You can also attend our Open House for Home Buyers on April 27th to speak to someone in person. For more information on the Open Houses, click here to go to our Facebook event invite, or click here to go directly to our website.

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People facing foreclosure are often scared to talk to anyone because they feel like there’s no hope or help. The first step is to talk with us, and this event is a perfect place to do that.

Save the Date

Free Homeowner’s Mortgage Assistance Event

Wednesday, April 17, 2013

10:00 a.m. to 7:00 p.m.

Omni New Haven Hotel, 155 Temple Street, New Haven, Connecticut

FREE PARKING available at the following locations:

1. Omni Hotel Garage
2. 1 Temple Street Garage
3. 213 Crown Street Garage

Bring parking ticket to event for validation.

Pre-Register

Our customers can call us at 1-800-270-5300 or send an e-mail to lossmitigation@websterbank.com to pre-register for the event. Registration is not required. We will help you obtain an appointment at a time that is convenient for you.

What to Bring

For a detailed list of documents to bring with you, visit the Department of Banking’s website at: www.ct.gov/dob/homeowner. Items listed include your taxes, bank statements, credit card statements, student loan or mortgage liens, your driver’s license, a recent utility bill (to prove residency), a hardship letter detailing why it is difficult for you to make your mortgage payments, a list of household expenses and income, etc. You can also print out and bring the following documents with you:

• The Request for Modification and Affidavit (RMA) Form  (pdf)
  - includes an income/expense/asset form
• IRS Forms 4506-T (pdf) and 4506-EZ (pdf)
• The Dodd-Frank Certification Form (pdf)

Tips on How to Avoid Foreclosure

If you’re facing foreclosure and don’t know where to turn, visit the Department of Banking’s website for tips and resources. Don’t be afraid to ask for help. Many people face foreclosure and it can be prevented, if you act quickly.

You can always call us to help and guide you. Reach out to the Loss Mitigation Team at Webster at 800-270-5300. You can also contact the Foreclosure Hotline at 1-877-472-8313.

Working with Our Customers

We believe in doing the right thing for our customers, especially when that means keeping people in their homes. As our Chairman and CEO, Jim Smith said to ABC News, “We have a responsibility to our customers to work with them. I think of it as being in our DNA. We’re there to work with our clients, to help them through a very difficult time.”

Home ownership is an important part of the American dream. Please attend this event if you are having financial hardship so we can help. Please ask us any questions in the comments below, or call us at 800-270-5300.

Calculate the Savings of Refinancing

In order to determine if refinancing is right for you, you need to calculate the long-term savings. A great way to compare is to look at an amortization schedule for both your current payment schedule and what your new payments would be once you refinance. You can use an online amortization calculator to give you an idea or have your banker calculate it for you. Have your current and future loan amount, loan term and interest rate handy to compare how much you would save by refinancing over time.

Lower Your Interest Rate to Save

Since rates are so low right now, you’re probably thinking you should take advantage of that and refinance to lower your monthly mortgage payment. Your interest rate is determined by a few factors, which we’ve explained in this post. Generally speaking, if your credit score has increased since you’ve obtained your mortgage, and rates have decreased, you may be able to lower your monthly payment if you refinance.

For example, if your current mortgage is for $200,000 for 30 years at 5%, and you were able to lower your interest rate to 4%, you would save $118.81 per month, which calculates to a savings of $42,771.60 over the life of the loan. Not too shabby!

  Adjust the Loan Term

However, it’s not always about the rate. Other factors can change your monthly payment, including your loan term. If you have a 30 year mortgage and refinance to a 15 year mortgage, your interest rate may decrease while your monthly payment will most likely increase. But you’ll end up paying a lot less in interest over time, which can save you a lot of money in the long run.

Keeping with our example above, if all other things being equal, you changed your loan term from 30 years to 15 years, the monthly payment would go up $507.95, but you would end up paying $101,824.20 less over the life of the loan.

Another way to reduce your interest payments and term length is by paying more than your monthly mortgage payment and applying it to the principal. Try adding $50 to your monthly payment to pay down that principal.

