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Home Sweet Home Equity Loan

Here’s What You Can Do With a Home Equity Loan

There are a lot of perks of owning your own home, but from a financial perspective, the most significant is the ability to build equity—that is the difference between the market value of your home and what you owe on your mortgage.

As your equity grows, so does your potential to capitalize on it, using it as collateral to secure the funds for major financial investments. This is known as a home equity loan and how it works is pretty straightforward: You borrow money against the amount of equity you have in your home. 

Why would you do that? Well, you can use this loan for a variety of purposes. Here are some of the most common:

  • Funding a student loan for yourself or your child 
  • Paying off or consolidating credit card debt 
  • Funding a vacation 
  • Paying for weddings or important celebrations 
  • Starting a business 
  • Making home improvements and upgrades 
  • Paying medical bills 
  • Making key purchases, such as a car or a truck 
  • Funding investments 
  • Set aside for an emergency fund

Welcoming Advantages of Home Equity Loans

Using a home equity loan can have several potential advantages:

  • The interest rates for home equity loans are fixed, instead of variable, and your monthly payment is consistent, so you never have any surprises.
  • You can pay for big purchases little by little.
  • The interest rate you pay on a home equity loan is often lower than those for credit cards or other types of loans.
  • You can usually get access to funds quickly, sometimes within days of completing the loan documents.
  • You also might be able to deduct the interest you pay on a home equity loan. Talk to your tax advisor for specifics.

Apply for a Home Equity Loan With Us Today

At Common Trust, we are proud to provide the personal banking services our members deserve. If you’re interested in learning more about our home equity loans or you’d like to apply, reach out to us today!

Until Sept. 30, we’re offering a special deal with our home equity loans. Learn more here.

 

Helping Young People Manage Their Money.

Whether a few bucks from the grandparents on their birthday or their first paycheck from a summer job, teaching young people how to manage their money is one of the most important lessons they’ll ever learn. They already know how to spend the money. The challenge is to show them how to earn it, save it, and maybe spend it more smartly.

To help, we’ve pulled together a few tips, some timely suggestions, and even thrown in a few good deals. Yes, because we’re a credit union – but we were young once, also. 

Earning It.

“Slow feet don’t eat.” Your kids might not miss any meals, but instilling an appreciation for the daily hustle can only serve them well in the long view. Chances are good they’ve already been introduced to the free-market economy by being paid cash for services rendered – shoveling snow, washing the dishes, vacuuming the floor, etc. Valuable stuff, but don’t neglect the flip side – don’t do the work, and they don’t get paid.

Eventually, many older kids become someone else’s employees, and nothing offers real-life money lessons better than a real-life job. First-time employees have to show up on time, work for someone who won’t care how cute they once were, and pay taxes. Oh, and one additional real-life lesson worth learning: Seeing Uncle Sam’s piece of their paycheck. 

Saving It.

If your kids earn more dollars than coins, it’s time for their first bank account. Make it theirsdon’t connect it to your account in case of overdrafts or a stolen identity. Do be the signer on the account to see spending behavior. It’s your opportunity to show young account holders how to balance their budget, track spending, and understand the long-term benefits of saving. A first car, college, that VR headset they didn’t get as a gift – if they want it, they need to start saving for it. From now until June 1st, Common Trust Federal Credit Union is offering a Youth Savings Account promotion. Open a savings account with us, and they’ll be automatically registered to win a new bike.

Now, Give Them Some Credit.

Some of those things worth saving for require not only cash but credit. Good credit takes discipline, which young people don’t always have. Hey, we don’t judge – plenty of adults learned the hard way about the importance of having and keeping good credit. An excellent plan for getting young adults started on the path to good credit is the credit-builder loan. That’s a special kind of loan specifically designed to boost credit scores. The young person  – aka “the borrower” – pays a lender in monthly installments and, in the end, receives that money in a savings account. The lender reports their on-time monthly payments to the credit bureaus, thus building (or rebuilding) their credit history. At Common Trust, it would be an honor to help a young person establish a good credit history with a credit-builder loan. 

Rent, Buy, Refinance: 5 Questions to Guide Your Decision

Buying a home can be an exciting milestone in your life, and it’s important to educate yourself on the financial implications of homeownership before you make an offer. Whether you’re a first-time homebuyer or a current owner looking to sell or refinance, there are a few key questions that should help guide your decision:

1. What are the pros and cons of owning vs. renting? 

Owning a home is a long-term commitment. Recent studies show that the average buyer expects to live in their new home for 13 years before selling. While homeownership allows you to build equity and take advantage of tax benefits, owning also comes with risks.Educate yourself on the costs and benefits of owning a home before you make an offer.

2. Am I ready for the responsibilities of homeownership? 

While property is generally considered an appreciating asset, home values are tied to economic conditions. Having your financial house in order is an important first step to buying a house! Are you confident in your ability to pay your bills on time? Are you able to budget for unanticipated costs? Evaluate questions like these to determine whether you are ready for the responsibilities of ownership.

3. How much home can I afford? 

Determining how much home you can actually afford goes beyond the list price of a property. Other factors that will affect your monthly payment include interest rates, taxes, insurance, income, debt, and future monthly expenses – to name just a few. While there are numerous “affordability” calculators out there, it’s important to first understand the whole picture. 

Before you buy, take action to determine how much home you can afford.

4. How will lenders evaluate my mortgage readiness & make loan decisions? 

Are you familiar with the “Four C’s of Loan Credit?” Lenders look at a number of factors to determine the terms of a mortgage loan.

Consider reviewing your financial history and educating yourself on the qualifications that lenders use to determine the terms of your loan.

5. How will my credit score impact my ability to buy? 

Your credit score and the information in your credit report are key factors in whether or not you’ll be approved for a mortgage and at what interest rate. When was the last time you checked your credit? Learn more about your credit, as well as steps you can take to build strong credit here.

No matter what stage of homeownership you are exploring, expanding your knowledge about the key financial questions to ask when buying a home will help you make a long-term decision that benefits you!

You can view all homeownership related content in Common Trust’s Financial Education Centeror check out our list of online calculators to get you started.

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