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Relax--Welcome Home
You might not know it from the daily news, but this is a good time to apply for a home loan.
The bad news headlines about mortgages mostly tell about homeowners who made risky mortgages with other lenders--lenders who want a loan on the books even if it's a bad deal for you.
We don't operate that way. You're a member, a part owner of the credit union. It's important to us that you can live with your loan.
Rates still are low and payments can be manageable. A credit union loan officer can explain your options, so your payment is one you truly can live with.
Call us today to start your home loan process.
And then relax--welcome home.
Tap Your Home's Equity
If credit card payments are eating up your disposable income each month, or if you need cash to remodel your kitchen--or to buy a new car--a home equity loan or home equity line of credit (HELOC) might be your best bet.
These loans let you borrow money using the equity in your home as collateral. Unlike almost any other consumer loan type, the interest on a home equity loan or HELOC of $100,000 or less is likely to be tax-deductible ($50,000 if married filing separately).
With a home equity loan, you borrow a lump sum of money repayable over a fixed term, usually five to 15 years, giving you the security of a locked-in rate and a consistent monthly payment.
A HELOC is much like a credit card or any other type of open-ended credit. You can borrow money as needed, up to the credit limit your lender assigns, using a special checkbook or credit card. A HELOC is usually a variable-rate loan, so your monthly payments will change based on your outstanding balance and fluctuations in the prime rate.
Home equity products do have closing costs, but they're generally far lower than for first mortgages, and lenders sometimes will waive the costs or roll them into the amount borrowed. With a HELOC, once you establish your line of credit you can borrow multiple times with no additional closing costs.
What to Do When Your ARM Is Due
If you have an adjustable-rate mortgage (ARM) and your fixed-rate period is drawing to an end, your first rate adjustment is looming. It's time to devise a plan.
Many ARM borrowers are facing that task with uncertainty. One of three homeowners with ARMs say they don't know what they'll do when their rate adjusts, according to a March 2007 Bankrate.com survey. If you're among those who feel unsure, consider a few pointers.
Begin by examining the ARM you have. How often can the rate adjust? How much can the rate rise at each adjustment? How much will your monthly payment increase at each adjustment? What's the limit on the rate increase over the life of the loan?
When your ARM comes due for an adjustment, you have three basic options:
1. Refinance into a fixed-rate 30-year (or shorter term) mortgage. You'd never have to worry about rate adjustments again for as long as you live in your home. But fixed-rate loans have higher rates than ARMs. You'll also have to pay closing costs to refinance (usually 2% to 4% of the mortgage amount), and your current ARM may have prepayment penalties. Check your contract.
2. Refinance into a new ARM that has terms better suited to your situation. You'll face the decision again in a few years about what to do when the rate adjusts. Still, a new ARM might be a viable option if you plan to sell your house in a couple of years. You'd save a bit on monthly payments in the meantime. Remember to factor in closing costs and any prepayment penalties.
3. Stay with the ARM you have and take the rate adjustment. If you have a low-rate ARM and it can't climb much, you might want to stay in it for the remaining few years and see what happens—if you can live with the uncertainty. It also makes sense to stay in your current ARM if you plan to sell your home soon.
If you need help to decipher your ARM contract and plan your next move, turn to FSU Credit Union. We can advise you with your best interests at heart. Call (850)224-4960 for an appointment or just stop by.
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