Happy Home Hunting

The median home price in the U.S. continues to creep higher in 2014. The number of homes for sale has been growing, as well.  What does that mean for house hunters? Simple. Now is a good time to shop for a new abode.

For those of you inexperienced in the world of mortgages, we have compiled some pointers that should help you avoid some real estate land mines.

       Focus on your credit

The biggest factor in your purchase power is your credit score. If you have a strong credit score, you will want to keep it that way. Do not make too many major purchases as you prepare to buy a new home. This could negatively affect your credit score. If your credit score is not so stellar, spend the months prior to home shopping whittling down your debt-to-income ratio. In other words -- pay off your bills and credit cards as much as possible.

     Get pre-approved

Take the time to visit your local AltaOne Member Service Center and ask about a pre-approval. This is an important step in the home shopping process. It determines how much your financial institution will lend you. During the pre-approval process, your credit union reviews all your financial information and determines how much of a mortgage you can afford. The pre-approval process saves you time and allows you to focus only on the homes you can afford.

·         Draw the lines

You would be surprised how frequently border disputes arise because neighbors do not know their property lines. Accurate property lines may also save you money on your property taxes.

·         The best time to buy 

Interest rates rise and fall. Property values skyrocket and plummet. There is never a perfect time to buy ... on second thought ... there is a perfect time to buy -- when you are ready. Stop hemming and hawing and trying to predict the market trends. When it makes sense for you and your family, then it is a good time to buy.

·         Save up for the down payment

There are several benefits to making a down payment of 20% or more. First off, you will not have to pay PMI (private mortgage insurance) if you put down at least 20%. PMI provides insurance to your lender in case of default. Lenders look more favorably at borrowers who provide higher down payments. In addition, if you make a 20% down payment, then you instantly have 20% equity in your new home.

·         Find an agent

Every city boasts and abundance of realtors. It is important to conduct your homework and find a quality, experienced realtor who is going to represent your needs.

·         What's it worth? 

An appraisal determines the market value of the home. Lenders use appraisals to help determine the loan amount. Consumers have a legal right to obtain a copy of the home's appraisal.

·         Check the foundation 

A home may look squeaky clean and brand new -- but the structure may not be sound. In California, earthquakes may have caused cracks in structural beams. Termites, water leaks and other hazards often cause hidden damage. A thorough inspection by a reputable firm is an important element to the home buying process.

·         Let the negotiations begin 

Your agent will help to recommend offers. Be fair. Base the offer on comparable home sales in the neighborhood, the condition of the home, extras such as a pool, etc. Remember, the sellers probably want to sell the house as much as you want to buy it.

There are many more aspects of home buying to consider, such as homeowners insurance, the local schools and much more.

Good luck -- and happy home hunting.

(Every new mortgage and HELOC funded through AltaOne Federal Credit Union through November 14, 2014 qualifies for the Imagine Sweepstakes and could win a year's worth of mortgage payments!)

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The Thrill of That First Car

There is nothing quite as monumental as your first car purchase ...Well, maybe your wedding day or the birth of your children or your first home purchase. But, the first vehicle is pretty high atop the list of great firsts.

It is easy to get lost in the moment as you shop for your car. So, before you make an impulsive buying decision, there are several important matters to review to prepare you for the car buying process.

1. Budget Have you penciled out your budget (or worked it out on your personal financial manager)? Your first step in the car-shopping bonanza is your budget. Do not stretch your finances too thin.
2. Shop online You can get a good idea of what is available and the potential costs of the vehicles you are eyeing.
3. Outside Costs Consider the insurance and maintenance costs. High performance cars not only come with a higher sticker price, but high maintenance costs and insurance premiums, as well. Conduct your research before you buy so you are not stuck with unexpectedly astronomical expenses.
4. Pre-approved Loans vs Dealer Financing Understand the difference between a loan pre-approval and dealer financing. Every car dealership has a finance department that is the final stop in the purchase process. All new car buyers must understand this is not your only finance option. It is frequently more prudent to shop around to your credit union or other financial institution. In many instances, they will pre-approve you for a specific loan amount and rate. In addition to obtaining a competitive loan rate, you know exactly how much you can pay for your new car, giving you much more buying power.
5. Registration Most dealerships will handle your tags and title for you - but not all. You may need to visit your DMV to get the title in your name and to order the tags.
6. Counsel You may want to invite an experienced car buyer to help with the process. They may be able to fend off any high-pressure sales tactics and answer questions before they occur.
7. Warranty Almost all new and many used vehicles come with a standard warranty. The dealer's finance manager will likely offer you an extended warranty product. Similar products are available from various financial institutions -- often for a bit lower price.

The bottom line -- do your homework. Do not buy the first vehicle you see. The salesman does not want you to leave the dealership, but they know most consumers shop around.

Good luck — and happy car hunting.

