Whether you’re purchasing your first car or upgrading your current model, it’s important to understand the commitment you’re making and plan for the long-term expense. Before signing any papers and driving your new car off the lot, make sure you do your homework and have your budget set or your payment plan in place.
Financing Your New Car
When you decide to purchase a new car, there are a lot of considerations to make: will you be trading in your current vehicle and/or putting money down? If so, how much? The more money you are able to put down up front, the lower the amount you’ll need to finance.
Speaking of financing, many people finance their automobile through their dealer or through a bank, but they often end up paying a higher interest rate as a result. Securing a low-interest auto loan through LUSO Federal Credit Union can result in a significant cost savings over the life of your loan. Figure out how much you can afford to pay for a car loan each month with our online Auto Loan Affordability Calculator.
Budget for Related Expenses
Aside from the monthly payment for your auto loan, there are other considerations to make when buying a new car. In addition to regular car payments, you’ll have to pay for your insurance premium, the cost of gas and other driving expenses such as parking or tolls, and regular maintenance, inspections and registration costs. And don’t forget emergency expenses for unexpected repairs that aren’t covered under warranty. Setting up a LUSO savings account with direct deposit when you open your auto loan can make budgeting for these unexpected expenses a bit easier.
If you’ve decided to purchase a new car, truck or SUV or if you’ve already purchased your new car with dealer financing, ask us how we can help you refinance to lower your payments!
LUSO Federal Credit Union is a not-for-profit, member-owned financial cooperative dedicated to providing members with quality financial services and products. We at LUSO pride ourselves on serving the financial needs of our members and helping them save for the special occasions in life.
Feel free to contact our Ludlow or Wilbraham branch toll free at 1-844-LUSO-FCU.
Homeowners often find themselves in need of funds for various purposes, such as home improvements, debt consolidation, or major expenses. Two common financial products that allow homeowners to tap into their home equity are the Home Equity Line of Credit (HELOC) and the Home Equity Loan.
When faced with the need to access the equity in your home, understanding the nuances of financial products like a home equity loan and a HELOC is crucial. Both options can provide substantial funds for various purposes, but they operate differently and suit different financial needs and goals. By carefully considering the similarities and differences between these two products, homeowners can make informed decisions that align with their specific circumstances, whether they are planning a major renovation, consolidating debt, or preparing for future expenses. Making the right choice can lead to financial stability and better management of resources, while an uninformed decision could result in unexpected costs and complications.
While these products may seem similar at first glance, they have distinct characteristics, advantages, and ideal uses. LUSO Federal Credit Union’s dedicated lending staff is well-versed in the similarities and differences between HELOCs and home equity loans, and can guide you on when each might be the best choice.
Collateral Requirement: Both HELOCs and home equity loans are secured by your home. This means your house serves as collateral, which can result in more favorable interest rates compared to unsecured loans.
Home Equity Utilization: Both products allow homeowners to borrow against the equity they have built up in their property. Home equity is calculated as the difference between the current market value of your home and the remaining balance on your mortgage.
Disbursement and Repayment Structure:
• Home Equity Loan: This provides a lump sum of money upfront, which is repaid over a fixed term with consistent monthly payments. The interest rate is fixed, providing predictable payment amounts throughout the life of the loan.
• HELOC: A HELOC operates more like a credit card. It provides a line of credit that you can draw from as needed, up to a predetermined limit. The draw period, during which you can borrow money, typically lasts 5 to 10 years, followed by a repayment period of 5 to 10 years. Payments can vary based on how much you borrow and the interest rate, which is variable.
Interest Rates:
• Home Equity Loan: The interest rate is fixed for the life of the loan, meaning your monthly payments remain constant. This predictability can be advantageous for budgeting.
• HELOC: The interest rate is variable, tied to the U.S. Prime Rate as an index. This means your payments can fluctuate, making it more challenging to predict your monthly obligations.
Flexibility and Usage:
• Home Equity Loan: Best suited for large, one-time expenses, such as major home renovations, medical bills, or consolidating high-interest debt. The lump sum disbursement and fixed rate offer stability and certainty.
• HELOC: Ideal for ongoing or variable expenses. If you have recurring costs or anticipate needing funds over a period of time, such as paying for education, a HELOC provides flexibility. You only pay interest on the amount you draw, not the entire credit line.
Deciding whether to use a home equity loan or HELOC hinges on your specific financial needs and goals. By clearly identifying the purpose, you can select the product that offers the best terms and flexibility, depending on your situation.
Home Equity Loan:
• Major Home Improvements: If you’re planning a significant renovation project, the lump sum can cover contractors, materials, and other costs.
• Debt Consolidation: For those with high-interest debt, consolidating into a single home equity loan can simplify payments and potentially reduce interest costs.
• Large One-Time Purchases: Ideal for expenses that require substantial upfront payment, like a new roof or major medical procedures.
HELOC:
• Home Maintenance and Minor Renovations: If you foresee needing to fund various small projects over time, a HELOC provides flexibility.
• Educational Expenses: For parents with children in college, the ability to draw funds as needed can be very beneficial.
• Unexpected Expenses: A HELOC can act as a financial safety net, offering accessible funds in case of emergencies.
For more information about Home Equity options, contact Vera Carvalho, Lending Manager at LUSO Federal Credit Union, at (413) 589-9966 x114.
