1. Think beyond the big banks

Searching for the best car loan refinance rates? Don’t limit yourself to large traditional banks. It’s always a smart idea to check with local credit unions, since their primary goal is to service their clients and not to make a profit. Check Credit Karma to research rates from a variety of lenders, including online auto refinancing sources.

2. Stay calm if you get declined

If you’re declined a personal loan, try to figure out why and see if there’s an action you can take to remedy the situation. Do you have a high balance on one of your credit cards that is negatively impacting your credit score? If so, paying it down could help improve your credit health and chances of being approved in the future. Make sure you use these credit score hacks to maintain a healthy credit score.

While high-mileage cars or those more than ten years old, could reduce your chances of being approved, not all lenders have the same criteria. If you’re declined by one lender, you could be approved by another.

3. Shop around within a short timeframe

As part of the loan application process, new lenders will examine your credit report—but not all credit checks have the same effect. Some lenders use “soft inquiries,” which usually don’t affect your credit score and don’t show up on credit history, while others use “hard inquiries,” which generally do impact your credit score.

But don’t let concerns about multiple hard inquiries prevent you from shopping around for the best rate. Major credit bureaus don’t want to penalize smart customers for rate shopping, says Credit Sesame. “Rather than assume each inquiry indicates a discreet and unique credit application, they built logic in their credit scoring model that identifies when you’re shopping for one loan rather than many loans.”Check My Rate

In short, multiple inquiries of the same type within a short period of time are counted as only one inquiry and your credit score only takes one hit.

4. Know when to refinance—and when not to

Before spending time and energy shopping for a new auto loan, consider whether refinancing is appropriate for your financial situation .

You might be a good candidate to benefit from refinancing if interest rates have declined, your credit score has improved, or your current loan is from a dealership (where rates are typically higher than from other traditional lenders). Another reason people consider refinancing is to lower average monthly car payments and free up cash flow or save money for other life events, like having a baby or buying a home.

On the other hand, PersonalFinanceInsider.com advises that auto refinancing “may not be an option for you if your credit score has gotten worse, the vehicle has been damaged, or market compound interest rates have gone up since you took out your original loan.”

5. Don’t fall asleep at the wheel

Once you’ve found a better/lower rate and are nearing the end of the refinancing process, it’s important to stay vigilant about the details. Check the fine print of your current loan (is there a prepayment penalty?) and of your new loan (are there any fees?). These potholes can meaningfully change the math—making a seemingly great deal less appealing.

The Consumer Financial Protection Bureau recommends borrowers “take the time to look over the paperwork related to your loan. Be sure that what you thought was agreed to is included in the contract.”

Don’t assume anything is completed. You might think your existing personal or joint personal loan has been paid off, and you can stop sending payments, but any delay in the process can result in a ‘missed’ loan payment which will hurt your credit. Confirm with both lenders before you stop sending money.

Ready to refinance your car loan? Get a and find out how much you could save in minutes—with no impact to your credit score.

If you’re just starting the car-buying process and debating leasing vs. buying, check out our blog post on the important factors to consider.

The post Refinancing Your Auto Loan appeared first on Telco Credit Union.

1. What is a home equity loan?
2. Pros and cons of a home equity loan
3. How much can you borrow?
4. Home equity loan vs. home equity line of credit (HELOC)

What is a Home Equity Loan?

So, what exactly is a home equity loan? A home equity loan is a type of loan that is secured by your home. You repay the loan with equal monthly payments over a fixed term, much like your original home mortgage. If you don’t repay the loan as you agreed, your lender can foreclose on your home. Home equity financing can be set up as either a loan or a line of credit. With a home equity loan, the lender offers the total loan amount upfront. On the other hand, a home equity credit line provides a source of funds that you can draw on as you need.

If you’re considering a home equity loan or credit line, make sure to look around and compare offers by banks, credit unions, savings and loans, and mortgage companies. You can get a better deal this way. Keep in mind that mortgage brokers don’t lend money, but they help arrange loans. Also remember that your home secures the amount that you borrow. So, if you don’t pay your debt, you may be forced to sell your home to satisfy that debt. 

A home equity loan is a lump-sum loan with a fixed interest rate, while a line of credit works like a credit card with a variable interest rate. A HELOC often requires interest-only payments during the draw period, which is usually the first 10 years. That means you’ll need to pay more than the minimum payment due to reduce the principal and make a dent in your overall debt during that time. Since the loans are secured by your house, you’re likely to get a lower rate than what you would find on a personal loan or balance transfer credit card. However, you can also lose your home if you don’t keep up with payments.

You may be considering tapping your home equity to consolidate your credit card debt, a move that can lower your interest costs but has risks. Because of these risks, NerdWallet recommends that you reserve home equity for certain circumstances.