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Give Yourself a Financial Check-Up

Once a year, you take your children for a physical, even if they are not sick. You take your car to the shop for an annual tune-up, as well. You are careful with your family and your major assets.  So, why do you not take the same care with your money?

Every individual should schedule some time each year to undergo an annual financial check-up. The exam should be rather painless, and it may save you a bundle of money.

The items to review may include:

Check for Accuracy

You may want to schedule some time with your financial institution to determine whether all your information is up-to-date, and to make sure you are utilizing the services they have available. Many institutions have implemented some high-tech, convenient enhancements. It pays to check out the latest and greatest services.

Are You Properly Covered?

As your life and circumstances change, your insurance needs change, as well. When was the last time you had a conversation with your insurance agent about your coverages? You may be eligible for some new discounts. Is your coverage adequate to protect your family and your assets? You may be able to reduce deductibles and save some money.

How do Your Mortgage Rates Stack Up?

What is your current mortgage rate? When was the last time you examined the mortgage rate marketplace? Refinancing may be a viable way to reduce your mortgage payments.

Time to Trim Expenses?

Have your expenses grown lately? Been hit with some unexpected bills? Is it more difficult to make it to the next payday? You may need to do some serious belt-tightening to get you through the challenging financial times. Create a budget. Slice unnecessary costs. Look into a handy budgeting program such as AltaOne's BudgetPro. These tools may save your bacon and help you to save for short- and long-term goals.

Dust off Your Retirement Portfolio

Many folks have college funds and retirement plans such as an IRA or a 401(k). But, many times the money goes into the fund and the individual spends very little time investigating ways to enhance those earnings. A call to your financial advisor may open your eyes to some exciting new ways to invest.

Once you have completed your annual financial check-up, you should ask yourself the following questions to help grade the performance of your finances:

1. This past year, have my checking/savings balances grown or shrunk? If it has grown, maybe you can slice off a little more for your 401(k) or plop some money into a CD.
2. Are my credit card balances higher or lower than last year? A spike in your credit card balances may be a sign that you need to apply the brakes with your spending.
3. How liquid am I? If you need money immediately, can you access enough to take care of certain emergencies?
4. Is my retirement plan on target? If you do not see enough growth, you may want to look into a different investment strategy.

Diligent financial check-ups will lead to improved fiscal health. 

Remember, you will want to enlist the help of the specialists at your financial institution, your insurance agent and your investment advisor when completing your annual financial exam.

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Credit vs. Debit Cards: Which Do I Use?

When you reach into your wallet to pay for something, do you pause to ask yourself whether to use credit or debit? It’s an important question, and one that is often overlooked. Although the decision between a debit card and credit card is a personal one, there are times when one is more appropriate to use than the other.

Debit or Credit?

Best Uses for Credit Cards

Credit cards are more heavily advertised and visible as a financial product than debit cards. While they come with perks and solid fraud protection, it is important to be selective when and where you use the cards. Here are three such instances:

1. For rewards Credit card companies offer some pretty attractive incentives to use their cards. You can rack up points to put toward hotels, flights, gas, groceries, cash back and more simply by opting to use a specific credit card. If you pay off your balance each month, you can really benefit from these opportunities and save a great deal of money. Otherwise, you may fall into fees more than freebies.
2. Online purchases It’s always advisable to use a credit card when making online purchases, as these cards offer a layer of fraud protection that debit cards do not. If someone steals your credit card number, you are liable only for charges up to $50 after you report the fraud, whereas you could be on the hook for $500 for a debit card. It is also advisable to research a company prior to making an online purchase with your credit card, especially newer companies. Make sure they are reputable to save you a great deal of stress.
3. When you can afford it While it can be tempting to use credit to purchase items now, resist the urge to spend habitually. Carrying a balance from month-to-month is a very big deal, because you must pay interest on the amount you owe. You will end up paying much more than you actually spent by accruing interest charges, leading to scenarios where you might pay for vacation expenses long after the trip. Use credit wisely to help build good credit, as paying off your bill each month shows you can manage it responsibly.

3 Best Practices for Debit Cards

Charging items to your credit card can get out of hand, and the way back on track can be your debit card. Since it dips into your checking account funds, you can better control your finances if debt is in your near future. Opt for your debit card for:

1. Frequent/familiar purchases It is not good to rely on too much credit. When shopping in-store at major retailers or smaller stores you frequent, using your debit card is a great idea. This helps you maintain a good grasp on what funds you have available and keep your monthly credit card purchases under control.
2. When budgeting If you are concerned about debt, ramp up your budgeting skills. When it comes to budgeting with plastic, stick to the debit card and grow healthier habits. Know your monthly spending limits and how much credit you can afford to spend. It is also much easier to resist temptation if you only have the funds in your account to spend, instead of spending to your credit limits.
3. When in credit card debt If you find yourself in credit card debt, continuing to charge purchases to your cards will only perpetuate a downward debt cycle. Repayment needs to be a priority. Avoid credit charges at all costs. Although debit cards do not affect your credit score directly, shifting to using them will help raise a low, debt-ridden credit score.

