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Financial Words of the Week: Delinquency and Derogatory

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FWOTW

Have you ever missed a credit card bill or a loan payment? You may know that missing a bill can hurt your credit, but do you know how much? What should you do about it?

What does a late payment mean for my credit?

Missing a loan or credit card payment is known as a delinquency. Delinquencies may  negatively affect your credit history and credit score. If you miss a payment, the best thing you can do is to make that payment as soon as possible. The longer you wait, the more interest will build up.

In terms of your credit score, you need to make the original payment before the next payment is due as well as that next payment. Generally, delinquencies are measured in months, rounding up to the nearest month. The day after the missed due date, an account could be counted as one month late, depending on the lender. One month and one day after the missed due date, that account may be considered two months late and is now a major derogatory.

What is a derogatory, and what makes it major or minor?

Any negative information on your credit history is a derogatory. When a lender reviews your credit, they look at what derogatories show up and how recent they are. Derogatories (or your lack of derogatory information) also make up an important chunk of your credit score. A debt two months late or more counts as a major derogatory. Major derogatories hurt your credit score more because of their serious nature. Other examples include bankruptcies, foreclosures and many debts that go to collections. If you have already missed one month, the best thing you can do is not let it become two.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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HGTV’s House Hunters features Kansas City UMB associates

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Do you love the show House Hunters? A couple of our associates were featured recently and plan to share some insider house-hunting tips on the blog later this month to continue our “Steps to Buying a Home” series. In the meantime, catch their episode tonight on HGTV at 10 p.m. CST.
061017UMB Unit Finance Managers Josh Cummings and Natalie Crumpton with their realtor, Monte Boultinghouse

 

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Words of the Week: Fixed Rate / ARM

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Previously, we defined interest  as the cost of borrowing money. You have a range of options when it comes to interest rates. Before you take out a new loan or credit card, be sure you understand those options.

When looking at mortgages, you will likely see fixed rate and adjustable rate mortgages. With a fixed rate mortgage, your lender sets the interest rate during the application process, and it does not change for the life of the loan. With an adjustable rate mortgage, your interest rate will change regularly, based on a published reference rate. The frequency of this change depends on your mortgage.

Loans other than mortgages can be either fixed rate or variable rate. The definition of a fixed rate loan is the same as a fixed rate mortgage, but variable rate loans differ from adjustable rate mortgages in how frequently the rate can change. If the reference rate changes frequently, the interest rate on a variable rate could change monthly. Many car loans have fixed rates, while most credit cards have variable rates.

If you are unsure what your interest rate is on an existing loan, you can look at the terms and disclosures on your monthly statement or your loan paperwork. If you are applying for a new loan or line of credit, the application disclosure should tell you how the interest rate is set.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Happy Independence Day!

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How does your patriotic pocketbook compare to the rest of America’s?

07-04 (1)

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Words of the Week: Points, Origination Fees and Closing Costs

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FWOTW
All three of these terms refer to costs associated with applying for a loan. Lenders sometimes charge these fees to cover the cost of underwriting, appraisals, document preparation and other parts of the process. Generally, the fees will be higher with mortgages than other loans. Mortgages have more complicated requirements compared to other loans. Origination fees are one-time flat fees that cover the costs of processing the loans. By comparison, closing costs may include expenses associated with the real estate transaction that cannot be included in the mortgage amount. A point is one percent of the dollar amount financed. Lenders may let you pay points to lower the interest rate or they may charge points instead of origination fees. Some examples of possible closing costs:

  • Appraisal: The cost of hiring a real estate professional to determine the value of the house
  • Inspection: Hiring an engineer or building professional to examine the structural condition
  • Flood Certification: By law, every mortgage made through federally-regulated or insured lenders must include a flood certification. This assessment determines if the property resides in a high-risk flood area. Homeowners with mortgages in high-risk areas must have flood insurance.
  • Realtor Fees: Real estate agents are paid based on the cost of the house, normally around 3 percent of the selling price.