Pros and Cons of a Home Equity Loan

Pros

• Interest rates on home equity loans and home equity lines of credit (HELOCs) are typically lower than those on credit cards.
• Interest paid on home equity loan products may be tax-deductible; credit card interest is not.

Cons

• With your house as collateral, you risk foreclosure if you can’t pay.
• If your home’s value drops, you could wind up owing more than it’s worth.
• Repayment terms can be 10 years or longer.
• The loan itself doesn’t address troublesome spending habits.
• Credit card debt is more easily discharged in bankruptcy.

Homeowners with good credit are likely to have other debt consolidation options that don’t risk their house. A homeowner with shaky finances shouldn’t move unsecured debt that can be erased in bankruptcy to secured debt that can’t.It’s debt-crushing timeSign up to link and track everything from cards to mortgages in one place.

How Much Can You Borrow?

The amount you can borrow depends on your income, credit history, and the market value of your home. Typically, the amount you can borrow is limited to around 85% of the equity in your home. When you interview lenders, ask all lenders to explain the loan plans that are available to you. Ask questions if you don’t understand something, because confusing terms and conditions could cost you more. Pay close attention to the annual percentage rate (APR) of a home equity loan, along with fees like the application or loan processing fee, origination or underwriting fee, lender or funding fee, appraisal fee, document preparation and recording fees, and broker fees. If points or other fees are added to your loan, you’ll pay more to finance them.

Always ask for your credit score! Feel free to negotiate with more than one lender. Don’t be afraid to make lenders and brokers compete for your business – you’ll get a better deal this way. Before you sign for a home equity loan, make sure to read the loan closing papers carefully. Don’t sign if you see anything that makes you feel suspicious. You can negotiate or walk away. 

Home Equity Loan vs. Home Equity Line of Credit (HELOC)

A home equity line of credit (HELOC) is a revolving credit line. A HELOC allows the borrower to take out money against the credit line up to a preset limit, make payments, and then take money out again.

With a home equity loan, the borrower receives the loan proceeds all at once, while a HELOC allows a borrower to tap into the line as needed. The line of credit remains open until its term ends. Since the amount borrowed can change, the borrower’s minimum payments can also change, depending on the credit line’s usage.

Key Differences

HELOCs can be useful as a home improvement loan since they allow you the flexibility to borrow as much or as little as you need. If it turns out that you need more money, you can get it from your line of credit-assuming there’s still availability—without having to re-apply for another mortgage loan.

One question you should ask yourself: What’s the purpose of the loan? A home equity loan is a good choice if you know exactly how much you need to borrow and how the money will be used. Once approved, you’re guaranteed a certain amount, which you receive in full when the loan is advanced. , as a result, home equity loans can help with big expenses such as paying for a children’s college fund, remodeling, or debt consolidation.

Conversely, a HELOC is a good choice if you aren’t sure how much you’ll need to borrow or when you need it. Generally, it gives you ongoing access to cash for a set period—sometimes up to 10 years. You can borrow against your line, repay it all or in part, and then borrow that money again later, as long as you’re still in the HELOC’s draw period.

However, an equity line of credit is revocable—just like a credit card. If your financial situation worsens or your home’s market value declines, your lender could decide to lower your credit line or close it altogether. So while the idea behind a HELOC is that you can draw upon the funds as you need them, your ability to access that money isn’t a sure thing.

Telco Credit Union is a full service, not-for-profit financial institution serving over 10,000 members. We serve eastern North Carolina, including Tarboro, Rocky Mount, and Greenville, NC. Profits are returned to our members, which are reflected in our ability to pay higher dividends on savings, offer lower interest rates on loans, and provide expanded products and services at less cost. 

The post Home Equity Loans appeared first on Telco Credit Union.

1. What are loans?
2. What is interest?
3. What’s the difference between a loan and a line of credit?
4. How can you use a loan to consolidate debt?
5. What’s the difference between interest rate and APR?
6. Types of loans

What are Loans?

Loans offer competitive interest rates with a predictable monthly payment. You must submit an application and receive approval from a lender to get a loan. Then, after you are approved, you’ll receive a lump sum of money based on the amount you’ve been approved to borrow. You’ll then repay the loan with interest in equal monthly installments for the length of the loan.

What is Interest?

How does paying interest work? This is the cost of taking out a loan. Personal loans typically have a fixed and simple interest rate on the principal of the loan. You can calculate how much interest you’ll be paying over time by multiplying your loan principal by your annual interest rate and by the number of tears it’ll take to pay off the loan. Paying interest is part of your monthly payment. 

What’s the Difference Between a Loan and a Line of Credit?

A loan is an amount of money that you borrow from a lender for a specific length of time. A line of credit, on the other hand, is a borrowing limit extended to you. This means that funds are available to you up to a pre-assigned credit limit, and you’ll have the ability to reuse your line of credit as you repay. Your monthly payment will be based on the amount of the line you have outstanding. 

