Borrowing Basics

Your credit score and history are vital to your financial health. It's important to maintain a healthy credit score, so when it comes time for you to apply for a mortgage, auto or personal loan, or any other big purchases, you are able to get approved and secure a low interest rate. The following tips can help you make good credit decisions.

• Monitor your credit report: Check your credit report on an ongoing basis for any errors and to monitor your progress. First National Bank credit card holders can now keep tabs on their FICO^® Bankcard Score 8 online 24/7 at no additional cost.
• Take advantage of online billpay: Late payments will negatively impact your credit score and history. First National Bank offers free online BillPay, allowing you to set up payments on a recurring basis and schedule payments up to 90 days in advance to ensure your bills are never paid late.
• Be aware of your available credit: Using too much of your available credit will lower your credit score. Monitor your credit to debt ratio, otherwise known as your credit utilization ratio. Having a low ratio - less debt than less available credit - is good way to improve your credit score.
• Avoid opening multiple new credit accounts: Apply for and open new credit accounts only as needed. Do not open a number of new accounts that you don't need just to increase your available credit, as this could actually lower your credit score.
• Reduce your debt: You should always maintain minimum payments on your accounts each month, but more importantly, you should pay down your revolving debt (credit cards) as much as possible. Put together a payment plan to payoff your existing credit accounts and avoid accumulating additional debt in the meantime.

There are different methods for paying off your debt depending on your personal goals and the type of debt you are carrying. Paying off your debt requires modifications to your spending habits and it’s important to choose a strategy and stick to it to help eliminate your debt. The following strategies can help you to decide which method is best for you.

Smallest Balances First

With this strategy, often referred to as the “snowball” method, you should make a list of all your accounts and balances and commit to making the minimum payment on all balances, except your smallest one. Then pay as much on the smallest balance each month as you can until you pay it off entirely. Then move up one-by-one and pay off each account until you get to the account with your largest balance. This method can allow you to have fewer bills and see continuous progress, continuing to motivate you to eliminate your debt as you are getting entire accounts paid off, one at a time. Those who are repaying revolving credit accounts, such as credit cards, and have enough income to pay the minimum on all accounts often use this strategy.

Highest Interest Rates First

Paying off your accounts with the highest interest rate can save you more in the long run than paying off your smallest balances first as you will likely pay less interest. If you pay off debt with higher interest rates, the money you would have been spending on that interest can go towards paying off other balances.

Debt Consolidation

Debt consolidation is a great way to pay down all of your debts at once by pulling them into one line of credit, such as a home equity loan or a personal loan. If you are paying on a variety of credit or loan accounts that have high interest, you may be able to secure a lower interest rate if you consolidate all payments into one. If you are struggling to meet your minimum payments and multiple due dates, debt consolidation may be a great option for you. ${brands.bankShortName} offers a variety of home equity loans and personal lines of credit with competitive interest rates and payment terms to meet your needs. Learn more about our lending options.

The most important thing to remember about paying off your debt is that you should stick with your strategy from start to finish and avoid accumulating any additional or unnecessary debt. Choose the payment method that works best for you and your family and continue down the road to a secure financial future.

With recent high-profile data thefts, protecting your identity has been top of mind for many. The following tips from the Federal Trade Commission will help you safeguard your personal information and your credit history as well as provide steps to take if your information has been compromised.

• Safeguard your personal information offline: Lock your financial documents in a safe deposit box or a lock box in your home. Limit what you carry in your purse or wallet and always leave your Social Security card at home. Shred any financial documents, credit card or account statements, or insurance forms that are no longer needed. When possible, sign up for online statements. ${brands.bankShortName} offers online statements to allow you to quickly and securely view your information.
• Secure your information online: Be aware of any spam emails or other types of online message that may lead to an infringement of your privacy and theft of your personal data. Do not give out any personal information over the phone or through email unless you are 100% positive of who is on the other side. Keep your passwords private and do not share personal details on social networks. Information shared publicly can help identity thieves to gain access to your accounts.
• Keep your devices secure: Use anti-virus software, anti-spyware software and set up a firewall to protect your device and personal information from being compromised. Always lock your laptop or device when finished using and do not save any automatic passwords or logins in your browser. Be aware of any information you are accessing over a public wireless network if it’s not secure and make sure websites you visit are encrypted.
• Monitor your financial accounts and credit report: Check your online banking and other financial accounts on a regular basis to look for any suspicious or non-authorized transactions. Sign up for credit monitoring services to be sure you are aware of any inquiries or dramatic changes to your credit score. ${brands.bankShortName}'s Credit Card now helps you keep tabs on your FICO® Bankcard Score 8. Just by logging in every month, you can view your FICO® Score 24/7 online and discover what Key Score Factors have affected your FICO® Score.

