few People Know About You?
In his early years my father worked for the railroad and they moved him around a lot. When I was born my parents happened to be stationed in Boonville. I then spent much of my youth in Springfield, Missouri before my father transferred to Oklahoma City when I was in high school. My mother was from Pleasant Hope, Missouri and my father from Windsor, Missouri.

If You Won The Lottery, What Would You Do?

First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!
4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265

Wednesday, February 3, 2016

Refinancing Your Home: 4 Questions To Ask

Refinancing your home is a big topic. It typically requires a great deal of research and consideration, but it can lead to substantial savings if done wisely. When refinancing your home, you take out a new mortgage loan to pay off your existing one. Before choosing to refinance, we encourage you to ask several important questions. Here are a few to get you started, courtesy of the team at our Lake of the Ozarks bank.

1. Why Do You Want To Refinance?
Homeowners choose to refinance for a variety of different reasons. Some want to secure a lower interest rate so they can save money on interest. Others want to shorten their loan term (such as from a 30-year loan to a 15-year loan) so that it can be paid off sooner. Having a shorter loan term means you will spend less money on interest in the long run. Still others choose to refinance so they can change the type of loan they have (typically from an adjustable rate mortgage to a fixed rate mortgage) so they can protect themselves from changing interest rates.

2. What Are The Costs To Refinance?
Choosing whether or not to refinance your home is all about the numbers. If it won't save you money, don't do it. Refinancing comes with several expenses, so it's important to ensure that these costs won't outweigh the savings. Examples of some of these types of expenses include the mortgage broker's services, application, loan origination, home appraisal, home inspection, title insurance, and others. You will also want to find out if your existing loan charges a penalty for being paid off early. Even if refinancing will lower your monthly payment, you'll want to be sure that you plan on staying in the home long enough for the savings to outweigh these upfront costs.

3. How Do You Get Started?
If you plan to refinance, you will first need to ensure that you have a few key components in place: good credit score, equity in your home, verifiable source of income, and steady employment. You can talk to your current lender about refinancing options, but don't be afraid to shop around to find the best loan. Ask every lender to provide their estimates (along with interest rates and associated costs) in writing. Putting in the time to shop, compare, and negotiate can save you thousands of dollars.

4. Didn't Interest Rates Just Rise?
Some of you may be surprised to read a blog about refinancing right now, since the Federal Reserve recently raised the interest rate for the first time since 2008. However, it's important to realize that while the numbers did rise slightly, they are still very low. The current average interest rate on a 30-year fixed rate mortgage is 3.9%, and is expected to gradually increase this year. 10 years ago, mortgage rates were near 6.3%, and 20 years ago they were near 7.2%. While there is no immediate rush, now may be a good time to start thinking about refinancing to lock in the lowest rate possible.

Other Questions To Ask...
Other good questions to ask yourself before refinancing include: Have interest rates fallen since you secured your mortgage? Do you want to switch to a different type or different length of mortgage? Has your credit score improved? If you answered yes to any of these, it may be worth looking into refinancing. While it may seem scary upfront, it becomes incredibly manageable once you understand the process. 

On behalf of all of us at First Bank of the Lake, we wish you the best of luck in your refinancing endeavors! If there is any way we can be of assistance financially, please stop by our bank at the Lake of the Ozarks or give us a call at 573-348-2265. We look forward to serving you!

First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!
4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265