Credit and debit cards both offer a number of advantages as payment options, but remember that certain trends can help better your situation, whether it’s debt or other unfavorable factors. Know your plastics and you will be in control of your financial fate.

Spencer Tierney, NerdWallet

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Avoid the Pitfalls of Predatory Lending Practices

If you are considering a loan of any type, you need to beware of certain questionable lending practices. The Federal Reserve Bank of New York has defined "predatory lending" as:

A welfare-reducing provision of credit, where lenders profit by tempting

consumers into over-borrowing and delinquency.

There are several different types of predatory lending practices.

Predatory Mortgage Lending

Predatory mortgage lending involves a wide array of abusive practices. It often wipes out a family's wealth and frequently leads to foreclosure. Estimates place the annual cost of predatory mortgage lending at over $9 billion. Here are brief descriptions of some of the most common.

• Excessive fees: Many times lenders will include fees and points with the mortgage payment, even on standard loans. However, predatory lenders may charge fees that total more than 5% of the loan amount. A typical lender may charge around 1%.
• Prepayment penalties: Only around 2% of prime market mortgages will charge a penalty for paying off the loan early. However, the vast majority -- about 80% -- of subprime mortgages charge an early pay-off penalty. With abusive predatory loans, the penalty may be more than six months worth of interest.
• Kickbacks: Some predatory lenders have deals to pay kickbacks to real estate brokers who submit a loan that carries a bloated interest rate. The kickback, or “yield spread premium," is paid directly to the broker as an incentive for selling higher interest rate loans.
• Flipping: Consumers usually pay a fee to refinance their mortgage loan. Flipping occurs when a borrower refinances a loan to generate fee income without providing any benefit to the borrower. These unnecessary fees can drain a borrower's equity and inflate their monthly payments. Flipping may even occur with debt-free homes.
• Steering: Some borrowers are steered toward high interest loans, even if they may qualify for sub-prime loans. Research conducted by Fannie Mae shows over half of all borrowers with subprime mortgages could have qualified for loans with more appealing terms. Steering seems to occur more frequently among certain ethnic pockets. One government study revealed 51% of refinanced mortgages in predominantly African-American neighborhoods are subprime loans, compared with just 9% of refinances in predominantly white neighborhoods.

Short Term Predatory Lending

• Payday loans: Payday loans are short-term products available to many consumers with little or no collateral. They simply must show they have a job in order to qualify for the loan, which they must repay by their next payday (hence, the term "payday loan"). Payday loans (also called "cash advance) come with excessively high interest rates, which rise rapidly when the borrower cannot repay the loan within the prescribed timeframe.
• Car title loans: These are similar to payday loans. Car title loans come with high annual interest rates (usually over 100%) that often lead to a cycle of debt because their require repayment within one month, and the borrower is often unable to pay off the loan that quickly.

Tips 

We want all our members to be cautious. To help you avoid predatory lending practices, we have compiled the following list of tips:

1. Ask questions. Do not just accept the representative's word as the truth. Seek out additional information on all products.
2. Shop around. You may be in a rush to obtain the money, but it pays to take your time whenever your money is concerned.
3. Be an educated consumer. The Internet is an excellent source of information. Seek out consumer reviews and articles on products and companies with which you may conduct business.
4. Always read the agreement carefully before you sign. 
5. Avoid balloon payments. 
6. Avoid deals with prepayment penalties. 
7. Know your rights as a consumer. 
8. Just say, “no" if you believe the deal is not beneficial. 
9. Build your credit. This is one of the most effective ways to ensure you will receive the most competitive rate. 
10. Keep in mind -- low monthly payments are not always the best deal. Look at the overall cost of the loan. 
11. Watch out for offers to refinance the loan to a better rate down the road. 
12. Never sign a blank document or anything the lender promised to complete later. 

AltaOne offers several financial tools to help our members better understand how to manage their finances and avoid potentially under-handed lending practices. 

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Make Banking Easier with Online Tools

Running errands to the local credit union has long been a time-consuming, yet necessary chore. Thanks to the onset of online and mobile banking tools, money management is now easier than ever. Many banking features are available from anywhere, allowing you to transfer funds from your couch or pay bills on your smartphone while waiting in line at the grocery store. Read on for an overview of the latest tools out there.

Who is Using Online and Mobile Banking Tools?

Mobile banking is a hot new trend quickly gaining popularity. A 2012 survey conducted by the Federal Reserve noted that nearly 28% of mobile phone users reported using mobile banking features during the previous 12 months. This represents a steady increase from the 21% who reported using mobile banking during the 2011 survey.