How Can You Use a Loan to Consolidate Debt?

A personal loan is a great option to consolidate multiple debts into a single monthly payment. First off, identify all debts that you’d like to consolidate. Then, apply for the total sum or more. Once you’re approved, you can use your personal loan funds to pay off your higher interest debts and consolidate them into one loan with a single monthly payment. This is typically at a lower rate than multiple debts might be. 

What’s the Difference Between Interest Rate and APR?

The interest rate is the cost to borrow money from your line of credit. The Annual Percentage Rate (or APR) adds in some of the costs of getting the line of credit in addition to the interest. This includes lender fees.

Types of Loans

Credit Builder Loans

So, what is a credit builder loan? At Telco Credit Union, we want you to have a chance to get a loan, no matter your financial history. This type of loan will allow you to earn interest on money that you’ve put on hold. This encourages saving, which leads to better financial habits in the long run. If you don’t have any credit yet, don’t worry! This loan opportunity was made for you. Credit builder loans help members with no credit to establish credit. If you’re a member with us, choosing a credit builder loan will establish trust and honesty with us at Telco.

Home Equity Loans

So, what exactly is a home equity loan? A home equity loan is a type of loan that is secured by your home. You repay the loan with equal monthly payments over a fixed term, much like your original home mortgage. If you don’t repay the loan as you agreed, your lender can foreclose on your home. Home equity financing can be set up as either a loan or a line of credit. With a home equity loan, the lender offers the total loan amount upfront. On the other hand, a home equity credit line provides a source of funds that you can draw on as you need.

If you’re considering a home equity loan or credit line, make sure to look around and compare offers by banks, credit unions, savings and loans, and mortgage companies. You can get a better deal this way. Keep in mind that mortgage brokers don’t lend money, but they help arrange loans. Also remember that your home secures the amount that you borrow. So, if you don’t pay your debt, you may be forced to sell your home to satisfy that debt.

Auto Loans

When it comes to buying an automobile, there are many things to consider. First, it’s important to shop for your loan. Shopping for a loan before you buy a car will save you time, stress, and perhaps most importantly, money. Consider how much you can afford to pay monthly and how much you can afford to put down as an initial down payment.

Next, consider if you want or need a co-signer on your loan. A co-signer is another person who is required by law to pay back a loan after co-signing one. A co-signer is obligated to pay back a loan even though he or she does not own the vehicle. If you have a low credit score, or if you don’t have a credit score at all, a co-signer with good credit could drastically decrease the interest rate on your loan. The decision to have a co-signer is an important one; make sure to discuss this in detail with your potential co-signer. Late and/or missed loan payments affect your credit record and your co-signer’s credit record as well.

If you’re trading in a car, think about how much your trade-in may be worth. It is important to research the value of your current vehicle; some helpful resources to do so are Kelley Blue Book, NADA Guides, and Consumer Reports. Once you get a good idea of the worth of your current car, you should settle on either trading it or selling it on your own. Whether you trade or sell your current vehicle, make sure that you are getting a fair deal.

Telco Credit Union

Proudly serving Tarboro, Rocky Mount, Greenville, and surrounding North Carolina areas, Telco Credit Union is a full service non-for-profit financial institution. We offer many services and products, including savings and checking accounts, loans, mortgages, and much more. We’re here to help with all your financial needs.

When it comes to your finances, we want to provide you with the experiences you’re looking for. If you live or work in Tarboro, Rocky Mount, Greenville, or surrounding areas in North Carolina, check out Telco Credit Union and consider becoming a member.

The post Loan Basics appeared first on Telco Credit Union.

1. What is a credit union?
2. The difference between credit unions and banks
3. Benefits of becoming a credit union member
4. Credit union FAQs
5. Telco Credit Union

What is a Credit Union?

Credit unions are different from banks in that they are not-for-profit organizations that exist solely to be of service to their members. Credit unions are member-owned, which means they are owned and controlled by the members who use their services. Typically, a board of directors made of volunteers manages a credit union. This means that your vote matters! These financial institutions work to ensure the well-being of their members.

Credit unions are federally insured, and they tend to be much smaller than banks. This can make your financial experiences feel more personal; an average bank is around double the size of a credit union. Credit unions are nonprofits that are governed by their members. A credit union offers many of the same services that a bank does, including checking and savings accounts, CDs, IRAs, car loans, mortgages, home equity loans, and credit cards. Many people believe that they must belong to the military or work for the government to join a credit union, which isn’t true!

The Difference Between Credit Unions and Banks

Credit unions can provide secure and reliable places to save and borrow money at more reasonable rates. However, like banks, credit unions also provide many financial services and accept deposits as well. The profits made by these organizations are returned back to their members. Members can expect lower loan rates, reduced fees, and higher savings rates as part of their membership in a credit union.