Home Is Where the Equity Is

Another factor to consider is how much equity you have in your home. A good milestone to reach is having 20% equity in your home. This is when you don’t need to pay PMI (private mortgage insurance) any longer, which can help when refinancing. For more information on home equity, check out our previous post.

Average Costs of Refinancing

So you’ve calculated the savings, but what about the expenses to refinance? Belinda said that you should set aside about $5,000-$6,000 total to refinance, which includes a variety of different expenses including the bank, your attorney, (which on average are about $2,000 – $3,000), and the rest is for things you need to pre-pay, like your home-owner’s insurance and property taxes, which can vary greatly depending on the value of your home owners insurance and taxes. You can choose to finance some, all or none of your closing costs depending on the amount of equity in your home.

The Process of Refinancing

Here are the steps that take place when you refinance your mortgage at Webster Bank:

1. Fill out your application, also known as your Financial Statement, and submit your documentation, which includes your pay stubs, bank statements and W2’s, etc. This mortgage checklist can help get you prepared. If you’ve already started your application online, you can login here to finish.
2. Next, the bank will pull your credit score. It’s a good idea to request an annual copy of your credit report so you can fix any discrepancies before the bank pulls it. Check out Mary Johnson’s post on the 6 C’s of Credit for some tips.
3. Next, the bank will order an appraisal on your property to figure out the current market value.
4. Once all your documentation is in, your application will go to an underwriter for a decision. This process typically ranges from 45-60 days, depending on if you have all your paperwork submitted. Check out this previous post for some insight on the criteria that your loan will be evaluated on.
5. If you get approved, and there are no other conditions outstanding, we will contact your attorney’s office to prepare for the closing.
6. The closing is where you’ll sign all the paperwork and make it official.

If you’re thinking about refinancing your mortgage, you’ll want to do the math and calculate your long-term savings. Compare the amortization schedules to see how much you will save over the life of the loan, and figure out if those savings outweigh the cost to refinance. Everyone’s situation is unique, so in order to figure out what works best for you, come in to Webster and we’ll walk you through it. You can find a mortgage rep in your area by clicking here.

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All loans and lines are subject to credit approval.

1. Credit Score

Historically, the way you handle your personal credit is a good indication of how you handle your business credit, especially if you own a small business. And if you have a start-up business, this is especially important to a bank. A good rule of thumb is to request a copy of your credit report and fix any discrepancies before applying for a loan so there are no surprises. You can request your free credit report and check your credit score (a.k.a. your FICO score) using any one of these websites:

• Annual Credit Report – www.annualcreditreport.com
• Equifax – www.equifax.com 
• Transunion – www.transunion.com 
• Experian – www.experian.com
• Credit Karma – www.creditkarma.com 

On Annual Credit Report website, you can obtain one free copy of your credit report from all three credit reporting agencies each year. Or, you can contact the three credit reporting agencies, Equifax, Transunion, and Experian, separately to get your free credit report annually. Credit Karma will give you your credit score for free and suggest ways to help you improve your credit score, among other offers and services.

Many people will ask me “What is a good credit score?” While banks and other lending institutions all have their own guidelines, in general, a good score is 700 or better.

If you know there is something on your credit report that might be considered derogatory and there is a very good explanation for it, tell the bank up front and they may accept your explanation. Banks don’t like surprises —  being up-front and honest shows that you have good character.

2. Conditions

Conditions is simply shorthand for how you will use the proceeds of the loan. How much do you want to borrow? What will you do with it? How will you pay it back? And, if your primary source of repayment fails, what do you have to offer as collateral or fallback for loan repayment?

3. Capacity

I like to refer to capacity as cash flow, which is generally your primary source of repayment. Lenders will look at the operating cash flow of your business when determining your company’s ability to repay a term loan. Cash flow is defined as sales, minus operating expenses, plus depreciation and amortization expense, plus interest expense. The amount left over is the cash available to pay back debt. Some banks also subtract owners’ distributions.

