Buying a Home?

Buy or Rent?
Should you buy a home, or continue to rent? In mulling over that decision, many people ask themselves only one question: "Can I afford to buy?" If the answer is yes, they assume that buying is their best option. But you need to weigh much more than just the finances, which obviously are crucial. You also must ask yourself: "Am I cut out to be a homeowner?" "Do I really want to own a house?" Honest answers to these questions, as well as to the one about money, can save you lots of time, trouble and trauma later on. The following lists sum up the advantages and disadvantages of buying a home.

Advantages:

It's your castle. You can pound a nail in the wall without worrying that you'll chip away dollars from your security deposit refund.
Your housing costs stay somewhat steady. There's no landlord to spring a rent increase on you every year or two. With a fixed-rate mortgage, your monthly payments for loan principal (the amount you borrow) and interest (the fee you pay for using the lender's funds) won't change over the entire period of the loan. Of course, property taxes and insurance premiums will fluctuate.
You build equity! You have something to show for the money you've spent besides a fistful of cancelled rent checks.
It's an investment. Although house values aren't rising at double-digit rates they are still appreciating or at least remaining stable in most (but not all) areas.
You get tax benefits. On your federal income taxes, you can deduct what you pay in property taxes and interest on your mortgage, if you itemize. That can save you hundreds or thousands of dollars each year.

Disadvantages:
The up-front expenses are hefty. The down payment and closing costs add up to a sizable chunk of cash, due before you even get the keys to the front door.
Some people end up financially stretched and emotionally stressed. By the time they make their monthly mortgage payments, plus pay their other living expenses, they have little left for anything else. All the more reason to take a hard look at what you can really afford. E-mail or call us - we can help you help you with those calculations!
Keeping a house in shape takes money. If the roof leaks or your furnace dies, you can't call your landlord to rescue you.
and time. Even small home repairs and general maintenance, like lawn-mowing, eat into your free time. It's a fact of life that renters don't have to contend with.
If you need to sell, it will take time.

A precise evaluation of the financial pluses and minuses of home owner-ship can get complicated. There are so many factors to juggle in the equation: the costs (including down payment, closing costs, mortgage, insurance, property tax, utilities, repairs); the income tax benefits; the predicted resale value of your home a few years down the road; what you would have earned, after taxes, on the down payment money if you'd invested it instead; the going rental rates where you live. Your credit union can help you figure out whether, from solely a financial standpoint, it makes more sense for you to rent or buy. But, remember, financial issues are only part of the picture. Only you can weigh the psychological and emotional factors and decide if you're ready to own a home.

What is predatory lending and how can it affect you?
When you hear �Bad credit? No credit? No problem!� followed by promises of easy money, watch out! A loan from such a source could end up being a costly mistake. If you agree to such a loan and then fall behind in your payments, you can ruin your credit. You can also lose your cash savings and even your home!

Most lenders are trustworthy � but unfortunately, some lenders are not. They sometimes direct borrowers away from loans with more affordable interest rates. Instead, they offer loans that carry very high interest rates, questionable fees, and unnecessary charges. These practices are considered predatory lending.

A predatory lender may be a large company with a name you know. Or it may be a small company or a loan broker you�ve never heard of. But predatory lenders have many of the same traits. They:

offer loans based solely on the equity in a home, not on the borrower�s ability to repay the loan;
charge unusually high interest rates for loans;
add excessive points to a loan without lowering the interest rate;
include excessive fees; and
tack on unnecessary costs, such as prepaid single-premium credit term insurance.

With or without these extra charges, you may find it difficult or even impossible to repay the loan. If you fall behind in your payments, more charges may be added. Or the lender may suggest that you refinance the loan to lower your monthly payment. But the unpaid payments may be added to the new loan amount, costing you even more money over time. Then the loan becomes even more difficult to repay. If you can�t make the payments, you could lose the items you purchased or used to secure the loan. Click here for more information on predatory lending practices and victim's stories.

First-Time Homebuyers
Have you been thinking of buying a home but are having trouble setting money aside? Well, we have the plan just for you. We can help you get started with a savings plan that will not overload your monthly budget.
Here�s how it works:
We ask that you schedule an appointment with one of our credit union officers. During the appointment you will receive two informative handouts. First, you will be given a copy of our Home Buying Program Member Workbook. We will help you complete the workbook to determine what size house you can afford, how much you will need to save in the form of a down payment and how much you can afford to save each payday.

Next, we will provide you a copy of the Knowing and Understanding Your Credit handbook. We will review with you your credit report in detail and help you establish an effective strategy to address any credit problems.