Mortgage laws vary greatly from state to state. Additionally, each mortgage lender has different products and offers. Because of these complex issues, your costs may be different from those listed above. The best way to learn more is by working with an experienced mortgage loan officer. They can walk you through the full process and help you understand the costs involved. Be sure to check the blog for our “steps to buying your first home” series. So far, we’ve covered Pre-Approval (Step 1) and Choosing the Loan that’s Right for You (Step 2).

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Principal and Interest

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What are Principal and Interest?
As you pay down debt over time, your payments go towards principal and interest. Principal describes the amount remaining on the original amount loan or line of credit. Interest is the cost of borrowing money over time.

What does an interest-only loan mean?
With an interest-only loan, you can borrow money and any payments that you make during the initial period go towards paying interest costs, but do not reduce the principal. When the interest-only period ends, the loan matures or comes due. At maturity, depending on your contract with your lender, you will either need to begin making payments on principal and interest or you will need to pay back the full principal amount, called a balloon payment. Today, Home Equity Lines of Credit (HELOCs) make up a large portion of interest-only lending. As a borrower, you should carefully read the documentation on any loan and make sure that you can afford the payments when the loan comes due.

Why should I care? It’s all going to the loan, right?
First, some loans may have tax advantages, such as student loans, mortgages, and some HELOCs. You should always consult your tax advisor on what will count toward a tax benefit. One common form of tax advantage is a tax deduction or credit for some or all of your interest payments. Second, if you want to pay down your loans faster, make sure your extra payments go towards principal. By paying down the principal, you will owe less interest each payment and pay your loan off sooner.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Do you need a wealth advisor?

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Do you need a wealth advisor (also known as financial planner)? You might think that only the very wealthy need this type of expert advice. If you’re interested in investing, whether it’s for retirement, education or to leave a legacy, it is recommended that you work with a financial planning professional.

Whether it’s your first time talking to a financial planning professional or your 10th, you want to ensure your advisor is taking the time to ask the sometimes difficult questions to plan the best future for you.

Basic financial planning questions

Most customers focus on questions like:

  • Will I have enough to retire?
  • Will my children’s education be taken care of?
  • What if I get sick?

These are important topics to cover, but an in-depth financial/estate planning will include more than these basic questions.

Do I need a trust?

One question you should ask is, “Do I need a trust?” A trust is a legal agreement that allows you to transfer assets to a trustee. A trust can be used for various reasons including to:

  • manage assets
  • protect assets
  • facilitate charitable gifts
  • transfer of monetary assets or property

If the answer is yes, your advisor should assist you with making sure your assets are titled appropriately, or given the correct ownership recognition. You wouldn’t want to spend several thousand dollars for an attorney to prepare a trust document, only to find out that the assets aren’t titled appropriately. If so, the trust doesn’t get funded and your estate plan isn’t carried out to your intentions.

What about insurance?

Your advisor should also discuss the topic of insurance with you. Customers and advisors sometimes avoid this question, as it can be an uncomfortable conversation. Most insurance is used in the case of a disaster, accident, illness or death, and these are not pleasant subjects to discuss. You want an advisor who will understand the sensitivities of these topics, but will not avoid the subject. Insurance is an important part of a financial plan and it can be helpful to your family’s future.

Building relationships

You should look for an advisor who will build a relationship with you. If they work to create more than a business partnership, it’s likely there will be more open dialogue between you both. Advisors who are thorough in their work and ask the hard questions will be able to build a solid financial/estate plan for you, your family and their future generations.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Jumbo Mortgage

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FWOTW

What is a jumbo mortgage? A loan for a big house? Jumbo mortgage refers to a mortgage for more than a certain dollar amount. The limit is currently $417,000 for most areas, with a higher limit in certain high-cost regions. Mortgages of less than $417,000 may be called conventional mortgages. Many federal homeownership programs do not apply to jumbo loans. Lenders often charge higher rates for jumbo mortgages or have more restrictions on the loan, even for the same borrower. If I’m looking at a house that’s $420,000, does this apply to me? Maybe. A number of factors affect the total amount financed. Your down payment, the loan terms and where you’re buying will all influence the size of the loan. These potentially complex issues present another reason why it’s so important to work with an experienced mortgage officer. When you get pre-approved, your mortgage officer will help you understand your situation and how much you can afford. Your mortgage will be as unique as your home, so make sure you get the individual attention you deserve. luxury house

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Lien

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What is a Lien?