So what’s the difference between a credit union and a bank? Credit unions offer less rigid eligibility requirements, lower interest rates, and greater financial literacy resources than banks do. Plus, deposits are insured in the same way for credit unions as they are for banks. However, credit unions offer limited financial products, and there are fewer physical branches of credit unions.

On the other hand, banks offer resourceful online apps, tools, and features, which adds to the convenience factor of banks. For banks, there are more stringent eligibility requirements than for credit unions. Generally, banks offer higher interest rates and transaction fees than credit unions do.

Choosing between relying on a credit union’s resources and a bank’s resources can be a tricky choice, but it all depends on you and your financial needs. If you’re tired of paying for fees at ATMs or making payments on a savings account, it might be time to switch banks, or move your funds to a credit union altogether. One of the greatest benefits of using a credit union is that they offer higher rates of return on savings accounts, in addition to lower interest rates on loans. Credit unions have become more and more popular over the last few years, because they allow bank customers more options than before.

Benefits of Becoming a Credit Union Member

There are many benefits in becoming a member of a credit union; often, members share interests and enjoy being part of an organization that helps other people with those interests. Other benefits of joining a credit union include help with small business needs, in-school credit union branches, outreach to consumers, and financial education. Because of the collaborative design of credit unions, members appreciate working towards a common goal of financial well-being.

Membership in credit unions can be determined by the field of membership, or the legal definition of who is permitted to join the institution. These parameters differ in some credit unions. You may be able to join a credit union based on several categories: your employer, your family, your geographic location, and membership in a group or groups. Your employer may sponsor their own credit union, allowing you to join. Most credit unions permit existing members’ families to join. Many credit unions allow people to become members that live, work, worship, or attend school in a particular geographic region. Finally, already being a member of a group, like a place of worship, labor union, homeowners’ association, or school may allow you to join a credit union.

Credit Union FAQs

Here are some additional frequently asked questions regarding credit unions:

How did credit unions form?

When a season of failed crops in 17th-century Germany led to widespread poverty, villagers pooled their money in an effort to save themselves from poverty and starvation. They formed a jointly owned mill and bakery that sold bread to members at affordable prices. Savings accounts and small loans also were available.

The modern credit union movement grew out of an idea that people could work together to create solutions to meet their financial needs.

Credit unions were created to enable people to pool their financial resources to help themselves and each other.

What is the credit union philosophy?

In 1935, when credit unions were helping Americans through the Great Depression, the treasurer of a Midwestern credit union said that credit unions were “not for profit, not for charity, but for service,” and that philosophy holds true today. Credit unions continue to look out for their members’ interests and provide a level of service that generally is not available at other financial institutions. Credit unions continue to look out for their members’ interests and provide a level of service that generally is not available at other financial institutions. Whether it’s providing a loan to help a member cover unexpected medical bills, giving financial counseling to a member whose employer closed its doors, or simply offering a better deal on a used-car loan or mortgage, credit unions make a difference for their members and the communities they serve. In 1984, the World Council of Credit Unions approved the nine International Credit Union Operating Principles that remain the cornerstone of the credit union movement. They are:

• Open and voluntary membership
• Democratic control
• Nondiscrimination
• Service to members
• Distribution to members
• Building financial stability
• Ongoing education
• Cooperation among cooperatives
• Social responsibility

These principles are founded in the philosophy of cooperation and its central values of equality, equity, and mutual self-help. They express, around the world, the principles of human development and the brotherhood of man through people working together to achieve a better life for themselves and their communities.

Why should I join a credit union?

1. Credit unions are focused on people, not profits. Credit unions operate by a “people helping people” philosophy that is hard to find at other financial institutions.
2. Financial education is available to all members. Credit unions assist members in becoming better-educated consumers of financial services.
3. As not-for-profit institutions, credit unions offer better rates on credit cards—up to two percentage points lower than the average bank card rate.
4. Credit unions are available in places where banks typically aren’t, such as community development neighborhoods.
5. As a member of a credit union, no matter how much money you have on deposit, you have an equal voice in how your credit union is run.
6. Superior service, convenience, and technology. Credit union members receive the service convenience of today’s technology through online and mobile banking.
7. Use the credit union services you need. Many credit unions provide online loan applications and remote deposit capture for member’s convenience. Even if you don’t need the credit union’s sophisticated website or 24-hour loan services, you can use the credit union services you need most.
8. Many credit unions offer no-surcharge ATMs that any credit union member can use. National shared ATM networks mean you can find ATMs where you live and work.
9. Your credit union can put you in business with a small business loan. And some credit unions have established a relationship with the Small Business Administration to expedite loans to credit-worthy small businesses.