If your debt is piling up, combining what you owe into one manageable payment may be a good option. Reducing debt is a great step towards financial stability. Before beginning the process, you should check your credit report and correct any potential errors to ensure your credit history is accurate when you apply for a consolidation loan.

Juggling multiple monthly payments can be a challenge. Consolidating your debt offers the following benefits:

• Receive financial advice from a financial expert
• Ability to focus on one manageable payment
• Avoid potential late charges or fees from individual creditors
• Eliminate confusion of the different repayment terms and payment amounts from multiple credit lines
• Begin to get your budget and spending habits back on track to eliminate debt and reduce future debt

If you’ve decided consolidation is the best route to go to get your monthly payments under control, you should look for a flexible, low-interest loan that fits your individual needs. Taking out a home equity loan is a common way to consolidate your high-interest debt into one low monthly payment by using your home as collateral. Ensure you are comfortable with the monthly payment and confident that you will be able to pay the amount for the duration of the loan.

If you don’t own a home or have equity in your home, another option is to take out a personal debt consolidation loan. No collateral is required and you should look for a flexible loan with a fixed interest rate that allows you to pay off the loan early with no penalty charge.

First National Bank offers home equity loans and personal debt consolidation loans to help get you on the path to financial success. Managing your debt and continuing to make your consolidation monthly payment on time until the loan is paid off will lead to a more secure future for you and your family. Learn more about lending options from First National Bank.

Whether you are considering a big purchase in the coming year or just want to ensure a secure financial future, it’s important to protect and manage your credit score. Use the following tips, including obtaining your credit score once a year, not canceling existing credit lines, carrying low balances, and tracking credit card purchases.

• Monitor your credit score: Good financial health starts by knowing where you stand. This is why it’s important to monitor your credit report at least once per year to take control of your financial future, as well as safeguard against identity theft. First National credit card holders can now keep tabs on their FICO® credit score for free. Just by logging in every month you can view your credit score online 24/7, discover what key factors have affected your score, and find out what you can do to strengthen your financial heath. To learn more, visit www.firstnational.com/fico
• Do not cancel existing credit lines: You benefit from a long credit history, which is why it is important not to cancel any existing credit lines. Lenders also take a look at the ratio between the balances on your existing credit lines and your total available credit limit, so closing a credit line could negatively impact that ratio, causing your credit score to drop.
• Pay your monthly balance in full: It is in your best interest to pay off your credit balance each month in order to maintain or improve your credit score. If you are unable to pay off the entire balance, always make your payment on time and always try to pay more than the minimum payments to limit your interest charges.
• Reduce your overall debt: Eliminating your debt is the most effective way to improve your credit score. Pay off your accounts with the highest interest first and maintain at least minimum payments on your other accounts. To calculate how much it will take to pay off what you owe, visit First National’s online calculators.

For those who are not First National credit card holders, the Fair Credit Reporting Act (FCRA) allows you to obtain a free copy of your credit report every 12 months from each credit reporting company, including Experian, TransUnion and Equifax. You can request yours today at www.annualcreditreport.com.

If you are have plans to remain in your current home but still want to make improvements, you most likely have a budget you will want to stick to. The following tips will help you stick to that budget while still remodeling a space that your family will enjoy for years to come.

Getting Started

• Determine what you can do yourself vs. contracting out. Major electrical, plumbing and structural work should be left to the professionals, but installing a simple tile backsplash or changing out a light fixture yourself can save you money.
• If hiring a professional contractor, find someone who is familiar with the building codes in your area, as updating work that does not pass inspection can be costly. Also, ensure your contract includes the entire scope of your project to avoid unexpected expenses during the remodel.
• Plan ahead by choosing everything you want to include in your new room design to prevent impulsive, expensive decisions later during the process.