When a borrower uses collateral to get a secured loan,the lender has a legal claim to that collateral. That legal claim is the lien. Lenders most commonly place a lien on a home for a mortgage and on a car for an auto loan. When a creditor places a lien, the creditor must be paid and the lien released before the property can be sold. For secured loans, the lien is created voluntarily.

Liens and Car Loans

When you buy a vehicle using an auto loan, the lender places a lien on the car title with your state motor vehicle office (depending on where you live). That lien will remain on the car title (even if the car is subsequently transferred) unless the lender issues a lien release. A lender releases a lien by notifying the proper officials, usually upon payment in full of the loan. This is an important step to research when selling or buying a vehicle privately. When you buy or trade-in with a car dealership, they usually assist with this process.

Liens and Mortgages

Houses and other real estate can have more than one lien. If you have a mortgage and use your home for another loan or line of credit, the second lender will put a lien on your home. One lender will have a first lien, meaning that in the event of non-payment, they get paid first. The other lender has a second lien position, meaning they will be paid after the first lender.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Community Partnerships: The key to your diversity and inclusion plan

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So your company has created and implemented a comprehensive diversity and inclusion plan. Now what? A key component of your company’s plan is choosing community partners. These partners provide an expertise and insight on how your company can succeed from a diversity and inclusion perspective.

Diversity Partners

At UMB, we choose organizations and groups that have been identified through our diversity council as major contributors to our strategy. Our goal is to have these organizations enhance our diversity and inclusion strategy in four ways:

  1. Talent acquisition and development – We build a stronger company by hiring and retaining talented, high-performing associates with diverse backgrounds.
  1. Associate engagement – We demonstrate inclusiveness by ensuring each of our associates has a voice and opportunities to share ideas.
  1. Corporate community involvement and volunteerism – Our associates regularly volunteer at the organizations who are our collaborative partners.
  1. Regional cohesiveness – We try to find organizations that have outreach in multiple cities across our footprint (Black MBA Association in Kansas City and St. Louis, Urban Financial Services Coalition in Kansas City, St. Louis and Omaha). But we also will work with independent organizations (The Regional Business Council of St. Louis).

So how do both the company and the community organization benefit from these partnerships?

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Within the company, community partnerships help make associates aware of diversity. Additionally, they help associates stay educated about their community. Some organizations even offer training programs for associates, like a Lunch and Learn, so they can get a better understanding about the community organization and the work they do. For example, UMB works with the Hispanic Chamber of Commerce in Greater Kansas City and they provide our associates with training about how to work with Hispanic businesses.

The company benefits externally from these partnerships by helping us connect with our community. They help us connect with people, resources and other businesses. They help share our vision, mission and values in the diverse communities that we serve.

Community organizations benefit from these partnerships depending on the company. At UMB, we provide them with financial education programs. We also have company officers who serve on boards for the organizations. And we encourage our associates to volunteer for their various programs.

Ultimately it’s important for both the company and the organization to feel like the partnership is bringing some value to them. Both parties should be involved, creating mutually agreed upon activities and goals. Representatives from both organizations should meet regularly to discuss whether or not the partnership is on track. In fact, at UMB we require our collaborative partners to submit an annual report, as well as a scorecard that gives information about their website traffic, how many scholarships they gave out and the amount (if applicable), how many programs they organized during the year, etc.

With the help of these community partners, your company’s comprehensive diversity and inclusion plan will be complete. With your unique combined perspectives, you can be more competitive and create stronger connections within your markets.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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