Telco Credit Union

Telco Credit Union is a full service not-for-profit financial institution serving over 10,000 members. Serving Tarboro, NC, Rocky Mount, NC, Greenville, NC, and Eastern North Carolina, Telco can help with all your financial needs.

At Telco Credit Union, it is easy to become a member/owner. You can complete a single membership application and make one deposit of $5.00 into a savings account. All you have to do is keep a $5.00 minimum in your savings account. Our motto is “once a member always a member” – it’s as simple as that. Membership at Telco is available to active or retired Selected Employee Group (SEG) employees and their immediate family: this includes a member’s wife, husband, daughter, son, mother, father, brother, sister, grandmother, grandfather, and/or grandchildren. Contact us at Telco for help with your financial needs!

The post Credit Unions appeared first on Telco Credit Union.

1. What is debt consolidation?
2. Ways to consolidate unsecured debt
3. Consolidating your credit card debt
4. Why your debt consolidation loan could get rejected

What is Debt Consolidation?

Debt consolidation provides a solution to those dealing with the stress and financial fatigue caused by overspending with credit cards. If you’re using credit cards while struggling to make even the minimum payments, debt consolidation can help turn your financial freighter in the right direction.

Debt consolidation organizes your debt in a manageable and affordable fashion. You should see reduced interest rates and a lower monthly payment, allowing you to regain control of your finances.

This approach works best for credit card debt. In limited situations, you could consolidate other unsecured debt like medical bills or personal loans and in very rare circumstances, student loans.

The first step in consolidation: Determine if the debt you are carrying is secured or unsecured.

• Unsecured debt is usually credit cards, but can also be personal loans or in very rare circumstances, student loans. It is unsecured because it has no collateral behind it. If you default, there is nothing for the lender to take back (like a house or car). However, lenders might try to get a court judgment against you and garnish your wages if you  fail to pay back the debt.
• Secured debt means there is something of value, known as collateral, backing the loan. In most cases, the collateral is a home, but could be a car or property. Failure to make payments on secured debt can result in foreclosure (on a home or property) or repossession (on an automobile).

What’s your best next step? Gather all your bills, add up exactly how much you owe, and then research these options for consolidating debt.

Ways to Consolidate Unsecured Debt

There are several ways to approach and find debt relief, but generally speaking each option is tailored to a particular situation. Don’t blindly assume they will all work for you. Do your research and make an informed decision.

Here are eight ways to consolidate your debt:

1. Debt management program
2. Credit card balance transfer
3. Personal loan
4. Peer-to-peer online lender
5. Home equity loan or line of credit
6. Retirement account loan
7. Borrowing from friends and family
8. Cash-out auto refinance

Consolidating Your Credit Card Debt

Many credit card companies offer zero-percent or low-interest balance transfers to invite you to consolidate your debt on one credit card. What you should know about consolidating your credit card debt:

• The promotional interest rate for most balance transfers lasts for a limited time. After that, the interest rate on your new credit card may rise, increasing your payment amount.
• If you’re more than 60 days late on a payment, the credit card company can increase your interest rate on all balances, including the transferred balance.
• You probably have to pay a “balance transfer fee.” The fee is usually a certain percentage of the amount you transfer or a fixed amount, whichever is more.
• If you use the same credit card to make purchases, you won’t get a grace period for those purchases and you will have to pay interest until you pay the entire balance off in full (including the transferred balance).

Why Your Debt Consolidation Loan Could Get Rejected

Before you apply for a debt consolidation loan, you should know some of the common reasons why lenders sometimes reject these applications. Here are 6 reasons why your lender could reject your application:

1. Low income: Lenders want to know if you make enough money to handle a loan. They are unlikely to offer you a loan if you’re struggling to make ends meet. If they believe you won’t be able to pay back your loan in a timely fashion, your chances of approval are low. They expect you to be able to manage your everyday expenses, your bills, and your loan payment. They typically require you to have some sort of regular, reliable income. Most lenders expect you to repay a consolidation loan in 3 to 5 years. If you are hoping for a consolidation loan, make sure you have a steady source of income before applying.
2. Your credit score: Your credit score indicates how you’ve handled debt in the past. A low credit score makes you more of a financial risk in the lender’s eyes. If your score is low, your chances for a loan approval are low, but not impossible. There aren’t any quick fixes for a low credit score.
3. Outstanding debt: In addition to your income and credit score, lenders will also look at your outstanding debts before approving a loan. If you have too many debts, including student loans, this can affect your eligibility. Most creditors will only allow you to borrow up to 40% of your annual income. This means your debt payments and consolidation loan cannot exceed 40% of your annual income. If this amount is greater than 40%, the lender may reject the loan or qualify you for a lesser amount. You can determine your debt-to-income ratio by totaling your monthly debt and dividing the total by your monthly income.
4. Mistakes or missing information: In some cases, an innocent mistake on your loan application could result in a rejection. It’s easy to make a mistake by entering a wrong number, misspelling your name, or failing to provide the right documentation.
5. No credit history: A poor credit history can keep you from getting a loan, but so can an insufficient credit history. If you haven’t established your own credit or you’ve used credit cards in someone else’s name, it can affect loan eligibility. Some lenders require you to have up to three years of credit history before they will consider approving this type of loan.
6. No collateral for a debt consolidation loan: Some lenders ask for proof of collateral when you apply for a consolidation loan. This is a way for the lender to ensure some repayment if you default on the loan. They may require some form of collateral if you’ve had some credit problems or repayment issues with past loans. For lenders to approve your loan, they must feel certain they will not lose the cost of the loan.

