Using a HELOC to Pay Off High-Rate Debt. Is it a Good Idea?

Homeowners might wonder whether it’s a good idea to tap their home equity, or the market value of the property minus what is still owed on it, to pay down other types of debt, especially high-interest credit card balances.

Homeowners might wonder whether it’s a good idea to tap their home equity, or the market value of the property minus what is still owed on it, to pay down other types of debt, especially high-interest credit card balances.

One way to do this, using a home equity line of credit, is growing in popularity — more than $120 billion in HELOCs were created in 2014, an increase of about 22% over the previous year.

How a HELOC works

A HELOC, or home equity line of credit, is a bit like a second mortgage since your home serves as the collateral for the loan. However, a HELOC is a form of revolving debt, like a charge account, in that you’re able to withdraw money up to an approved limit, using a card or check, repay it and draw it down again. Since it’s secured, a HELOC usually has a much lower interest rate than the average credit card or a personal loan. You pay interest only on the amount you take out, and what you pay is often tax-deductible* on HELOCs up to $100,000.

Most lenders limit how much of your home’s value you can borrow. If your house is appraised at $400,000, you could borrow as much as $320,000 on it, including the first mortgage, at an 80% debt-to-value cap. So if your mortgage balance is $250,000, your home equity is $150,000, but the maximum you could borrow on that would be $70,000.

If you have significant debt, say, on a credit card with a 15% interest rate, a HELOC might seem like an easy solution. You could save on interest costs and lower your monthly payments. But proceed carefully. Unless you’re certain you have a stable plan for keeping up your payments, you could be putting your home at risk as a short-term solution to a financial jam.

Fees and risks to consider

Before you go too far, find out what obtaining a HELOC from your lender would cost — it might be substantially more than taking out a personal loan, for instance. A HELOC might require an application fee, property title search, an appraisal and attorney fees and even points, like on a mortgage. Lenders might waive some of these costs, but some also charge annual fees and withdrawal fees.

Most HELOCs have variable rates, so your monthly payments could go up or down periodically. Ask your lender how often the rate can be adjusted, and by how much. Some financial institutions offer fixed-rate HELOCs, but they might have higher initial interest rates than adjustable-rate credit lines.

Suppose your income drops unexpectedly, say from a job loss. If you were to default on unsecured credit card debt, the issuer wouldn’t be able to take possession of your property. But default on a HELOC and the lender could cause you to lose your home.

Using a lower-rate HELOC to pay down high-rate debt can be a savvy financial move as long as you fully understand all the costs and risks and have a stable plan for keeping up with your repayments.

*Please consult your tax advisor for questions.

© Copyright 2015 NerdWallet, Inc. All Rights Reserved

Interested in applying for a HELOC or other kind of loan? We can help. Start the loan process here.

 

Dividend Increase, Record Quarterly and Year to Date Earnings Q3 2015

F & M Bank Corp. Announces

DIVIDEND INCREASE, RECORD QUARTERLY AND YEAR TO DATE EARNINGS

 

TIMBERVILLE, VA—October 22, 2015—F & M Bank Corp. (OTCQX: FMBM), parent company of Farmers & Merchants Bank, announces its financial results for the third quarter and it’s recently declared third quarter dividend.

 

Selected Financial Highlights:

2015

2014

Q3

YTD

Q3

YTD

Net Income (000’s)

$      2,189

$   6,236 $   1,569

$     4,236

Net Income available to Common

$      2,062

$   5,854 $   1,569 $     4,236
Earnings per share

          0.63

      1.78

       0.47

       1.38

Net Interest Margin

4.41%

4.45%

4.36%

4.29%

Allowance for loan losses

1.64%

1.64%

1.70%

1.70%

Provision for loan losses (000’s)

$              –

$      300 $      750

$     2,250

Non-Performing Loans (000’s) $      6,386 $   6,386 $   7,053 $     7,053
Equity to Assets

12.47%

12.47%

11.59%

11.59%

Efficiency Ratio

57.05%

58.97%

56.14%

57.78%

Dean Withers, President and CEO, commented “Our third quarter earnings for 2015 totaled $2.19 million, which is an increase of over 39.5% compared to 2014. We continue to achieve record quarterly earnings on the strength of our net interest margin and efficiency ratio.” Withers continued, “Loans held for investment increased 6.6% or $33.5 million in the past twelve months. Loans held for sale increased $39.4 million compared to the same period in 2014, fueled by lower secondary market interest rates and an improving real estate market.”