A term loan is a loan that is repaid through regular periodic payments, usually monthly. Lenders want to know if your company generates enough cash flow to cover the monthly loan payment. If you need a line of credit, lenders want to know if your company’s operating cash flow can support monthly interest payments; and if the collection of accounts receivable and/or sale of inventory can repay the principal amount outstanding on the line of credit within a one-year period.

4. Capital

Capital is cash invested by the borrower. Generally, banks will not finance 100% of the cost of an asset. You need to be prepared to make a down payment towards the equipment, building, business, or anything else you want to finance. Willingness to put some of your own money in is a sign of your commitment to the business. If you are not willing to commit to your own cash to your business; it is unrealistic to expect the bank and/or any potential investor to lend money or make an investment in your business. Commitment is closely linked to character, explained in point number 6.

5. Collateral

In order to ensure that you have an alternative source of repayment, lenders want to see what kind of hard assets you have to secure the loan. Acceptable forms for collateral include accounts receivable, inventory, commercial and/or residential real estate, machinery and equipment and/or cash / marketable securities. IRAs are ineligible. If the collateral granted doesn’t quite cover the loan amount, an alternative may be a loan that carries a guaranty from the U. S. Small Business Administration (SBA).

6. Character

Last, but not least, your character counts. Lenders need to make an assessment on how well you are at repaying your loan, and things like your reputation and all of the other “C’s” of credit. Examples of character include:

• The senior management team’s experience and ability
• The business owners’ willingness to personally guaranty the loan
• Being a law-abiding citizen
• A good personal and/or business credit history
• Honesty

Before applying for a loan, check your credit bureau report and review the “Six C’s of Credit”, which are important parts of your application. Are you ready to apply?

1. Set a Goal

In order to save your money and avoid spending on frivolous items, set a long-term goal for something you’d like to do that requires you to save. Here are some examples to get you thinking:

• Buying a home
• Finishing your “honey do list” projects
• Vacation to Hawaii or other exciting places you’ve never been
• Buying a car
• Remodeling your bathroom
• Becoming your own boss

Figure out how much money you’ll need to reach your desired goal, and give yourself a deadline to reach it. Then you’ll want to see how much you can set aside each month to achieve that goal. There’s so many different ways you can save your money, including CD’s, mutual funds, savings accounts, checking accounts. For advice, ask your banker to help you find the best balance and fit for your lifestyle and responsibilities. We also have a variety of savings options, which you can research here.

Use your Holiday Club Savings account to save for a long-term goal, like vacation. Click this photo to learn more.

2. Create a Saving Game

Sometimes you need to get creative to ensure you stick to your plan. I developed a simple game over the years which helped (okay…forced) me to save money and prevented buyer’s remorse. First, I take the amount of money I have left over after paying my bills, and divide it by what’s left in my account until my next paycheck. The result is my budget per day.

For example: If I have $600.00 left until my next payday in 10 days, that’s:$600/10 = $60.00 per day budget.

The object of the game is to determine how much money you’re able to save each day without going over budget. If you’re able to save at least 50% of your remaining balance from your paycheck, give yourself a pat on the back and reflect on how close you are to achieving to your long-term goal.

You can transfer your extra savings into whatever savings vehicle you’ve chosen to save for your long-term goal, or keep it in your checking account to build up a bigger financial cushion.  You could also use the extra money to pay down any debts you owe, or open a Holiday Club savings account.

3. Transfer Your Spare Change into Savings

Since I hardly carry cash anymore, another tip I’d like to share is transferring spare change from your checking account into your savings account online. For example, let’s say I have $43.65 left in my checking account after I reconciled my register for the day before I head out into the world. I transfer $0.65 into my savings account.

This serves two purposes; I can easily recall how much I actually have in my checking account because it’s an even number, and after a certain period of time, I will accumulate a nice sum in my savings account. You’d be surprised how much you can save over time!

Saving money can be fun if you have a goal in mind, create a plan, and get creative on how to stick with it. Instead of splurging on that new pair of shoes, think about walking on the beach barefoot on your future vacation, or how you’ll have to remove your shoes upon entering your new home. You won’t get instant gratification, but good things come to those who can wait.

Your spare change can add up!