Telco Credit Union is a full service, not-for-profit financial institution serving over 10,000 members. We serve eastern North Carolina, including Tarboro, Rocky Mount, and Greenville, NC. Profits are returned to our members, which are reflected in our ability to pay higher dividends on savings, offer lower interest rates on loans, and provide expanded products and services at less cost. Let us help you with your debt consolidation today!

The post Debt Consolidation appeared first on Telco Credit Union.

Create a Budget 

Regardless of your current financial situation, creating a budget and sticking to it lets you control where your money goes instead of wondering where it went. A budget is a guide that helps you track and organize your cash inflows and outflows. Your budget should account for your personal financial goals, which may include paying bills, saving, giving to others, treating yourself, and much more. Get started by using Federal Student Aid’s simple guide to creating a budget and check out their brief video on budgeting to further your understanding. 

Start an Emergency Fund 

It can be difficult to prepare for all of life’s surprises. That’s why when the unexpected happens, an emergency fund can turn what could have been a financial crisis into a mere inconvenience. An emergency fund is a cash reserve that’s set aside specifically for financial emergencies or unplanned expenses. Losing a job, needing a car repair, or experiencing a medical emergency are all realistic examples of what you could use an emergency fund for. The Financial Industry Regulatory Authority’s guide to starting an emergency fund recommends that your emergency fund is made up of roughly 3-6 months’ worth of living expenses. Make sure you keep these funds somewhere where they can be easily accessed, but also where you won’t be tempted to use them for non-emergencies! Having this financial safety net gives you peace of mind and helps protect you from having to incur debt when an unexpected expense or emergency arises. 

Fill Out the FAFSA Form and Apply for Scholarships 

The Free Application for Federal Student Aid, better known by the acronym FAFSA, is a form completed by both current and prospective college students to identify their eligibility for federal aid. Filling out the FAFSA every year is a great way to determine if you are eligible to receive financial aid that can help you pay for college. The first “F” in FAFSA stands for free! It costs you nothing to fill out this form every year, and you may have to fill it out to be eligible for certain scholarships at your college anyway. Be sure to fill out the FAFSA annually. However, the FAFSA isn’t the only resource available that you can use to help pay for college. Scholarships are a form of financial aid that don’t have to be repaid! Scholarships can be offered on the basis of a variety of criteria, which can include academic merit, athletic skill, inclusion and diversity, and financial need. Scholarships can also differ drastically in terms of their amount. Be sure to check your college’s website or call their financial aid office to learn about the various scholarships that they may offer and apply for as many as you qualify for. For more information on scholarships, check out Federal Student Aid’s page on everything you need to know about scholarships. 

Start Building Credit and Know Your Credit Score 

A credit score is an indication of how “creditworthy” you are, which is a metric used to represent how likely you are to repay a loan on time. Your credit score is important because it directly affects your ability to finance large purchases like a house or car, your eligibility to obtain lower interest rates, as well as your potential to receive housing and insurance discounts associated with a high credit score. Most credit scores range from 300 – 850 and the higher the score, the better your chances are of being approved for a loan and obtaining a favorable rate. Some of the factors that contribute to the calculation of your credit score include your bill-paying history, your amount of debt, and the amount of credit you’re using. You can find more details about how your credit score is calculated from the Consumer Finance Protection Bureau here. Also get a free copy of your credit report. Repaying student loans and having a credit card you pay off on time every month are both great ways to positively impact your credit score. However, be very cautious about your credit card use because failing to pay off your credit card bill on time will harm your credit score and likely result in you being charged with extremely high interest rates on your payments! 

Start Planning for Retirement 

For many college students, saving for retirement may be an afterthought because it’s so far off. Despite the fact that most college students won’t retire for several decades, now is the best time to start saving in order to ensure a successful retirement. Explore all the options you have when it comes to different retirement savings accounts and choose the one that fits you best. By beginning to save now, you can benefit from the power of compound interest, the process by which your savings grow exponentially, or at a continually increasing rate. Take advantage of your youth and start saving early!  