Withers stated, “The decrease in our non-performing loans and the sharp decline in charge offs has enabled us to reduce our provision for loan losses, while maintaining a healthy allowance for loan losses of 1.64%. We continue to experience improvement in our criticized asset ratio which further supports the reduced provision.” Withers continued, “On October 20, 2015, our Board of Directors declared a third quarter dividend of $0.19 per share. Based on our most recent trade price of $24.00 per share, this dividend constitutes a 3.16% yield on an annualized basis. The dividend will be paid on November 16, 2015, to shareholders of record as of November 4, 2015.” Highlights of the company’s financial performance are included below.

F & M Bank Corp. is an independent, locally-owned, community bank holding company, offering a full range of financial services, through its subsidiary, Farmers & Merchants Bank’s ten banking offices in Rockingham, Shenandoah, Page and Augusta Counties, Virginia. The Bank also provides additional services through two loan production offices located in Penn Laird, VA and Fishersville, VA and through its subsidiary, VBS Mortgage located in Harrisonburg, VA.  Additional information may be found by contacting us on the internet at www.fmbankva.com or by calling (540) 896-8941.

This press release may contain “forward-looking statements” as defined by federal securities laws, which may involve significant risks and uncertainties. These statements address issues that involve risks, uncertainties, estimates and assumptions made by management, and actual results could differ materially from the results contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in: interest rates, general economic conditions, legislative and regulatory policies, and a variety of other matters. Other risk factors are detailed from time to time in our Securities and Exchange Commission filings. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

SOURCE:         F & M Bank Corp.

CONTACT:        Neil Hayslett, EVP/Chief Administrative Officer, 540-896-8941 or NHayslett@FMBankVA.com

 

 

F & M Bank Corp.
Financial Highlights

For Nine Months

Ended September 30

INCOME STATEMENT

Unaudited

2015

Unaudited       

2014

Interest and Dividend Income

$21,834,518

$19,838,232

Interest Expense

2,105,120

2,776,643

  Net Interest Income

19,729,398

17,061,589

Non-Interest Income

Provision for Loan Losses

Other Non-Interest Expenses

2,880,037

300,000

13,371,621

2,705,229

2,250,000

11,462,755

  Income Before Income Taxes

8,937,814

6,054,063

Provision For Income Taxes

Less Minority Interest income

2,586,293

115,397

1,844,035

26,300

Net Income

$6,236,124

$4,236,328

Dividend on preferred stock

382,500

                 –

Net Income available to common shareholders

$5,853,624

$4,236,328

Average Common Shares Outstanding

3,292,709

3,061,432

Net Income Per Common Share

Dividends Declared

                       1.78

.54

                      1.38

.51

BALANCE SHEET

 Unaudited

September 30,                         2015

 Unaudited

September 30,                         2014

Cash and Due From Banks

$6,420,254

$6,155,742

Interest Bearing Bank Deposits

489,849

1,038,662

Federal Funds Sold

16,165,000

Loans Held for Sale

Loans Held for Investment

55,481,773

540,414,615

16,131,118

506,845,616

  Less Allowance for Loan Losses

       (8,869,905)

       (8,601,293)

  Net Loans Held for Investment

    531,544,710

    498,244,323

Securities

24,143,104

19,298,256

Other Assets               38,021,163

37,539,741

  Total Assets

$656,100,853

$594,572,842

Deposits

$483,816,907

$487,640,625

Short Term Debt

38,239,340

3,783,809

Long Term Debt

              38,892,857

15,000,000

Subordinated Debt

Other Liabilities

13,313,770

 

 

10,191,000

9,043,174

  Total Liabilities

574,262,874

525,658,608

Stockholders’ Equity

81,837,979

68,914,234

  Total Liabilities and Stockholders’ Equity

$656,100,853

$594,572,842

Book Value Per Common Share

$22.05

$20.94

 

SOURCE:         F & M Bank Corp.