When it comes to purchasing a new home, it’s important to do your homework. It’s a big change that will likely affect your life (and finances) in a variety of ways, so advanced preparation is key. If you’re considering entering the housing market, here are a few things you should know:
A home is probably the single most expensive purchase you’ll ever make, so it’s best to prepare before you even start looking. When you own your own house, you’re responsible not only for the mortgage and utility payments, but also for the maintenance and repair costs. These can add up quickly. In order to put yourself in the best possible financial position when looking to purchase a home, check your credit score, make sure you are debt free and have an emergency fund of three- to six-months’ worth of expenses set aside.
Maintaining a healthy credit score is important when trying to secure a mortgage. That’s why LUSO Federal Credit Union offers Credit Sense through online and mobile banking. Credit Sense is a FREE service that allows our members to check their credit score at any time, right from their computer or mobile device, just by logging into their LUSO online account. Checking your credit regularly will give you an idea of what debts you need to pay off before you’re able to secure a mortgage. We offer a debt payoff calculator in our Financial Wellness Center, that will show you how long it will take to pay off each loan and how much interest will accrue over the length of said loan.
Once you are debt free, you can set up a direct deposit into a dedicated savings account to easily start building your emergency fund. This stash of money will come in handy when, months after you move into your new home, one of your appliances breaks down and you find yourself in need of a replacement or you suddenly find yourself unemployed or without a significant source of your income with which to pay your mortgage.
Before you become emotionally attached to your dream home, it’s important to determine whether you can afford a mortgage based on your income and budget. Check out our Mortgage Affordability Calculator to figure out if the monthly payments on a mortgage will fit within your budget. Be sure to account for monthly housing costs (HOA fees, taxes, insurance, etc.). Remember that property tax rates and the cost of homeowner’s insurance can vary, so check with your real estate agent and insurance company for estimates that can help you with your calculations.
If you’re unable to pay cash for the total price of a house, set a goal to save at least 20% of the purchase price for your down payment. This will help you to avoid paying for private mortgage insurance (PMI), which protects your lender if you can’t make your mortgage payment and end up in foreclosure. PMI usually costs 1% of the total loan value and is added to your monthly payment. If you’re a first-time homebuyer and you’re unable to save 20% to put down, contact one of our dedicated lending specialists to inquire about our first-time home buyer program and our variety of mortgage products. We would love the opportunity to help you purchase your first Home Sweet Home! Remember that in addition to putting money down on your home, you’ll also be required to pay a closing cost at settlement. This cost typically includes a loan origination fee, appraisal fee, tax and insurance escrow, and more.
So, you’ve gotten yourself out of debt and you have some money set aside to use for your down payment and closing costs. Before you hit the road in search of Open Houses, make sure you contact us to obtain a mortgage pre-approval. This shows sellers that you’re a serious buyer and can help first-time home buyers get ahead in a competitive market. We will need to verify your financial information (proof of income, taxes, etc.) to get started.
Once you obtain a pre-approval from us, you can begin the search for a home in your price range. Congratulations, and we’ll see you when your offer is accepted!
LUSO Federal Credit Union is a not-for-profit, member-owned financial cooperative dedicated to providing members with quality financial services and products. We at LUSO pride ourselves on serving the financial needs of our members and helping them save for the special occasions in life.
Feel free to contact our Ludlow or Wilbraham branch toll free at 1-844-LUSO-FCU.
There are many benefits of a home renovation and it can be an exciting venture. Home renovations give homeowners the opportunity to express their individual tastes and style throughout their home. With a plan in mind, an end goal, and an understanding of these benefits, anyone can achieve the home renovation of their dreams.
Upgrading your home is one of the most profitable decisions you can make because it adds value to your home. It can also improve your home’s size, layout, or design so that the space is more aesthetically pleasing and functional. Disregarding the importance of a remodeling project can result in lost money when it comes time to sell your home. Upgrades also influence the appeal of your home. The longer you live there and enjoy the improvements you make over time, the more the upgrade contributes to the overall return on your investment. Renovating your home is a guaranteed way to raise the value of your property.
Home renovations help reduce maintenance and utility costs. Repairing your home can be more expensive when maintenance has been postponed or ignored for too long. By starting improvement projects at the first sign of a problem, you will save more in the long run. Examples include replacing your windows, doors, or siding, which can result in greater security and a higher level of energy efficiency.
Renovating your home not only increases its resale value, but it also helps you adjust to an evolving lifestyle. For example, you can benefit from extra space to accommodate a growing family; you can remodel a guest room into a home office or games room; or you can transform your kitchen to give you more storage space and an area to entertain guests.
The number one use of home equity loans is for home improvement. The benefit of this is that if you purchased a home you’re not totally in love with, and you want to remodel, you can use mortgage lending to get the job done. Whether it be for an addition to your home, aesthetic changes, kitchen and bathroom upgrades, building a garage, or finishing a basement, you can leverage your home equity at a low rate to invest it back into your home for a more comfortable living situation.
If you are considering a home renovation, consider exploring the home equity features at LUSO Federal Credit Union. Our lending professionals can help you make the most of your mortgage, manage your finances, get out of credit card debt, start saving for future goals, and get you set up with the loans you need. Our services and rates are available in Hampden County, Massachusetts. For a home equity loan or line of credit in Ludlow or the surrounding areas, contact our Ludlow or Wilbraham branch at 1(844) 587-6328 to learn more.