If you have any tips of your own, feel free leave a comment here or contact us through our Facebook or Twitter pages. You can also check out our easy to follow blogs on saving money by clicking here: http://blog.websteronline.com/tag/save/

We believe that everyone has the potential to rebuild their finances and improve their lives. If you’ve had a less-than stellar banking history, here’s some advice and options:

Tips from the FDIC

The FDIC explains  why some checking accounts are forced closed and what you can do. Some of their advice is to:

• Order a free copy of a ChexSystem report filed under your name by going online at www.consumerdebit.com  or calling 1-800-428-9623.
• Review that report and dispute any discrepancies.
• Don’t give up on opening a checking account.

Second Chance Opportunity Checking at Webster Bank

If you’ve ever ran into a snag opening a checking account based on your past history, you may be a great candidate for what’s commonly referred to as a “second chance” account. At Webster, we call this the “Opportunity Checking” account. Here are some of the reasons why this account can help:

• It establishes or re-establishes credit worthiness.
• If you want to apply for credit in the future, you’ll need to have a checking account.
• Your money is protected by the FDIC insurance up to $250,000. (Much better than the mattress!)
• You’ll save money on stamps and trips to the post office with free online and mobile banking and billpay.

However, there are some restrictions including:

• There’s a monthly service charge.
• Signature Visa Debit Card Purchases  (i.e. selecting the “credit” option and signing the receipt, rather than the “Debit” option and entering your PIN) are limited to $250 per calendar day.
• Other restrictions apply, please review Webster’s Deposit Account Disclosure for details.

The good news is that if you incurred less than three overdraft fees within a 12 month period, we can upgrade you to a different account of your choice. If you need any tips on ways to avoid overdraft charges, check out our previous blogs on the subject:

• Overdraft Options
• Top 5 Money Misconceptions
• How to Avoid Overdraft Fees
• Balancing Your Checking Account in the Digital Age

We will help you every step of the way. If you have any questions about our second chance account, please don’t hesitate to contact us at 1-800-325-2424. We are available 7 days a week from 7:00 a.m. to 10:00 p.m. with the exception of Federal holidays. Or you can ask us any questions in the comments below.

Our Refer-A-Friend or Business program works exactly as  our consumer program works: Existing customers (business or consumer) who refer a friend or family member to open and use a business checking account can earn a $50 Visa reward card. Once the terms and conditions are met, your referral will also earn $50!

How to Refer-a-Business or Friend:

Step 1: Learn more about it by visiting websterbank.com/refer

Step 2: If you decide to refer someone, register your information online & click GO!

Step 3: Then, fill out the form with your friend or relative’s information.  We will send them an email. You can share it online through your social network. If you’d like to refer more than one person, click “add another email.”

Step 4: After your referral registers, they will receive an email notification containing registration instructions and requirements of the program.

Step 5: You can login to your referral dashboard at www.referlive.com/websterbankraf/giftstatus to track referrals, view how many reward cards you have earned, refer more friends or businesses, post referrals to your social networks and send reminder emails.

See terms and conditions at websterbank.com/refer

Thank you for being a loyal Webster Bank customer, we highly value your business and hope you enjoy this new program. Please let us know any questions in the comments below, and happy sharing!

News, Weather and Classifieds for Southern New England (NBC 10, Providence, RI)

For more information on the Sallie Mae® loan product, click here.

Construction projects from the smallest to the largest can be expensive and difficult to pay for out of savings. Fortunately, whether you are looking to remodel a bathroom, add a new bedroom or build a new home, there are several financing options available to you. And with interest rates at historic lows, now is the time to stop dreaming and start building!

Options

1. For smaller home improvement projects, such as adding granite counter-tops in your kitchen or remodeling a single bathroom, consider an unsecured personal loan. These loans are typically offered up to $25,000 depending on your credit score and income.  Rates for unsecured loans are higher than those for equity loans but borrowers with good credit can now get rates under 10%[1].  Not bad when comparing to the national average credit card rate of 14.96% [2].  Other benefits of personal loans are faster approvals (often same day), no closing costs, and usually there are fewer documentation requirements [3]. Furthermore, this option is a great alternative if you don’t have enough equity in your home for a home equity loan.