Be Creative

• Avoid structural changes if possible, and instead revamp the room through paint or other cosmetic changes.
• During the remodel, look for inexpensive ways to achieve the look you want. Install crown molding and window and door trim accents to give the room a finished look. Swap out doorknobs, handles and hinges to upgrade older doors or windows instead of replacing them.
• Upgrade instead of replace. Refinish your existing hardware floors instead of laying new flooring. Paint your cabinets instead of building custom ones. Small, less expensive renovations can provide satisfying results if you give them a try.
• Choose simple, classic designs to eliminate the need for another remodel a few years later.

Add Finishing Touches

• Shop secondhand stores or estate sales to find quality and affordable furniture for your remodeled room. Look for pieces with solid construction and classic lines you can reupholster or refinish to make your own and to match the style of your space.
• Add color to your room through rugs, art and a variety of throw pillows. This is an inexpensive and flexible way to change the tone and mood of a room.

When financing your remodel, consider utilizing the equity in your home. This may provide the perfect opportunity to make improvements and increase the value of your home. Contact First National today to learn more about our home equity loans, with competitive interest rates, payment terms to meet your needs and online access to view account information and make payments.

Buying a new home while selling your current home brings a unique set of circumstances, including the possibility of paying two mortgages, living in a rental home for a short period, and bridging financing between both homes. But if your family has outgrown your current home and you are ready to make a change, consider the following tips to help the process go smoothly.

• Evaluate the Market: Before you put your current home up for sale, you should evaluate the current housing market and look into the prices of houses in your neighborhood, as well as your potential new neighborhood. It’s important to get a good picture for how much homes are selling to help you determine how much you need to sell your current home to afford the home you want.
• Get Pre-approved for your New Mortgage: In today’s credit environment, it’s important to get a formal loan commitment from your bank to guarantee successful financing for your new home and to ensure there are no surprises or hiccups along the way that can be avoided. First National Bank will help you find a mortgage to fit your situation with low interest rates. Visit firstnational.com/mortgage or contact a mortgage specialist today at 877-687-5626 to get started on the pre-approval process.
• Consider Purchase Contract Contingencies: If you find a new house before you have sold your current house, it may be smart to make your purchase contract dependent on selling your current house. On the flip side, if you have found a buyer for your current house but have yet to find your new home, add a contingency that your closing will be dependent on your ability to close on a new house.
• Develop a Plan to Bridge Financing: You should prepare yourself to potentially own two houses. With that possibility comes the mortgage payment and expenses of two houses. Prepare for this by building up your savings ahead of time, or consider taking out a bridge loan. Bridge loans allow you to borrow money for the down payment on your new home based on the equity in your current home. However, bridge loans can include a variety of fees and a high-interest rate. Another option is to take out a home equity loan, and payoff the loan once you’ve sold your current home.

Purchasing a new home can bring numerous scenarios into play, depending on your personal and financial situations. First National Bank is here to work closely with you to ensure your finances are in place and the process goes smoothly during this exciting and important time.

Buying your first home is a decision that can stick with you a lifetime. Not only is it a financial investment, it is also a lifestyle change. You should consider the following financial and lifestyle factors before buying your first home.

Financial Factors Current income and expenses: Before committing yourself to a mortgage payment for the next 30 years, you should evaluate your current financial situation. Detail a list of your current income sources, as well as all expenses. Determine how much money you feel comfortable with allotting for a mortgage payment. This will also help you determine what price range you can afford. You should also consider expenses that come along with purchasing a home, such as earnest money, a down payment and closing costs.

• Tax advantages: New homes come with the possibility of tax advantages. Those possible advantages include deductions for mortgage interest, local property taxes and home equity interest (if you borrow against your home). Plus today's laws allow for savings on capital gains if you sell. As with any tax related issue it is best to discuss this with your tax advisor for all the little details. But if your rent payment is lower than a mortgage payment and you are comfortable living where you are, you can invest those funds and possibly receive the same monetary advantages.
• Maintenance and repair costs: If you are purchasing an existing home, it may involve maintenance and repair costs, both in the short-term and long-term. Ensure that you have a savings plan ready to handle any kinds of unexpected expenses that will be required to continue safely and comfortably living in your new home.