Conclusion: 

Many of the financial decisions that you make during college will have a lifelong impact, which is why it’s important to become financially-literate. Continuing your education beyond high school should open new doors and provide you with new opportunities, not burden you with financial regrets. Wise financial decision-making now can lead to a prosperous financial future and help give you the upper hand when it comes to financial success. 

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So what’s a home equity loan?

A home equity loan—also known as an equity loan, home equity installment loan, or second mortgage—is a type of consumer debt. Home equity loans allow homeowners to borrow against the equity in their homes. The loan amount is based on the difference between the home’s current market value and the homeowner’s mortgage balance due. Home equity loans tend to be fixed-rate, while the typical alternative, home equity lines of credit (HELOCs), generally have variable rates.

How a Home Equity Loan Works

Essentially, a home equity loan is akin to a mortgage, hence the name second mortgage. The equity in the home serves as collateral for the lender. The amount that a homeowner is allowed to borrow will be based partially on a combined loan-to-value (CLTV) ratio of 80% to 90% of the home’s appraised value. Of course, the amount of the loan and the rate of interest charged also depend on the borrower’s credit score and payment history.

Traditional home equity loans have a set repayment term, just like conventional mortgages. The borrower makes regular, fixed payments covering both principal and interest. As with any mortgage, if the loan is not paid off, the home could be sold to satisfy the remaining debt.

A home equity loan can be a good way to convert the equity you’ve built up in your home into cash, especially if you invest that cash in home renovations that increase the value of your home. However, always remember that you’re putting your home on the line—if real estate values decrease, you could end up owing more than your home is worth.

Should you want to relocate, you might end up losing money on the sale of the home or be unable to move. And if you’re getting the loan to pay off credit card debt, resist the temptation to run up those credit card bills again. Before doing something that puts your house in jeopardy, weigh all of your options.

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What Is a Construction Loan?

A construction loan is a short-term loan that covers only the costs of custom home building. This is different from a mortgage, and it’s considered specialty financing. Once the home is built, the prospective occupant must apply for a mortgage to pay for the completed home. However, there are several other loans available when it comes to home building, from ground-up building to a complete remodel of the entire house. There’s likely a loan out there that’s right for you, whether you’re starting from scratch with a land loan or completely renovating a home.

Construction-Only Loan

This type of loan is short-term and is usually issued for a year. It’s meant to cover only the actual construction period. Like many lenders, Rocket MortgageⓇ doesn’t offer this type of loan. Why? With so many variables like the builder’s cooperation, getting approvals from local municipalities and more, these are considered higher-risk loans. This means they’re harder to qualify for, and the interest rate will likely be higher than a traditional loan. In addition, if you decide to go this route, you’ll have to pay a second set of loan fees when you apply for a traditional mortgage.

Construction-To-Permanent Loan

Construction-to-permanent loans are a financing option that prospective custom home builders can apply for. Like construction-only, construction-to-permanent financing are one-time loans that fund construction and then convert into a permanent mortgage. During the construction phase, borrowers make interest-only payments. These types of loans can be much more expensive than traditional mortgages, so if you decide to go in this direction, shop around, compare rates and find the best deal before you pull the trigger. 

Renovation Loan

Renovation loans, also known as FHA 203(k) loans, can be used for home renovation and are insured by the Federal Housing Administration (FHA). This allows borrowers to both purchase and renovate their new home while still making one monthly payment to cover both costs.

Other options include a home equity loan or a home equity line of credit (HELOC). No matter what you want to change about your home, there are plenty of options to get the financing you need to start swinging that sledgehammer.

Owner-Builder Loan

Usually when you build a home, there’s a general contractor who essentially acts as head of the whole operation. They make sure the framing people, the tile people, the wood floor people, the painters and so on all work in coordination to get your home completed (ideally on time and on budget). However, some prospective home builders wish to act as their own general contractor, and some banks offer owner-builder loans just for this purpose. These types of loans generally require the borrower to demonstrate through experience, education and licensing that they have the needed expertise to oversee the home’s construction.

End Loan

An end loan is a traditional mortgage loan that a home buyer or home builder (if you’re building your own home) can apply for after the new home is constructed. You can get an end loan if construction is complete on the home. One good aspect of an end loan is that the mortgage application for a newly constructed home is the same as it is for any other home. Less complicated is always appreciated when it comes to financing applications.

Building your dream home is serious, and talking to an expert about it is the best way to make your choice. Let Telco Credit Union help you today with any and all of your loan needs. Contact us today!

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There are many reasons why life insurance is necessary and helpful for you and your family.

1. Replace Lost Income

Life insurance works to provide financial security to your loved ones after you pass away. You have to consider what would happen if you were to die suddenly. This is especially true if your loved ones rely solely on your income. Get yourself adequate coverage. That way, you won’t leave your loved ones helpless when the monthly bills come around.