It may come as a surprise to many, but age does not seem to be much of a factor when it comes to mobile banking. The Federal Reserve survey noted the following mobile banking usage by age during the past 12 months:

• 21.5% — 18 to 29 year olds
• 26.9% — 30 to 44 year olds
• 27.2% — 45 to 59 year olds
• 24.4% — 60+ year olds

Mobile banking is not the only form of electronic banking on the rise. A 2013 survey by the Pew Research Center found that 51% of U.S. adults bank online, representing 61% of Internet users. More men than women use online banking, according to the research -- 63% to 58%. The online banking usage breakdown by age includes:

• 67% — 18 to 29 year olds
• 65% — 30 to 49 year olds
• 55% — 50 to 64 year olds
• 47% — 65+ year olds

This represents a steady growth rate from a 2010 survey by the think tank, revealing that 46% of U.S. adults, representing 58% of Internet users, said they bank online.

Both online and mobile banking users benefit from a wide-variety of tech savvy tools designed to simplify money management, including:

Mobile Banking Tools

For many people, banking from a smartphone is the ultimate in convenience. Mobile banking availability and features vary by financial institution, but are quickly gaining popularity. Popular features available through mobile apps and web browsers include the ability to check account balances, transfer funds, pay bills, deposit checks and find nearby ATMs and branch locations.

Online Banking Tools

Online banking has been around for a while, providing many customers with enough features to almost completely avoid the inside a financial institution. AltaOne and many other organizations offer a variety of features, including the ability to open new accounts online, conduct internal and external fund transfers, set up automatic bill pay, review your accounts 24/7 and set spending alerts.

Budgeting Tools

Online budgeting tools have made it easier than ever to manage your finances. To get started, all you have to do is create an account and these apps will aggregate your financial data, including loans, credit union accounts, credit cards balances, and more. Budgeting tools such as AltaOne's BudgetPro have features to help you track your expenses, showing you how much money you have in certain categories, so you can identify areas to cut back.

Loan Access

Skip the branch visit – you can apply for just about any kind of loan online at your credit union’s website. As long as you are a member, you can apply anytime, 24/7. Some credit unions even have online loan payment centers.

Final Word

If you are not already using online and mobile banking tools, now is the time to get started. The wide-variety of available services saves consumers a great deal of time and effort. Manage your money when and where it is most convenient for you.

Damaris Olaechea, NerdWallet

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Why Preapproved Auto Loans Make Sense

With so many credit unions and other financial institutions offering low auto loan rates, now is a great time to make that new car purchase you have been putting off. In addition, the minuscule auto loan rates are very tempting for those who may want to refinance their existing loan.

But before you go out to shop for your new ride, stop to think about your buying options. While going directly to the auto dealer seems to be the easiest route, the Consumer Financial Protection Bureau has warned consumers that dealer financing often results in higher interest rates. 

In addition, if you have ever experienced the sales pressure of the car dealer's financing department, you may want to consider a pre-approval from a credit union such as AltaOne. Auto loan pre-approvals from a credit union give the consumer greater negotiating leverage with the dealer, it speeds up the buying process and it will usually save a ton of money on the interest rate.

Check out the following pointers that will help you with the pre-approval and auto buying process:

1. Credit check Smart consumers obtain a credit history on a regular basis. Not only will it reveal your credit score (scores will vary, depending on the reporting agency), but this gives you the chance to correct errors on your credit. If your credit score is lower than you had hoped, you may want to tighten your budget and pay down some debt. This will improve your debt-to-income ratio and enhance your credit score.
2. Check out the local offers. As we mentioned, many credit unions and banks offer rate promotions. Shop around for the better deals.
3. Determine your budget.  What is the maximum car payment you can afford? What is the maximum down payment you can plop down on a new vehicle? This information will determine the flexibility when it comes to the vehicle selection and terms of your loan.
4. Visit your local credit union. The approval process is painless. Once the lender determines your eligibility, you will receive a "blank check" for a specified amount of money you can spend on a new vehicle. Once you select your vehicle, you give your "blank check" to the dealer, and they finalize the lending arrangements with your credit union.
5. The F&I guy will try to sell you. Many car dealer finance and insurance managers will attempt to offer you their own financing deals. They may have arrangements with other financial institutions that make it more lucrative for them. Listen carefully and do not let a sales pitch sway you.
6. You must carry adequate insurance coverage. All reputable auto lenders require consumers to carry a full insurance coverage on financed vehicles. This ensures that the institution recovers at least part of the loan balance in the event of total loss. If your down payment is less than 20%, you may need a GAP (Guaranteed Auto Protection) insurance policy that covers the difference between the amount the vehicle is worth as an insurance loss and the remaining loan balance.
7. Drive your new car home. You sign on the dotted line -- and now you have a new car. Stay current on your payments and enjoy that new car scent.

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