Lifestyle Factors:

• Home and yard upkeep: Maintaining the inside and outside of a new home may be a pro or a con, depending on your situation. If you enjoy landscaping, home maintenance, and decorating, owning your own home gives you the flexibility to make a house your home. If you lack the time, skills, or money to keep up with everything a house entails, you may want to consider continuing to rent.
• Future relocation plans: Consider how long you plan to live in an area. If your job requires frequent relocation or you are planning on moving to a new area within the next few years, renting may make more sense than buying, and having to quickly sell a home in a tough housing market.

Whatever choice you decide is best for you and your family, First National is here to help you through the entire home-buying process. Through the mortgage pre-approval to closing on your new home, First National Bank's mortgage loan officers will guide you along the way. For more information on our variety of mortgage products that will fit your needs, contact us today at 877.687.5626 or visit firstnational.com/mortgage

With rates near historic lows, now may be a great time for you to refinance your mortgage. But before you determine if refinancing is the best choice for you, it's important to have a clear understanding of what is involved with refinancing, as well as the pros and cons.

Refinancing Basics

The interest on your home loan is directly tied to how much your monthly mortgage payment is. By refinancing, you may be able to get a lower interest rate and reduce your monthly payment and build home equity more quickly, according to FederalReserve.gov. Refinancing can also affect the length of your mortgage. Shorter-term mortgages generally have a lower interest rate but your monthly payment is often higher because you are paying more on your principal. Longer-term mortgages will lower your monthly payment, but will increase the amount of time and the total amount you pay on your mortgage.

While costs may vary from lender to lender, you will most likely be responsible for paying a variety of fees including an application fee, appraisal fee, inspection fee, and closing costs. You will also be responsible for home insurance and title insurance. Use First National's "What Will My Refinancing Costs Be" online calculator to help get an idea of the potential costs associated with this decision.

Advantages of Refinancing

There are many advantages of refinancing including lowering your monthly mortgage payment, paying off bills or consolidating debt, improving cash flow, or planning for upcoming expenses such as a home improvement, education or a new vehicle. Refinancing can help you build home equity more quickly and help you pay off your mortgage sooner while paying less interest.

When Not to Refinance

Your current mortgage may include a prepayment penalty, which is a fee your lender will charge you if you decide to pay off your loan early or decide to refinance. These costs may outweigh the savings of refinancing, so be sure to carefully calculate and verify the fees associated with this penalty before making a decision to refinance. Also, consider if you plan to sell your home in the upcoming years as the fees associated with refinancing may outweigh the potential short-term savings.

Determining Your Eligibility

To determine your eligibility for refinancing, you lender will review your credit score, income, debts, your current mortgage agreement and the value of your property. Take our free 60 Second Mortgage Checkup to help you decide if refinancing is right for you. First National Bank has experienced mortgage professionals to help. Visit firstnational.com/mortgage to find a lender near you.

A home equity loan can help you reach your financial goals, such as paying for your child's education, making home improvements, consolidating your debts and more. Home equity loans offer low fixed interest rates and fixed monthly payments, giving you flexibility to use the equity in your home to your advantage now and save money in the long-term.

1. Making home improvements, such as remodeling your kitchen, replacing your windows or finishing your basement with a home equity loan is beneficial as home improvements will typically add to the value of your house. They can also make the home more energy efficient and cut down your utility bills. Additionally, certain home improvements may qualify for tax incentives, leading to additional savings.
2. Offset secondary and post-secondary education expenses with a home equity loan. Education costs are rising and low-interest home equity loans are a great option to supplement your savings for private and college education expenses. A home equity loan also offers you the flexibility of paying for education expenses in one lump sum versus multiple payments.
3. Consolidating your debts with a home equity loan is often a smart choice. If you have high-interest balances on credit cards or auto loans, a home equity loan may help you pay off those balances with a lower interest rate. This option may also help to improve your credit. If you do decide to consolidate your debts with a home equity loan, resist the temptation to continue using your credit card and run up a high balance again.
4. Settling unpaid medical expenses is a common use of home equity loans. If you have recently faced expensive, unexpected medical expenses, a home equity loan is an easy way to catch up on your payments and avoid late fees or high-interest charges.
5. Treat yourself to a long-awaited vacation. While saving for a vacation may not have been your priority, a home equity loan still gives you an option to affordably enjoy your dream vacation. A home equity loan may give you a much lower interest rate than charging your vacation to your credit card.

First National Bank offers Home Equity Loans with competitive interest rates and flexible terms, with access to view your account information and make payments online. Apply today online or stop by one of our convenient locations.