2. Cover Burial Expenses

Sadly, even a basic funeral service can run upwards of several thousand dollars. Life insurance can give you and your beneficiaries more of a guarantee, lifting a burden off of them as well as yourself.

3. Pay Off Debt

Your death doesn’t necessarily mean your debts will disappear. In the instance that you and your spouse have co-signed for a mortgage or other loans, your spouse may become entirely responsible for repayment. The other outcome could result in creditors trying to collect from your estate. While that gets rid of your debts, your heirs will receive the depleted remainder. Life insurance allows those you leave behind to take care of any lingering financial responsibilities.

4. College Planning

There are a number of ways to save money for your child’s education. You may not have thought that a life insurance policy would be a good option. But insurance payouts can actually provide a good supplement your savings. If your child ends up borrowing money to get through school, the insurance proceeds could also help wipe out pesky student loans.

5. Build Cash Value

Term life insurance, a type of life insurance, stays in place for a set period of time. But another option, whole life insurance, provides permanent coverage that only ends if you cancel the policy. Whole life insurance allows you to build up cash value over time, an attractive prospect to everyone. That cash value acts as an extra cushion that you can tap at any time. This may come in handy if you have a financial emergency down the road.

6. Diversify Investments

Some people also use life insurance as an investment tool with universal life policies. These policies are tied to a specific investment product. Then policyholders receive dividend payments based on the product’s performance. Read the fine print before you dive into this type of insurance. 

7. Business Planning

If you own a business, it’s vital that you have life insurance. This covers your obligations so your hard work doesn’t go to waste. Are you involved in a partnership with someone else? You should both have coverage. That way, if one of you dies, the other isn’t left holding the heavy financial bag.

8. Estate Taxes

When someone passes away, their heirs often face estate and inheritance taxes on any assets they receive. If you’re worried about your loved ones getting hit with a big tax bill, a life insurance policy can help cover these added costs.

9. Coverage is Affordable

One of the excuses people tend to make for not buying life insurance is the cost. But truthfully, coverage often ends up pretty affordable for most people. Term life tends to be less expensive than whole or universal life. Plus, the younger and healthier you are, the lower your premiums will be. Unless you smoke or have a preexisting health condition, you could find coverage for as little as $1 a day. 

10. Peace of Mind

No one can truly predict the future. But having life insurance means you and your loved ones can prepare for any eventuality. Even with a small policy, you may find yourself sleeping a little easier at night knowing that your family has protection in place should something happen to you.

Let Telco Credit Union help you today with any and all life insurance needs. Contact us today!

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At Telco Credit Union, we know how important it is to save money and consider your financial future. One such way is to teach your children how to be financially smart and to set them up as best as you can. Telco serves the Eastern North Carolina area, including Greenville, Tarboro, and Rocky Mount. You can trust Telco with all your financial needs, whether you’re looking to open a checking or savings account, take out a loan, finance your mortgage, or become a Telco member/owner.

Five Reasons College Students Should Join a Credit Union

Most students headed to college are using their first checking accounts and credit cards and may not be aware of the fact that you don’t have to use one of the big national banks. Campuses regularly offer credit union promotions that feature incredible rates on student loans and car loans. 

Lower loan rates

If you do decide to take out a student loan from a credit union, you’re pretty likely to get a better rate than you would from a bank. Car loans, home equity lines, and mortgage rates from credit unions are all consistently lower than banks, so it stands to reason that your local credit union will have a better student loan for you. This is critical after college when you have to start paying off loans.

Better savings rates

This may well be your first checking account, which could turn into a savings account, CD, or money market account. You want to make sure you’re getting the best possible rate you can. And that’s one of the glorious features of a credit union: they’re designed to circulate money through their communities. So, you’re likely to get more interest off your savings account in a credit union than a bank.

Fewer predatory credit cards

Bank-issued credit cards are traps that can easily lock young people into a lifetime of debt. While it’s important to be responsible with credit cards no matter who issues them, credit unions offer cards that are often lower than banks. So if you end up running a debt on your card during college, you will owe less if you use a credit union. 

Getting approved for a loan 

Let’s not rush past this loan thing. Loans are not necessarily easy to get. If you have good credit, you’re far more likely to get a “signature loan” from a credit union than from a bank. Also, credit union small business loans are typically better as well. So if you plan to start a business in college, it’s better to use a credit union. But you’re far more likely to get a small business loan at reasonable rates with a credit union than a bank. Credit unions are looking to make that rate better, too.

Customer service

Perhaps one of the most compelling reasons to use a credit union over a bank is the level of customer service offered. Banks are not about community, whereas credit unions are specifically tailored to their communities in a profound way. 

College is an exciting but stressful time. Let Telco Credit Union help you today. Contact us and talk to a specialist about what kind of loan is best for you and why a credit union is the best option for your future.

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