CONTACT:        Neil Hayslett, EVP/Chief Administrative Officer, 540-896-8941 or NHayslett@FMBankVA.com

 

8 Tips to Protect Your Identity

Protect Your Identity
Identity theft continues to be one of the fastest growing crimes in the United States. In 2014, there were 12.7 million victims of identity fraud in the U.S., according to Javelin Strategy and Research. F&M Bank recommends following these tips to keep your information – and your money – safe.

Identity theft continues to be one of the fastest growing crimes in the United States. In 2014, there were 12.7 million victims of identity fraud in the U.S., according to Javelin Strategy and Research. F&M Bank recommends following these tips to keep your information – and your money – safe.

1. Don’t share your secrets.

Don’t provide your Social Security number or account information to anyone who contacts you online or over the phone. Protect your PINs and passwords and do not share them with anyone. Use a combination of letters and numbers for your passwords and change them periodically. Do not reveal sensitive or personal information on social networking sites.

2. Shred sensitive papers.

Shred receipts, banks statements and unused credit card offers before throwing them away.

3. Keep an eye out for missing mail.

Fraudsters look for monthly bank or credit card statements or other mail containing your financial information. Consider enrolling in online banking to reduce the likelihood of paper statements being stolen. Also, don’t mail bills from your own mailbox with the flag up.

4. Use online banking to protect yourself.

Monitor your financial accounts regularly for fraudulent transactions. Sign up for text or email alerts from your bank for certain types of transactions, such as online purchases or transactions of more than $500.

5. Monitor your credit report.

Order a free copy of your credit report every four months from one of the three credit reporting agencies at annualcreditreport.com.

6. Protect your computer.

Make sure the virus protection software on your computer is active and up to date. When conducting business online, make sure your browser’s padlock or key icon is active. Also look for an “s” after the “http” to be sure the website is secure.

7. Protect your mobile device.

Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen. Before you donate, sell or trade your mobile device, be sure to wipe it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen. Use caution when downloading apps, as they may contain malware and avoid opening links and attachments – especially for senders you don’t know.

8. Report any suspected fraud to your bank immediately.

 

5 Ways to Protect Your Small Business from Account Fraud

Protect Your Small Business from Account Fraud
Corporate account takeover is a type of fraud where thieves gain access to a business’ finances to make unauthorized transactions, including transferring funds from the company, creating and adding new fake employees to payroll, and stealing sensitive customer information that may not be recoverable. F&M Bank recommends following these tips to keep your small business safe.

Corporate account takeover is a type of fraud where thieves gain access to a business’ finances to make unauthorized transactions, including transferring funds from the company, creating and adding new fake employees to payroll, and stealing sensitive customer information that may not be recoverable. F&M Bank recommends following these tips to keep your small business safe.

1.    Educate your employees. You and your employees are the first line of defense against corporate account takeover. A strong security program paired with employee education about the warning signs, safe practices, and responses to a suspected takeover are essential to protecting your company and customers.

2.    Protect your online environment. It is important to protect your cyber environment just as you would your cash and physical location. Do not use unprotected internet connections. Encrypt sensitive data and keep updated virus protections on your computer. Use complex passwords and change them periodically.

3.    Partner with your bank to prevent unauthorized transactions. Talk to your banker about programs that safeguard you from unauthorized transactions. Positive Pay and other services offer call backs, device authentication, multi-person approval processes and batch limits help protect you from fraud.

4.    Pay attention to suspicious activity and react quickly. Look out for unexplained account or network activity, pop ups, and suspicious emails. If detected, immediately contact your financial institution, stop all online activity and remove any systems that may have been compromised. Keep records of what happened.

5.    Understand your responsibilities and liabilities. The account agreement with your bank will detail what commercially reasonable security measures are required in your business. It is critical that you understand and implement the security safeguards in the agreement. If you don’t, you could be liable for losses resulting from a takeover. Talk to your banker if you have any questions about your responsibilities.

For additional information, give us a call or email us; we will be happy to help. You can also visit the following websites to learn more about how to protect your small business:

•    U.S. Chamber of Commerce: Internet Security Essentials for Business
•    Federal Communications Commission: 10 Cybersecurity Strategies for Small Business
•    Better Business Bureau: Data Security Made Simpler 
•    NACHA – The Electronic Payments Association Corporate Account Takeover Resource Center

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