March 2013 eNews

Catch up on the latest Starion news in our March 2013 Starion Financial eNewsletter.

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Building and financing your dream home

Many of us dream of building a home overlooking the river or some other spectacular view, but how do you make this dream a reality? One of the most important aspects in this process is figuring out how to finance this project. For most, this involves taking out a construction loan.

Construction loans differ from other home loans because they are so unique to each situation. Factors such as the builder, the location and the building specs all play a part in the specifics of the loan. They are also unique because there isn’t an actual building to base the loan off of. The loan amount is primarily based on the blueprints of the home.

When you’re ready to begin the building process, here are some common variables to a construction loan you need to know:

  • Lenders typically require interest-only payments during home construction, with the remaining balance due upon “completion.” Completion for homeowners means that the house has its certificate of occupancy
  • Home construction loans are usually variable-rate loans priced at a spread to the prime rate or some other short-term interest rate. You and the lender establish a draw schedule based on stages of construction, and interest is charged on the amount of money disbursed to date
  • Determine how much of the project cost the lender is willing to lend. If you already own the land, that can be considered as equity on the construction loan. This allows you the possibility of expanding your dream home plans
  • Consider using construction-to-permanent financing programs. This type of financing is where the construction loan is converted to a mortgage loan after the certificate of occupancy is issued. The advantage to you is a seamless transition between loans, saving you time and letting you lock in your rate and term
  • Discuss purchasing a rate-lock agreement valid through the expected completion of the construction. Depending on your view on interest rate trends, a rate-lock agreement may save you hundreds of dollars on your monthly mortgage payment in the long run. Just make sure you build extra time into your agreement for inevitable construction delays

Ready to take the next step or have more questions? Visit our mortgage page.

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Home Equity Loans - A powerful financial tool

The equity you have in your home can be a powerful tool in managing your overall financial situation. Your equity, the value of your home minus your existing mortgage, can serve as collateral for additional borrowing. While there are some risks with this strategy (as with any borrowing), home equity loans usually offer the attractions of lower rates, convenience and often tax benefits.

Most institutions view home equity as good collateral and are often willing to lend you money against that equity. The amount they will lend you depends on the amount of equity in your home and your other credit characteristics. As a general rule of thumb, they will lend up to an amount so the total debt against your home (including the first mortgage and any other loans where your home is pledged as collateral) is less than 80% of the current value of your home.

The interest rate charged will usually be variable and will be pegged to some published index, like the prime rate. You should also look for low rate specials offered by financial institutions.

Usually, you repay the loan in regular installments and with minimum repayments required. With some home equity loans, the minimum payments may only be the interest on the loan and you may be required to repay the loan at a certain date. You need to read the details carefully.

Attractions of a home equity loan are:

  • Convenience - Usually institutions make it easy to apply and their approval processes are fast. The process is often simpler than if you were applying for a new mortgage
  • Interest rates - The interest rates charged on home equity loans are usually greater than those on first mortgages but less than those on credit cards. Using the proceeds of a home equity loan to pay off credit card debt will usually save you money
  • Tax benefits - For individuals that itemize their tax deductions, the interest paid on home equity loans can help save some income taxes. While there are some limits on this type of interest deduction, it may save you some tax. Consult with your tax advisor for more details.

Even though you are borrowing against your house, there is no requirement that the money be used on your house. A home equity loan can be the source of funds for college tuition or even to buy a car.

Compare the rates on an auto loan and a home equity loan the next time you are financing a car. Borrowing against the equity in your home should be considered carefully. Even though there are benefits, these types of loans are like other loans - you pay interest and they must be paid off. Most people use home equity loans for "conservative" purposes and avoid making risky investments or extravagant spending with the proceeds.

Read and understand all the details before signing. Loan documents can be confusing and the easy process of getting this type of loan can mask the costs and risks. Home equity loans can be a great option as long as you are educated about all of the different factors involved.

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Now offering Allied Insurance

Starion Insurance is now proudly offering Allied Insurance. As a member of the Nationwide family of companies, Allied Insurance offers the quality insurance protection, customer service and financial strength that define an industry leader. Plus, Nationwide Agribusiness is the largest farm insurer in the U.S.

Our insurance agents are here to help customers protect the most important things in their lives – their families, property and financial futures. Starion Financial is committed to giving customers top-quality products and services, and that’s why we’ve decided to begin offering Allied Insurance.

Allied has a strong portfolio of personal and main street commercial products which includes:

  • Auto (including On Your Side Rewards) with Accident Forgiveness
  • Home (including identify Theft)
  • Powersports
  • Commercial
  • Excess
  • Bonds
  • Umbrella
  • Farm

Starion Financial is passionate about contributing to the communities we serve. We donated more than $350,000 to local organizations and events in 2012, and our employees volunteered hundreds of hours of their time to give back. It was important to us to choose an insurance provider that shares our same values, which is another reason why we chose Allied. Each year, the entire Nationwide family contributes more than $17 million to charity, and their associates give back to their communities by volunteering for blood donation, raising money for United Way and organizing food drives for local food banks.

We will continue to provide you with the exceptional service and product knowledge you’ve come to expect from us, and we are excited to now offer you Allied Insurance products. For more information about Allied or any other questions, visit our Insurance page.

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Starion supports Rebuilding Together

Starion Financial sponsored five teams for the 11th annual Bismarck-Mandan Rebuilding Together bowling fundraiser. At the event, there was a silent auction and a costume contest. This year’s theme was red, white and blue, and one of our Starion teams named “Red, White and Boom,” won Best Group Costume for their firecracker costumes. Domino's donated pizza for all the teams, and Mikey Hoeven gave a speech thanking our troops for their service. This was a fun event that benefited a well-respected organization.

Rebuilding Together has been providing extensive home rehabilitation and modification services to homeowners in need for almost 25 years. They focus on providing critical repairs, accessibility modifications and energy efficient upgrades to low-income homes and community centers at no cost to service recipients. Their impact not only helps individual households, but helps to revitalize and stabilize vulnerable neighborhoods and communities across the country. “We are always happy to support a great organization like Rebuilding Together,” said Craig Larson, CEO and President of Starion Financial. “The bowling fundraiser is a fantastic event for a worthy cause.”

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Where did the term “mortgage” come from?

The actual word “mortgage” was coined in England way back in 1190. In the word “mortgage”, the “mort”- is from the Latin word for death and “gage” is from the sense of that word that means a pledge to forfeit something of value if a debt is not repaid. So mortgage is literally a dead pledge. It was dead for two reasons, the property was forfeit or "dead" to the borrower if the loan wasn’t repaid, and the pledge itself was dead if the loan was repaid.

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