For more information on unsecured personal loans read my blog Benefits of Personal Loans.

2. If you wish to undertake a bigger project, such as remodeling a kitchen, finishing a basement or constructing a small addition to your home, consider a home equity product. These typically range up to $500,000, offer much lower rates than unsecured personal loans, and borrowers typically don’t pay closing costs. These products also offer borrowers flexibility because they can choose from a loan with fixed monthly payments or an interest-only line of credit.

3. Another option is a residential construction loan. This option is generally used for the largest projects, such as building a new wing to your home, taking on a major home remodeling effort, or for building a brand new home. These loans usually are interest-only for the construction period and then revert to an amortizing loan once the construction project is complete.

If you are planning to build a home from the ground up, a first mortgage construction loan is your best option.  These loans help you finance the cost of purchasing land and constructing the home or for gutting your existing home and rebuilding it.

If you wish to expand your existing home or significantly remodel it, you have two options: a first mortgage construction loan or a second mortgage construction loan.  A first mortgage construction loan allows a borrower to refinance their existing first mortgage balance and obtain the funds needed to cover the cost of construction. On the other hand, a second mortgage construction loan will cover your construction costs while allowing you to keep your existing first mortgage loan.

No matter which financing option you take – be prepared for cost overruns. As your project takes shape, it is natural to make changes to your plans, build a little bigger or use nicer materials. So consider adding at least 10% to your initial budget to cover these cost overruns.

And finally, all these financing options are now available through Webster Bank.

All loans and lines are subject to credit approval.

Stated simply, the “market value” of your bond holdings can drop if interest rates rise. I remember getting a call from my brother some years ago. He had just gotten a 401K statement showing his bonds gone down since the last report. He had moved out of stocks to avoid this and couldn’t figure out what was going on. I tried to explain and even over the phone could just feel his eyes glazing over!

Let me try again. Suppose you recently paid $100 for a brand new 10-year U.S. Treasury note (bond) that will pay you a whopping 1.5 percent interest per year. If you hold it to maturity, you’ll get that $100 (face value) back in full.

But what if prevailing interest rises to, say, three percent immediately after your purchase? You’ll continue to get your 1.5 percent every year, so that’s not a problem. And if you hold on for 10 years, you’ll get your $100 back.

The difficulty arises if you try to sell now. Nobody is going to pay $100 for your 1.5 percent bond when they can get a new one yielding 3 percent from the Treasury. The only way you can sell yours is by marking the price down closer to $87 so the buyer of your bond can earn the market rate of 3 percent.

If rates stay at 3 percent, the bond’s “market value” will gradually rise to the face value over the next 10 years. If rates fall, the price will rise faster. If interest rates climb higher, the bond price will drop even more. If that overnight jump was to 6 percent, the bond’s market value would drop to around $67 and then start climbing gradually.

So is there a bubble? Yes and no. According to the latest survey of economists by the Wall Street Journal, the 10-year Treasury is expected to yield 2.3 percent by the end of 2013 and 3 percent a year later. Hence, bond market values are likely to decline.

How might rising rates affect you? Not much at all if you bought your bonds for the income with plans to hold to maturity. However, if you need to get at the principal before maturity, then you could have a problem because you’ll have to pull out less than you paid.

The sensitivity to interest rate changes (aka “duration”) is higher for longer maturity bonds and lower for higher coupon bonds. Accordingly, the greatest sensitivity of market prices is for long maturity zero coupon bonds whose accumulated interest is paid at maturity.

Finally, there are huge differences between a potential “bond bubble” and something like the dot com fiasco. Many of those investors lost everything: there were no dividends and the shares became worthless as the firms vanished. Unless you’ve been buying some really risky bonds, this is very unlikely to happen.

Economic Review is published by Webster Financial Corporation. The opinions and views in this publication are those of Dr. Nicholas Perna, Webster’s economic advisor, and are not intended to provide specific advice or recommendations for any individual. Consult professional advisors with regard to your individual situation.

To read past editions of The Economic Review, please visit: WebsterBank.com/EconomicReview